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IGO boss sees premium for local clean energy metals

IGO boss Peter Bradford says the growing focus of Western governments on climate change policy puts Australian producers of clean energy metals in a unique position.

Speaking after IGO posted record full-year underlying earnings before interest tax, depreciation and amortisation of $717m, Mr Bradford cited the US Congress’ recent passing of the Inflation Reduction Act as an example of a government policy response to climate change that would benefit local producers of metals that are key to decarbonisation.

The Act sanctions a $US369 billion government investment in energy security and climate change measures to boost US capacity to build renewable technology like solar panels and electric vehicle components.

“We’ve maintained for some time that if you make a superior quality product in a jurisdiction where you can demonstrate that it has been made safely, ethically and sustainability – and you can demonstrate that through traceability from raw materials to end products – that you will get a price premium,” he said.

“I think some of the movements we’re starting to see with the Inflation Reduction Act and others, it’s starting to provide some substance to that theme that we have been talking to for some time.

“And I think it really puts Australia in a very unique position from a clean energy metals perspective.”

His comments come after Mineral Resources boss Chris Ellison told investors on Monday the company would look to become Australia’s first electric vehicle battery manufacturer by setting up a factory in WA.

He said he believed batteries made in WA would generate a price premium that could make economic sense, even if it cost more to build and operate a factory here.

Western automakers are scrambling to secure reliable, clean and ethical supply of the battery raw materials needed to fulfil their growing ambitions around electric vehicle production.

IGO recently joined the ranks of Australia’s spodumene producers owing to its 25 per cent stake in the Greenbushes lithium mine via a new joint venture arrangement with China’s Tianqi. It is also set to become a commercial producer of lithium hydroxide used in electric vehicle batteries courtesy of a 49 per cent stake in the Tianqi’s Kwinana plant as part of the same agreement.

The company is separately eyeing opportunities for the downstream processing of its nickel in WA in partnership with Andrew Forrest’s Wyloo Metals.

Mr Bradford said IGO’s high-quality nickel and lithium businesses, combined with its portfolio of belt-scale exploration projects, gave the company a great platform to leverage off the growing demand for clean energy metals needed to meet the transition away from fossil fuels.

IGO’s full-year results came on the back of a 34 per cent jump in annual revenue to $903 million but the company’s net profit was down 40 per cent to $331m because last year’s figure was abnormally inflated by the $903m sale of its 30 per cent stake in the Tropicana gold mine to Regis Resources.

The company declared a fully franked final dividend of 5¢ a share, down from 10¢ last year.

Mr Bradford said IGO had completed the acquisition of Western Areas in the period and had embedded itself with its joint venture with Tianqi, which had contributed $177m of net profit to the company’s bottom line.

IGO said sales revenue at its flagship Nova nickel mine delivered a record $457m in profit before tax and reflected consistent metal production, coupled with a significant growth in metal prices during the year.

Shares in IGO closed up 48¢, or 3.8 per cent, at $13.15 on Tuesday.

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