In June 2023, the Federal Government published the Critical Minerals Strategy 2023–2030, setting out the government’s vision to grow Australia’s critical minerals sector.

Australia’s Critical Minerals Strategy

Key objectives of this Strategy include:

  • creating a diverse, resilient and sustainable supply chain with a key focus on international partnerships;
  • building sovereign capability in critical minerals processing;
  • progressing towards Australia being recognised as a renewable energy superpower; and
  • extracting more value from our resources onshore, creating jobs and economic opportunities.

The Strategy includes six key focus areas:

By 2030, the Strategy aims to have grown the geostrategic and economic benefits of its critical minerals sector and develop Australia into a globally significant producer of raw and processed critical minerals while supporting diverse, resilient and sustainable supply chains.

While the Strategy was welcomed, the industry is waiting for further government support by way of tax incentives, clearer approval pathways for new projects and policies to expand the workforce to ease much-needed labour issues. We are hopeful that 2024 will see the focus areas set out in the Strategy lead to tangible outcomes for industry.

Among other objectives, the Strategy sets out a Critical Mineral List of minerals that Australia has geological potential for, that are essential to modern technologies, economies or national security, in demand from our strategic international partners, and are vulnerable to supply chain disruption.

On 16 December 2023, the Australian Government expanded the Critical Mineral List to 30 minerals, adding 5 new entries (fluorine, molybdenum, arsenic, selenium and tellurium) and removing helium. On 16 February 2024, nickel was also included in the Critical Mineral List, bringing the current list to 31 minerals in total.

New entrants on the Critical Minerals List

Strategic Materials List

In December 2023, alongside the amendments to the Critical Minerals List, the Government also released a Strategic Materials List, consisting of minerals important for the global transition to net
zero and broader strategic applications, but are not currently vulnerable enough to be considered critical minerals.

The list initially consisted of six minerals including copper, nickel (noting nickel’s subsequent move to the Critical Minerals List), aluminium, phosphorous, tin and zinc.

Emissions standards

Over the next decade increased demand for Australia’s critical minerals is expected to be driven by electric vehicle (EV) manufacturers seeking to meet more stringent emissions standards. Early in 2024, the Federal Government proposed emissions standards of passenger and light-commercial vehicles. These standards – the New Vehicle Efficiency Standard (NVES) – will mandate how much carbon-dioxide is produced on average by new vehicles, and will apply penalties where those standards are not met.

Bolstering mining and expanding manufacturing capabilities

Australia is a leading supplier of raw materials to the critical mineral supply chain, being the location of choice for many industry participants looking to secure supply for raw materials such as lithium, cobalt, nickel, magnesium and rare earth elements. Our abundance of geological resources, mature mining industry, stable economy and regulatory environment has traditionally contributed to the success of our mining industry, and is expected to continue to do so in the future.

Over the last year, however, we have seen concerted efforts by the Federal and State Governments to establish Australia’s downstream processing and manufacturing capabilities. Australia, like many other economies, understands the inherent risks to critical mineral supply chains if mineral processing and production is dominated by any one country. This is why 2023 saw a movement by Australia, and many other nations, to seek out opportunities to bolster their own, independent processing and manufacturing of critical minerals. For example:

  • In April 2023, Australia and the United Kingdom announced their joint statement of intent setting out their respective commitments to strengthen and diversify international critical mineral supply chains. The statement provides that the two countries will work together to promote investment opportunities in upstream extraction, seek enhanced research and development collaboration and consider coordination on critical minerals policies and information exchange on supply chain security, regulation and mineral criticality.
  • In April 2023, Australia and Germany released their joint declaration of intention on the Australian-German value chain feasibility study. As part of this study, the countries will undertake research on critical mineral supply chains with a focus on considering mining, refining and recycling projects and operations in Australia for the expansion of new Australia- Germany supply chains and opportunities for connection between German and Australian projects. The statement provides that the nations, ‘share the opinion that Australia should obtain significant potential in upstream resources activities, including extraction, refinement and recycling, and that the Federal Republic of Germany should obtain equal potential and experiences in production, recycling and manufacturing activities.’
  • In May 2023, Australia and the United States announced their shared commitment to enhance bilateral cooperation on climate and clean energy matters under a Climate, Critical Minerals and Clean Energy Transformation Compact (Compact). The Compact aims to establish strategic partnerships, integrate supply chains and accelerate climate action. See our article for further details here.
  • In September 2023, Australia signed a Bilateral Dialogue on Critical Minerals with France to launch a study into critical mineral supply chains, identifying the specific needs of both countries in relation to batteries and rare earth metals.

What is apparent from these announcements is that critical mineral supply chains are seeking to remove reliance on any single economy for upstream processing or manufacturing. That said, significant time, resources, investment and regulation will be required to achieve supply chain resilience. For Australia, this means that additional support, including by way of government grants, regulation and foreign investment, is required to bolster Australia’s position in the critical mineral industry.

Australian support for the industry

Support for the critical minerals industry appears to be front of mind for Australian policy makers:

  • On 14 March 2023, the Federal Government announced its $840 million investment in the Arafura rare earths project in Central Australia. The funding will be used to develop Australia’s first combined rare earths mine and refinery, as part of Arafura’s Nolans Project, which focuses on producing the rare earths neodymium and praseodymium, which are used by magnet manufacturers and as part of the supply chain for EVs.
  • On 8 January 2024, the Federal Government announced that it is investing almost $22 million into three new innovative research projects through the Australian Critical Mineral Research and Development Hub. These projects aim to reduce carbon emissions by further developing critical minerals and downstream processing to produce components for clean technologies. Funding recipients of these projects include:
    • $13.9 million for the Australian Nuclear Science and Technology Organisation (ANSTO) for a research project to accelerate the discovery, extraction and processing of rare earth elements from lower grade deposits;
    • $5.2 million to CSIRO to develop intellectual property and know-how to help downstream industries produce high-purity metals and materials; and
    • $2.7 million to Geoscience Australia to investigate the feasibility of a domestic industry for critical minerals such as gallium, germanium and indium.
  • These contributions are in addition to the Federal Government’s $2 billion loan facility expansion in critical minerals financing, announced in October 2023. The commitment doubled the capacity of the Critical Minerals Facility to fund and develop Australian projects from $2 billion to $4 billion, as part of Australia’s broader strategy to reduce reliance on China for downstream processing and manufacturing of critical minerals.

We expect to see even more activity in the critical minerals industry over the next few years which will drive industry regulation, investment and engagement.

This is an article from our 2024 Edition of Emerging Issues for the Australian Energy and Resources Industry. To read more from this publication, click here