A Strategy from the Critical Minerals King: We’re headed Downstream, without a paddle
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There’s lots of people in the room right now that reckon minerals are pretty critical and have been screaming blue bloody murder about it for some years. Decades even. You know who you are.
Well, fresh out of Marrickville, we have the government’s Critical Minerals Strategy – the playbook of the Australian Government’s plan to fire-start a new crucible for the creation of a truly crucial critical minerals industry.
Like a lot of these mission documents, it’s big on intention, light on detail.
• Establish a process to update Australia’s Critical Minerals List.
• The Australian Government will analyse the value chain for each priority technology. This will identify where we can be most competitive and prioritise policy support.
• The Northern Australia Infrastructure Facility (NAIF) will play an important role in supporting the growth of the critical minerals sector. To support the growth of the critical minerals sector, particularly downstream processing, the Government will ask NAIF to earmark $500 million to support projects that align with this Strategy.
• Establish the National Reconstruction Fund, which includes $1 billion for value-add in resources and $3 billion for renewables and low emissions technologies.
• Continue to evaluate the appropriateness of policy settings in the context of critical minerals’ linkages to critical technologies, national priorities and Australia’s competitive strengths, including how investment settings complement Government initiatives.
• Support a strong pipeline of new critical mineral discoveries and projects through government geoscience programs and strategic leadership.
• Review licensing and commercialisation settings for federally funded research relevant to the critical minerals sector to ensure it provides domestic benefit aligned with the Strategy’s vision.
• Leverage government research and development programs, capabilities and leadership to support the sector’s development.
• Analyse the type, volume and timing of mineral requirements for Australia’s processing and manufacturing sector.
• Wherever appropriate, industry policies should complement broader policy goals such as:
Labor MP Madeline King is on point for this.
She’s the Minister for Resources and with the Strategy’s release she’s said the 55 page handbook is intended as the single enduring framework upon which will be built this nation’s future policy, philosophy and imperatives when it comes to digging stuff up and flogging it off to:
a) Someone we trust
b) Someone we don’t really trust but reckon they won’t be able to do anything meaningfully harmful with it;
c) Maybe even use ourselves
Yeah. C is pretty outrageous. Crazy talk I know – but surely critical to any mineral strategy in a world hammered by change and forced transition.
It is simply the Australian Government’s responsibility to maximise the benefits of this incredibly lucky geologically extraordinary and internationally significant critical minerals endowments.
And while our track record, reputation and superbly endowed natural minerals foot is wedged well in the door of opportunity, we’ve got a shirt tonne of work to do.
We’re far from the only country waking up to the new scheme of things. And just digging and dealing won’t cut it no more.
“We must look to grow our downstream capabilities in areas of competitive advantage by enabling more processing and refining of minerals onshore in Australia, and realise the benefits derived from value-adding to our resources,” the King said in the strategy blurb.
So there’s lots to do. We (the nation) had 81 major critical minerals projects in the pipeline as of around Xmas (2022), worth a ballpark value of $30 billion and $42 billion.
This is up from 71 projects and $22 billion to $36 billion in 2021 (Department of Industry, Science and Resources, 2022).
The 2022 Australian Critical Minerals Prospectus was an intro to circa 55 advanced and investment-ready critical minerals projects.
To ensure the industry’s success, the strategies’ authors say ‘we must create and maintain an environment that attracts investment and encourages competitive projects.’
“Growing the sector and moving into downstream processing, where we can do so competitively, will capture more value, economic benefits and jobs in Australia while boosting our sovereign capability.”
Competition for capital is always tight, particularly for downstream processing projects.
According to modelling outsourced by the (DISR) Department of Industry, Science and Resources, just increasing exports – to maintain Australia’s strong market position for critical and/or energy transition minerals – could add circa $71 billion in GDP and ass 115,100 jobs from 2023 to 2040.
“However, building downstream refining and processing capability and securing a greater share of trade and investment could generate $133.5 billion in GDP and increase the number of jobs by 262,600 from 2023 to 2040.”
Ms King says the imperatives for the Strategy are thusly: Part green. Part development. Part geopolitics.
1. Australian critical minerals are fundamental to the global transition to Net Zero emissions
2. The development of our critical minerals industry will create jobs and national wealth
3. Australian critical minerals domestic supply chains are vital to our strategic interests
What I did learn from the report is that the Minister can’t believe her luck. She’s the Minister for the Best Resources Ever.
“With our rich geological endowment and track record as a reliable exporter of energy and resources, Australia can play a pivotal role in delivering the processed minerals the world needs for a clean energy future.
We are the world’s largest producer of lithium, the third largest producer of cobalt and fourth largest producer of rare earths.
Like the gold, iron ore and gas industries did before it, the critical minerals sector can deliver significant benefits to Australia. We also produce significant amounts of energy transition metals such as aluminium, nickel and copper – which in combination with our critical minerals are essential inputs into the technologies that will drive the energy transformation.
But she’s also got a head under her crown, on her shoulders:
While our potential is great, so too are the challenges. And global competition is fierce.
The international investment landscape is shifting rapidly as governments around the world race to incentivise investment in diversifying and expanding critical minerals supply chains.
Recent announcements from the US and EU aim to drive historic investments in clean energy supply chains, turbocharge its decarbonisation efforts and transform the environment for businesses globally.
Australia’s geology alone demands that we play in a key role in the energy transition.
In response to policy commitments to meet net zero by 2050, private and public investment is beginning to flow on a massive scale.
Bringing online sufficient new supply of minerals, in time to meet demand, is a significant challenge.
Our trade and investment partners are increasingly looking to Australia to provide critical minerals, including rare earth elements, that will feed diversified global supply chains in the energy transition.
The Australian Government is working with industry and communities to enable this.
We are also working with international partners to help projects link to emerging markets in countries like the United States, the United Kingdom, Japan, Korea, India, the UK, the European Union and its member states.
King says that for now Australia is the world’s biggest producer of raw battery minerals, ‘but we currently have a modest share of the global markets for processed minerals and high purity battery precursors.’
The new Australian Made Battery Plan will use ‘our significant endowment of critical minerals’ to build Australia’s domestic battery manufacturing capability, launched in May the plan is simply to create jobs and wealth and security by manufacturing batteries onshore.
The plan would have the feds join the Queensland Government to create a Battery Manufacturing Precinct up north, backed by a $100 million Commonwealth equity injection.
The Northern Australia Infrastructure Facility (NAIF) will play an important role in supporting the growth of the critical minerals sector.
To support the growth of the critical minerals sector, particularly downstream processing, the Government will ask NAIF to earmark $500 million to support projects that align with this Strategy.
The strategy at least recognises that:
Increasing Australia’s sovereign capability in mineral processing will involve moving beyond exporting ores and undertaking more concentration, separation, refining and smelting onshore.
We can use these high-purity, value-added chemicals and metals to realise economic benefits for Australia. For
example, at present Australia’s lithium and cobalt resources are largely exported as concentrates. By chemically refining these minerals to produce lithium hydroxide and precursor active materials, Australia has an opportunity to add significant value to our exports.
So. In summary. We’re going downstream. There’s about $600mn in the boat, but I don’t see a paddle yet.