Tasmania will set up a $20 million fund to support regional communities hit by job losses and closures, paid for by its successful investment in King Island's Dolphin Tungsten Mine. The state turned a $10 million loan to the mine's owner into a 12% stake.
At a glance
- The Dolphin mine hosts Australia's largest tungsten deposit and restarted in 2023.
- The state lent the mine a further $7.5 million last year.
- Premier Jeremy Rockliff said the fund turns "a one-off financial return into an enduring asset".
Background
Tungsten is a critical mineral used in heavy machinery, cutting tools and defence equipment. The Dolphin mine on King Island, off Tasmania's north-west coast, closed for more than two decades because of low tungsten prices before reopening with state support.
What happened
Premier Jeremy Rockliff announced the Recovery Fund for Regional Resilience on Tuesday, the ABC and Tasmanian Country reported. The $20 million fund will support communities facing major industry changes, employer closures and job losses, and help attract new investment.
The money comes from the government's investment in the Dolphin Tungsten Mine, owned by Group 6 Metals.
How the stake paid off
The mine reopened in 2023 with help from a $10 million state loan. When the owner could not repay it, the loan was converted into shares, and the government now holds 12% of the company. It lent the mine a further $7.5 million last year. The ABC said the mine has since had a significant financial turnaround.
Rockliff said the state's investment in the mine "has allowed us to reinvest a significant portion of the windfall back into the very regions that helped generate that success".
What it means
Tasmania has recently had to rescue several industries, including King Island Dairy, Bell Bay Aluminium and Nyrstar. It also lost more than 200 jobs when Liberty Bell Bay, Australia's last manganese smelter, shut down. Rockliff said the fund is meant to get ahead of such shocks rather than respond after a major employer closes.
Our read
Outlook: neutral. The fund is a state finance decision and does not affect tungsten supply.
What to watch
- How the $20 million fund is allocated.
- Performance of the Dolphin Tungsten Mine as tungsten prices fall.
- Further industrial closures in Tasmania.
For information only, not investment advice.
Detailed analysis
Timeline
- 2023: The Dolphin Tungsten Mine restarts with a $10 million state loan.
- 2026-10-13: Tasmania announces a $20 million regional fund from the mine's returns.
Government Policies
Tasmania converted a loan into equity in a tungsten mine and is reinvesting the returns.
What could lift prices
- The state's stake in the mine has delivered a significant financial return.
What could weigh on prices
- Tungsten prices have since fallen sharply, which could reduce future returns.
Country impact
| Country | Impact | Reason |
|---|---|---|
| Australia | Low | A state government is reinvesting mining returns into regional support. |
Industry impact
| Industry | Effect | Reason |
|---|---|---|
| Critical Minerals Mining | Positive | A state-backed tungsten mine has turned around financially. |
Who gains, who loses
- Regional Tasmanian communities: They gain a fund to cushion job losses and closures.
Other ways this could play out
- If the fund works, other states could copy the model of reinvesting mining returns.
- If tungsten prices stay low, the mine's future returns may shrink.
Price risks
- Tungsten prices are volatile.
- More industrial closures could stretch the fund.
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Australia