Critical Minerals Strategy 2023 Consultation Submission
The CMAA would like to thank its members for contributing to the Critical Minerals Strategy 2023 Consultation submission. The 2023 strategy will outline the Australian Government's priorities for the development of the critical minerals sector, including how Australia can create economic opportunities across the nation, including in our regions, and seize the opportunities of the net zero transformation.
The strategy will help Australia:
add value to our resources
grow our domestic downstream processing and manufacturing industries
The new strategy will reflect:
the important role our critical minerals can play in helping Australia and international partners achieve their emissions reduction targets
the imperative to bring Australian projects online quickly to support diversified critical mineral supply chains and markets
the growth of domestic manufacturing and industrial sectors
Australia’s ongoing commitment to the highest environmental social and governance (ESG) standards.
Further details can be found within the 'Critical Minerals Strategy 2023: discussion paper'.
The CMAA supports the critical minerals industry to outline the challenges it is currently facing and highlight opportunities to propel growth and innovation - to position Australia as a critical minerals superpower. Removing current obstacles and mitigating market failures can help secure Australia’s future and benefit Australians from all backgrounds, especially including First Nations Peoples and regional communities.
However, critical minerals supply chains are complex, intricate, and often opaque. As a result, critical mineral companies, that are exploring for, developing and extracting, processing, and refining critical minerals face unique challenges. It is important to note that for many critical minerals there are no free international markets. Instead, the monopolisation of critical minerals exposes critical minerals companies to risk from sudden market shocks and difficulties in competing on the global stage with state-backed companies heavily entrenched in the critical minerals market. This additional risk is often reflected in restricted access to global finance which does not consider the strategic value of projects to national security.
We recognise the efforts and initiatives of the Department of Industry, Sciences and Resources in seeking to advance Australia as a clean energy super power and key global critical minerals provider. Australia has enormous potential to supply a substantial portion of critical mineral demand, to be a substantial linkage in global clean energy supply chains, and to enable the decarbonisation of global industries. In doing so, Australia can create significant new job demand – especially in our local regions – and contribute to a social and environmentally acceptable science-led and engineering-led future around the critical minerals extraction industry and their complementary global supply chains (battery, solar, magnets, hydrogen, electrical grids).
Read the full CMAA submission:
Australia’s Relative Position
In realising the opportunity, there are several advantages that Australia has:
Natural resource endowment and critical land mass for significant development;
Photovoltaic energy potential (ability to build cheap and abundant solar (and wind) generation for renewable energy zones);
Science and engineering skillsets, including around chemical processing and tailings management;
Certainty of legal and regulatory framework; and
Depth of institutional private capital and a stable economy / government.
However, there are also several disadvantages:
Lack of large, local terminal markets for critical minerals mid-stream and downstream applications (e.g., we do not manufacture cars and we do not have sufficient domestic demand);
Lack of adjacent industries and manufacturing (e.g., the learning rate for EV car batteries was facilitated by the adjacent use of lithium-ion batteries in consumer electronics and power tools; e.g., China’s advantage in graphite anode processingcomes, in part, from their local demand for other industrial applications for graphite (such as furnaces, nuclear, lubricants) and their economies of scale in reagent supply since hydrofluoric acid is used in the pharmaceutical industry);
Relatively lighter budget allocation and centralised policy initiatives versus trading partners and allies (the USA budgetary allocation via Inflation Reduction Act and Department of Energy Loan Programs Office are a significant order of magnitudegreater than Australia’s even when normalised by GDP); and
Statism and difficulty of co-ordination across agencies (e.g., Resource – Defence – Foreign Investment Review Board – Trade at both Federal and State levels) and disconnected efforts and focus on developing IP and process flowsheets.
Further, we are starting well behind China (over 30 years behind) and whatever steps we do take need to have an awareness of China’s industrial capacity and position and the world’s current reliability on China including:
60% of lithium refining occurs in China, which is also the world’s third-largest producer of the mineral (Chinese firm Tianqi Lithium owns a majority stake in the world’s largest lithium mine, Australia’s Greenbushes, and the processing facility at Kwinana).
Three-quarters of all lithium-ion batteries are produced in China, and many of the remaining batteries produced elsewhere also require Chinese components (70% of all battery production is expected to happen in China between now and 2030).
China is the world’s largest manufacturer of all 4 main components of lithium-ion batteries (53% of global processing capacity for cathodes, 78% for anodes, 62% for electrolytes, and 66% for separators are in China).
China is the world’s largest new energy vehicle market, with half of all new energy vehicles sold in the country (China's fleet of half a million new energy buses accounts for 98% of global market share).
BYD and CATL now have a combined global NEV battery market share of 50%. Australia cannot simply rest on being the “Lucky Country” and rely on a policy setting that is relatively passive versus our international peers. Canada, for example, shares many of the advantages we enjoy but also has the massive advantage of being adjacent to America’s car industry and now has made meaningful proactive policy measures to capture their opportunity.
Broadly, the focus should be on stepping out from an extraction capability (i.e., we are perceived as a ‘dig and ship’ economy) to extraction and mid-stream and down-stream processing capabilities and the building of new industries on this which will take time. While we can and should support gigafactories and efforts to manufacture end products domestically, we should be cautious here. In our view, the opportunity is for Australia to take, deliberately and judiciously, the next value-add step immediately adjacent to extraction and direct shipped ore; to move up and out from a geology and mining engineering base (which is meaningful and not to be dismissed, but rather continually supported) and into a new, but adjacent chemical engineering base; to process minerals into materials.
There is no short-term fix or play here for the critical minerals industry as the federal and state governments will need to think long-term with respect to investment in this industry outside political cycles to become a major player in this global market across the entire value chain (i.e., inter-generational change).
The CMAA has provided responses to the consultation questions collating the views of our members who operate across all aspects of the critical minerals industry including exploration, processing, provenancing, critical minerals data, ESG and mining consulting amongst others. We wish to credit and acknowledge our indigenous partner organisation i2i Global in working with us to provide a contribution to the CMAA’s submission.