Resources Minister Madeleine King has released the Albanese Government’s critical minerals strategy with an investment of $500 million into critical minerals projects in northern Australia through the Northern Australia Infrastructure Facility (NAIF).
However, some believe the lack of big money spending is likely to leave the critical minerals sector wanting. The government did announce it will conduct a review of Australia’s critical minerals list by 2026.
More on that shortly.
In this article:
- Batteries are pivotal
- Has the battery strategy missed the mark?
- The numbers seem strong, but are they enough
- What of critical minerals?
- The benefits, if done properly
The idea is to strategically derisk important projects through government support and attract private finance to ensure local processing and manufacturing projects can access Australian minerals.
Mining will be supported across focus areas including communication, co-ordination, regulation and financial support with the strategy to focus on minerals that are used in priority technologies.
The government has recognised the supply chain as highly important for Australian critical minerals industries to gain traction in global markets.
This strategy aims to balance the impacts of existing energy-intensive extraction, concentration and processing critical minerals projects, with a commitment to net zero emissions by 2050.
"We must do this in a way that supports a sustainable and competitive industry without imposing undue costs or inefficient processes," the strategy document said.
While Australia is the world's biggest producer of raw battery minerals, it only has a modest share of the global markets for processed minerals and high-purity battery precursors.
The strategy would see Australia boost downstream processing and manufacturing through private investment from global businesses that have developed and proven their technologies in batteries, electric vehicles, wind turbines and solar panels.
Batteries are pivotal
The Albanese Government launched The Australian Made Battery Plan in May this year with the aim to create more jobs and greater wealth for the nation by manufacturing batteries onshore.
The plan would see a future Labor Government:
- Partner with the Queensland Government to create a Battery Manufacturing Precinct in Queensland, backed by a $100 million Commonwealth equity injection.
- Create a Powering Australia Industry Growth Centre to provide advanced technology and skills development to businesses looking to locally manufacture renewable energy technologies.
- Support 10,000 New Energy Apprenticeships, including around 2,000 expected in Queensland.
- Develop a National Battery Strategy to bring government and business efforts together for the long-term good of the nation.
Has the battery strategy missed the mark?
Minister King has acknowledged that: "While the potential is great, so too are the challenges.
"The strategy makes it clear our natural minerals endowment provides a foot in the door but we must do more to create Australian jobs and capitalise on this unique opportunity."
Albanese said when he launched the plan: “Australian-made batteries should power your house, your business, your school and eventually maybe even your car.
“We can shore up our electricity grid with safe, reliable and sustainable energy that’s Australian from top to bottom - and then we can sell those batteries to the world.
“We have a unique opportunity to make Australia a world leader in a future industry that will create good jobs for generations.”
In fact, Australia is aiming to be a globally significant producer of raw and processed critical minerals and build sovereign capability in critical minerals processing by 2030. It comes amid concerns that the country is too expensive to have its own processing facilities or battery factories.
This announcement has certainly left some in the sector underwhelmed.
The underwhelm comes with the government's deferral on deciding whether to expand Australia's critical minerals list which comprises 26 minerals, with only eight commodities: lithium, rare earths, cobalt, graphite, manganese, silica, vanadium and bauxite - the latter being only for its usage in high-purity alumina production.
Further to this, the allocation of the $500 million from NAIF is said to be not enough. Note, the government already has the $2 billion Critical Minerals Facility administered by Export Finance Australia.
The government has $1.1 billion left from the original $5 billion committed to NAIF; a bill is before parliament this week to tip another $2 billion to take the total available to $3.1 billion.
It is likely there will be no restrictions on the $500 million investment from NAIF, if it remains consistent with the Federal Government’s critical minerals strategy.
The numbers seem strong, but are they enough
The Albanese Government, during the 2022 federal election, had pledged to allocate $1 billion from its principal $15 billion National Reconstruction fund for resources value-add. It promised another $3 billion for renewables and low-emission technology projects.
The current administration inherited the Morrison Government's $2 billion Critical Minerals Facility. However, $1.5 billion of this fund is already dedicated to various projects.
These include a $1.25 billion loan to Iluka Resources to establish a rare earths processing plant, $185 million to Renascor Resources for its graphite project in South Australia, and an additional $US40 million for EcoGraf's battery anode facility in Western Australia.
Chris Ellison, the head of Mineral Resources, and Tom O'Leary, the managing director of Iluka Resources, have expressed their disappointment.
Both Ellison and O'Leary have been advocating for more rigorous mechanisms to retain investment capital within the country's borders.
This sentiment resonates even more with the considerable incentives provided by the United States under President Joe Biden's Inflation Reduction Act (IRA).
These industry leaders perceive the IRA as a significant lure for investment capital that could otherwise be directed towards local industries. They argue that in the face of such international enticements, domestic policy should do more to keep these investments on home soil. The currently proposed measures, they contend, don't rise to the challenge.
Other mining leaders have advocated for a domestic reservation policy for critical minerals. Drawing inspiration from Indonesia's export prohibitions on nickel and other primary commodities, they believe this could stimulate investment in local processing and refining industries. This proposal, however, has met with resistance from other segments within the mining industry.
Meanwhile, early signs suggest the government may be planning to expedite environmental approval procedures for critical minerals projects. This move, if implemented, would answer calls that have been at the heart of industry lobbying efforts over the past few years.
The problem is the proposed strategy lacks precision regarding a timeline or firm commitments, merely stating these matters will be considered in the ongoing review of the Environment Protection and Biodiversity Conservation Act.
"The government is exploring ways to pinpoint and expedite strategically significant mineral projects to facilitate quicker approvals while upholding robust environmental safeguards," the strategy outlines.
It goes on… "The federal Minister for the Environment and Water and Minister for Resources will routinely liaise with state and territory counterparts to ensure that these actions are in line with efforts to streamline approval processes at those levels."
What of critical minerals?
As noted, the government has postponed industry demands for a substantial expansion of the term 'critical minerals', a decision that could provoke further discussions in the sector.
Comparatively, the US and Europe have a much wider array of commodities in their critical minerals lists, with Europe even listing coking coal. While such an inclusion is not likely to find favour in Australia, aluminium, copper, nickel and zinc producers have been vigorously advocating for a more comprehensive list.
Contrary to expectations of a revised list coinciding with the critical minerals strategy, the released document merely stated that the government intends to "establish a process to update the critical minerals list".
The strategy clarifies, "To distinctly indicate policy priorities for the sector, Australia’s critical minerals list will be published separately from the critical minerals strategy. The strategy delineates the government's policy direction, while the list can be adapted in response to global strategic, technological, economic and policy changes."
The government aims to investigate the value chain for each priority technology to pinpoint where Australia has the most competitive advantage in securing market share. This study will further identify the essential mineral products and project types needed for these technologies. The government will prioritise supporting critical mineral projects that underscore priority technologies and align with the vision and goals of this strategy.
The benefits, if done properly
King noted that boosting exports of critical minerals and energy-transition minerals could generate more than 115,000 new jobs and contribute an additional $71.2 billion to the GDP by 2040.
Further, she indicated that if Australia developed downstream refining and processing capabilities, securing a larger slice of trade and investment, these figures could potentially increase to 262,600 jobs and a $133.5 billion addition to the GDP by 2040.