{"id":43694,"date":"2024-04-03T14:30:59","date_gmt":"2024-04-03T13:30:59","guid":{"rendered":"https:\/\/www.innovationnewsnetwork.com\/?p=43694"},"modified":"2024-04-03T14:39:41","modified_gmt":"2024-04-03T13:39:41","slug":"australian-critical-minerals-can-australia-lead-the-global-charge","status":"publish","type":"post","link":"https:\/\/www.innovationnewsnetwork.com\/australian-critical-minerals-can-australia-lead-the-global-charge\/43694\/","title":{"rendered":"Critical minerals down under: Can Australia lead the world\u2019s critical minerals charge?"},"content":{"rendered":"

Olimpia Pilch, Co-Founder and Senior Advisor of the Critical Minerals Association Australia<\/a>, considers the outlook for Australian critical minerals, navigation of turbulent markets, crucial policy changes, and international significance.<\/h2>\n

In 2023, Western governments turned to penning strategies, signing agreements and banding together through the Minerals Security Partnership (MSP) \u2013 of which Australia is a member \u2013 and funding projects across MSP and allied nations. Notably, Australia and the UK signed a statement of intent<\/a> to support the critical minerals sector, as well as one with Germany<\/a>; they courted the US and inked the Compact aimed at enhancing bilateral co-operation<\/a>; shook hands with France over a bilateral agreement on critical minerals<\/a>; celebrated a milestone in the critical minerals investment partnership with India<\/a>; and Australia\u2019s Prime Minister Anthony Albanese visited China\u2019s President Xi Jinping in an effort to calm down the turbulent relationship at a time when tensions over critical minerals (especially gallium, germanium, graphite, and rare earths) had been escalating as US and China continue a tit-for-tat.<\/p>\n

For Australia, like many Western nations, China is its biggest trading partner (accounting for 34% of exports<\/a>), and if prompted, could cause chaos for Australia\u2019s resources sector and, as a result, the economy (with exports of predominantly iron ore, bauxite, gold, coal, and lithium \u2013 generating a record AU$455bn in export revenue<\/a> in the 2022-23 financial year). Maintaining traditional trade relations and the search for new partners has dominated Australia\u2019s strategy on the global stage as a \u2018dig-and-ship\u2019 nation that has not yet capitalised on sovereign value-added processing and refining, which remains in the tight grip of China.<\/p>\n

Turbulent markets<\/h3>\n

While the Australian Government embarked on a quest for new friends, the industry faced an existential problem. The optimism of analysts projecting astronomical shortfalls between demand for critical minerals and green technologies and supply was not shared by equity markets in 2023.<\/p>\n

Key issues remained: the technologies were not being built at the rate expected, China\u2019s economy was showing signs of a slow-down, and Chinese consumers began falling out of love with electric vehicles (Tesla\u2019s sales alone dropped 17.8%<\/a> in November 2023 \u2013 some attributing this to the China\u2019s phase-out of US$28 billion<\/a> worth of incentives over 2009-2022).<\/p>\n

Investors had little appetite for backing pre-feasibility exploration projects that would not stack up economically with a downturn in prices. And the sharp downturn came, fuelled by China\u2019s overcapacity and economic slowdown, claiming not only the cash-strapped juniors but also high-cost casualties including \u2013 the legendary Mt Isa, Core Lithium\u2019s Grants mine, and Wyloo Metal\u2019s Kambalda \u2013 with lithium returns at -81.43%, nickel at -45.21%, and platinum at -7.67%<\/a> for the year 2023. For better or worse, Australia\u2019s resources sector is paying the price for decisionsmade in Beijing. Troubles in China spell troubles for down under.<\/p>\n

Late-stage critical minerals projects, however \u2013 particularly 15 rare earth projects with a proposed investment of $7.3bn<\/a> \u2013 have enjoyed a surge in investment. The Albanese Government also stepped in with an AU$2bn expansion in critical minerals financing<\/a> aimed at doubling the Critical Minerals Facility\u2019s capacity to finance Australian critical minerals mining and processing projects.<\/p>\n

