Australia’s bi-partisan Critical Minerals Strategy 2023–2030, launched in 2019, is a seven-year roadmap designed to capitalise on this country’s exceptionally rich natural reserves of natural resources at a time when there is a growing need to encourage domestic production.
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Critical minerals, including rare earth elements, are vital for manufacturing renewable energy technologies, electric vehicles and battery storage systems, and also have application in computing and defence.
Why the rush?
The strategy was part of a raft of similar legislation introduced throughout the anglophone world that sought to shore up nations’ sovereign wealth and secure the supply of commodities that many countries and industries are reliant on China, predominantly, along with jurisdictions in Africa, Asia and South America, to produce.
According to Statista.com, the production share of a cross-section of critical minerals worldwide in 2023 broke down as follows:
- Gallium – China – 98.36%
- Niobium – Brazil – 90.36%
- Magnesium – China – 88.3%
- Tungsten – China – 80.77
- Bismuth – China - 80%
- Silicon – China – 78.95%
- Graphite – China – 76.88%
- Cobalt – Congo – 73.91%
- Rare earths – China – 68.57%
Australia appears on this list with lithium, and a market share of 47.78%, which explains this country’s lion’s share of small caps operating in the space.
The need to source critical minerals closer to home became particularly critical after war broke out in Ukraine, and in the wake of a changing geopolitical landscape, though it had also been rumbling along thanks to the global push towards clean energy and new technologies.
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The rationale is that Australia already has a well-established reputation as a reliable producer and exporter of energy and resources. This, combined with its geological wealth, places the country in a prime position to lead the world in critical minerals.
The bi-partisan strategy was shaped by broad public consultation, involving stakeholders from industry, academia, First Nations groups and government. This consultation process identified both the challenges and opportunities facing Australia’s critical minerals sector.
A forward-looking strategy
Key planks of the strategy include:
- Creating resilient and sustainable supply chains through secure international partnerships. This involves diversifying global markets and enhancing Australia's status as a trusted trading partner.
- Building sovereign capability in critical minerals processing. This ensures Australia’s footprint grows beyond raw material export into high-value downstream processing.
- Harnessing Australia’s critical minerals. This supports the country's own clean energy ambitions and allows it to contribute to the global energy transition.
- Maximising the economic benefits of onshore resource extraction. This is particularly important in the case of fostering new industries and creating well-paid jobs in regional and First Nations communities.
By 2030, the strategy aims to cement Australia’s position as a globally significant producer of raw and processed critical minerals, underpinning industries vital to the net-zero transition and regional energy security.
Albanese government reinforces commitment
Recognising the genuinely bi-partisan nature of the strategy, the Albanese Government announced a A$2 billion expansion of the Critical Minerals Facility in its first term in power.
The added funding nearly doubled the financial capacity of the facility, increasing total government investment in the sector to A$6 billion.
The government's stated aim is to accelerate critical minerals mining and processing projects, strengthening Australia’s ability to meet the growing demand for these essential resources and to become a a key player in the global transition to clean energy.
The expanded funding will not only enhance Australia’s production capabilities but also deliver economic benefits, particularly in regional areas, by creating jobs and fostering new industries.
The government says that by investing in the entire supply chain, from mining to processing, the country can capture more value domestically, ensuring the country remains competitive in the critical minerals market.
In a speech to Australian and US industry leaders announcing the expansion of the program, Prime Minister Anthony Albanese said:
"Australians will benefit through this investment in critical minerals, through technology, skills, jobs and economic gains.
"Australia is committed to building sustainable and secure critical minerals supply chains with the United States. This is central to building a clean energy future and delivering economic growth.
"The expansion of the Critical Minerals Facility will help to build supply chains with the United States and support our shared clean energy, manufacturing and defence ambitions."
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The A$2 billion expansion was announced following the first meeting of the Australia-United States Taskforce on Critical Minerals, which was set up to strengthen the alliance between the two countries, with a focus on building sustainable, secure supply chains for critical minerals.
Cooperation with the US is a cornerstone of the Climate, Critical Minerals and Clean Energy Transformation Compact, which reinforces the importance of international partnerships in meeting shared clean energy and manufacturing ambitions.
A raft of Australian small-cap companies are carving out a niche in this emerging industry and stand to benefit from the increased investment and future focus on critical minerals, including Ionic Rare Earths Ltd (ASX:IXR, OTC:IXRRF), International Graphite Ltd (ASX:IG6) and Lanthanein Resources Ltd (ASX:LNR, OTC:FRNRF).