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Western Australia sees 2% of mining sector jobs hit in

July

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Critical minerals processing plant expansions put on ice

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BHP says Australia at an inflection point

MELBOURNE, Aug 1 (Reuters) - A downturn in the critical

minerals sector that has triggered a wave of job losses in

Australia's top earning resources state has also struck a blow

to the country's hopes to build out a critical minerals

processing sector.

Top lithium producer Albemarle on Thursday announced

around 300 redundancies at its lithium hydroxide plant in

Western Australia, where it paused an expansion as part of a

"comprehensive review" of its cost and operating structure, in

the latest job cuts to the sector.

Australia is known for being the world's largest iron ore

exporter but it also supplies around half of the world's

seaborne lithium used in batteries and is a major supplier of

other battery materials like nickel.

Miners have now announced job cuts equivalent to 2% of the

sector's state workforce in July alone, according to a Reuters

tally, roughly doubling cuts announced in the first half

combined. The have also mothballed or delayed plans for new

projects that would feed into the energy transition.

"Australia's critical minerals industry is in a critical

state - energy costs, labour, productivity, red tape," said

analyst Daniel Morgan of investment bank Barrenjoey.

"It sounds good on paper but it's not clear the settings are

in place for it to work. All of this reinforces how

uncompetitive Australia is in downstream processing."

BHP Group ( BHP ), IGO, Albemarle and Fortescue

have all been expected to benefit from Australia's

moves to shore up its economy for the green transition.

But they have been hurt by slower than expected electric

vehicle take-up that has hit nickel and lithium prices, as well

as persistently high power and labour costs.

Australia has harboured big dreams to become a critical

minerals and green energy powerhouse.

It in May released a budget centrepiece of A$22.7 billion

($15 billion) to boost domestic manufacturing and renewable

energy, which included a A$7 billion investment in processing

critical minerals under a "Future Made In Australia" banner.

The plan also included tax breaks for processors of critical

minerals, which is set to start in 2027, and which the

government is now considering bringing forward, Resources

Minister Madeleine King told ABC Radio in Perth on Thursday.

"This is complex problem, and it is impacting international

markets across the critical minerals sector globally," she said

separately in a statement.

Battery metals producer IGO said last month that given

"prevailing market conditions" it would pause a study into

developing a facility that would produce precursor battery

chemicals near Perth.

BHP said is stopping battery chemicals output at its Kwinana

nickel refinery, which was set to supply Tesla while

Fortescue cut jobs amid concerns it would not meet its green

energy production targets.

"Australia's mining sector is now at an inflection point as

the energy transition and global decarbonisation efforts change

the shape of overall demand," BHP said in a submission to an

Australian enquiry last week.

The cost of mining operations in Australia has increased

"acutely" in the past few decades while labour productivity has

remained flat. To boost competitiveness, the country needs to

upskill its workforce, streamline permitting and support new

projects by developing common infrastructure, it said.

($1 = 1.5309 Australian dollars)