The story in lithium also continued, with total committed investments increasing<\/a> by $2.5bn despite the rocky equity markets. However, the spending was committed to either expansions or the bigger end of town rather than junior explorers and their new finds. The increase from $6.7bn in 2022 to $11.8bn in 2023 in the value of committed critical minerals projects<\/a>, confirms Federal Minister for Resources and Northern Australia Madeleine King\u2019s statement that \u201cthe road to net zero runs through Australia\u2019s resources sector\u201d and the world remains hungry for Australia\u2019s resources. However, Australia\u2019s export revenues depend on more than three lithium projects, reaffirming the need for a robust critical minerals strategy.<\/p>\n

Critical Minerals Strategy 2023-2030<\/h3>\n

Australia\u2019s Critical Minerals Strategy 2023-2030<\/a> focuses on re-positioning the nation as a globally significant producer of raw and processed critical minerals. The strategy aims to incubate the fledgling sector to take advantage of geostrategic and economic benefits associated with resources needed for the energy transition. To successfully move further up the value chain and reap the additional benefits of Australia\u2019s natural endowment, the government will need to focus on creating an enabling business environment that promotes innovation and commercialisation within the midstream processing and refining space.<\/p>\n

The Strategy also focuses on critical minerals\u2019 biggest challenge \u2013 financing\u2013specifically that of strategic projects in the midstream. The government aims to support the industry through \u2018well-designed support\u2019 to help de-risk projects and attract private investment to projects deemed important to Australia\u2019s goals.<\/p>\n

So far, the Australian Government has awarded A$100m to projects \u2013 a drop in the ocean when it comes to building modern and \u2018green\u2019 refining facilities that can easily run into the billions. However, the National Reconstruction Fund has AU$1bn earmarked for \u2018value-add in resources\u2019. Another AU$50.5m has been committed to establishing the Australian Critical Minerals Research and Development Hub to begin tackling technological challenges that Chinese companies have built expertise in and Australia is found lacking in.<\/p>\n

On the partnership side, diversification and partnerships with like-minded nations (government speak for non-China, Russia, North Korea, or Iran) are highlighted as the Australian Government continues to court potential buyers for its critical minerals. Australia is also committing more resources to monitor whether competitors are investing in the nation\u2019s critical minerals sector, with AU$2.2m to be spent over four years by the Treasury to \u2018develop more sophisticated ways of tracking foreign investment patterns.\u2019 This comes as no surprise after the Government blocked a takeover of a lithium miner<\/a> by a China-linked company. Greater protectionism of Australian sovereignty is likely to ruffle some investors\u2019 feathers, particularly those who have enjoyed decades of quick profits.<\/p>\n

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\u00a9 shutterstock\/TippaPatt<\/figcaption><\/figure>\n

On the environmental, social, and governance (ESG) front, there\u2019s still some debate as to whether Australia is a \u2018world leader.\u2019 While it may indeed be the case for Australia in terms of political stability and absence of violence and terrorism; government effectiveness, regulatory quality, and accountability; the rule of law and control of corruption; the critical minerals sector \u2013 especially at the project level \u2013 has some issues that limit the nation\u2019s ability to claim that title, particularly in indigenous matters and corporate governance. That being said, there are plenty of outstanding projects demonstrating exemplary ESG practices. The Australian Government is also cooperating with international standards bodies and encouraging discussions between the sector and First Nations people under the banner of \u2018benefit sharing.\u2019<\/p>\n

Not meeting in the middle<\/h3>\n

The strategic role of the midstream cannot be stressed enough. Currently, China monopolises the midstream space globally for many critical minerals \u2013 such as gallium, lithium, graphite, and manganese \u2013 by Indonesia for nickel, Brazil for niobium, and the US for beryllium. Although many nations have a variety of resources that can be extracted, it is the processing and refining that ultimately add value and influence both the upstream prices and downstream access to critical materials. Moving from a \u2018dig and ship model\u2019 is no simple task. The successful creation of an Australian \u2013 specifically Australian-owned- midstream industry \u2013 will depend on the presence of the following five must-have ingredients:<\/p>\n