De-risking Australia's critical minerals industry

Critical minerals and fundamental commodities such as lithium, cobalt, nickel, copper, vanadium and other rare earth elements are integral to a clean energy future, essential for producing electric vehicles, solar panels, wind turbines and mobile phones. As we transition to a renewable energy future, the need for critical minerals will intensify, with demand expected to soar between 20 to 40 times by 2040.

Australia has these minerals in abundance. In 2021, Australian resources and energy exports were valued at $348.9 billion – a record high. With the potential for exports to reach even greater heights, Australia is extremely well placed to become a leader in the global critical minerals boom. However, the window of opportunity to take a leading position in this market is closing. 

Arguably, the Federal Government's Critical Minerals Strategy provides some focus but needs additional input and surety for investment to position Australia as a major global provider of these resources and their derivatives. Establishment of bi-lateral and multi-lateral agreements are valuable, but more substance is needed to leverage Australia’s contribution to such agreements.

In one of the largest studies ever conducted across the global energy sector, SHOCKED by GHD reveals 80% of energy leaders believe that the primary barrier to building the infrastructure required for the energy transition is the lack of capital being deployed. While money is generally available, projects are often considered risky by investors and developers.

De-risking the energy transition relies on meeting the projected national and global demand for critical minerals. For Australia to capitalise on this opportunity, we need to build confidence and investment surety in Australia's critical minerals industry. Central to this is improving approvals processes, exploring new investment models, and pinpointing strategically significant locations for critical minerals hubs.

Australia’s current approvals processes are complex and often stymied by red and green tape. On average, it takes anywhere between 12 and 15 years from the discovery of a mineral to the development of a mine site — and lead times are worsening. 

Our existing policies and practices are not ‘fit for future’. We need processes that retain the rigor Australia is renowned for, whilst providing greater surety to investment and enabling critical resource development to progress. 

Greater flexibility in how approvals are managed is paramount. Rather than basing approvals on the expected decades lifespan of a mining project, there are benefits and efficiencies in stage-by-stage approvals so that a project can responsibly progress with mine lifecycle considerations in mind.

State and Federal Governments must better collaborate to significantly enhance review, assessment and appeals periods. This will require policy review and an updated legislative response to boost confidence among industry and investors. 

We need to driver greater outcomes from the process of government. Not responding is not an option. The consequence is that the world will bypass Australia, jeopardising our ability to capitalise on our natural abundance of critical minerals and contribute to a decarbonised future.

Better collaboration and resourcing between state and federal governments, along with the communities in which they will operate, will be essential to boosting industry and investor confidence. We need new investment models. Financing and prioritising higher-value projects that incorporate advanced manufacturing, processing and recycling applications is critical. In addition, we need to direct more capital towards research and development, including skills and technologies.

Securing joint ventures with government can strategically advance significant projects. In Canada, the Strategic Innovation Fund has seen the government proactively invest billions of dollars in buying equity in critical mineral mines and related infrastructure. Governments in Europe are also investing in their own critical minerals sectors.

The Australian Government’s current strategy relies on private investors, however, obstacles and barriers in this investment model remain. One mining project has secured hundreds of millions of dollars of overseas investment, but the investor required the state government to approve the mine before it releases the funds. The state government, on the other hand, insists the investment money be in the bank before it issues the mine approval.

Private international investors have mixed confidence in Australia’s genuine commitment to driving its critical minerals industry. Exploring different investment models will be fundamental to accelerating strategically significant critical minerals projects.

Another priority for Australia is to unlock local and international value through the creation of regional critical minerals hubs. Focus should be placed on hubs that support regions with existing infrastructure, export facilities and supply chains where rich mineral deposits have already been identified, such as Queensland’s CopperString 2032 project.

This project will see a 1,100km high-voltage electricity transmission line stretching from Townsville to Mount Isa to connect Queensland’s North West Minerals Province to the national electricity grid. The province contains one of the world’s richest deposits of critical minerals worth an estimated $500 billion.

Similarly, in Western Australia, the Kwinana-Rockingham Strategic Industrial Area provides strategically important industry with access to services and suitable land close to key infrastructure, such as port, road and rail networks. With its existing chemical and resource-based processing industries, the area has attracted investment and globally significant critical minerals processing facilities to support emerging renewable energy industries.

Not all states and territories can be equal in hosting regional critical minerals hubs — for the benefit of the entire country, some areas need to be prioritised over others. Our government must be clear about where hubs should be located based on strategic significance or downstream processing potential. Identifying and supporting these hubs early will foster greater certainty for industry and potential investment. 

• Identify and prioritise support to develop areas as regional critical minerals hubs. 
• Develop more supportive approvals processes to expedite important projects.
• Prioritise investments in projects that unlock the greatest value such as those that include advanced manufacturing, processing and recycling applications.
• Pursue joint ventures with government, like Canada’s Strategic Innovation Fund.