Critical minerals - Australia’s opportunity of the century

The front page of The Australian today featured Federal Treasurer Jim Chalmers speaking at PWC’s Critical Minerals Summit, arguing that critical minerals could be the opportunity of the century for Australia and its resources sector.

Chalmers confirmed that Resources Minister Madeleine King is working to refresh the government’s Critical Minerals Strategy. The reasons why can be summarised as follows:

• Russia’s invasion of Ukraine is a reminder of the costs and consequences of over-relying on a substantial supplier of a critical resource.
• The war helped elevate the conversations already underway about the highly concentrated nature of commodity markets, including critical minerals supply chains.
• Australia boasts some of the world’s largest reserves of globally significant deposits, meaning confronting geopolitical realities make for compelling opportunities for our country.
• Mining will underpin Australia’s position as a clean energy superpower, as “We have exactly what the world needs, exactly when the world needs it”.
• Therefore, critical minerals could be the opportunity of the century. This is a generational opportunity that we cannot miss or mishandle.
• By 2040, global demand for lithium is expected to be 40 times bigger than 2020 levels. Demand for graphite will be 25 times bigger. 21 times bigger for cobalt.
• Australia currently does very little value add processing, but the further we move along the supply chain and up the value chain, the greater the opportunity.
• While Australia now supplies ~55% of the world’s lithium, we have only a very small share of the processing industry, no share of the battery precursor industry, none of the battery cell production industry, or any of the battery pack assembly industries.
• Consider this in the context that by 2040, global lithium demand is expected to be 40 times bigger than 2020 levels, 25 times bigger for graphite, and 21 times bigger for cobalt.
• By adding value before we export we can cement our position in the global supply chain for low-emissions technologies.
• As more critical minerals become a locus of geo-economic competition, Australia becomes more essential to global supply chains, not only because of our globally significant mineral deposits, but our highly skilled mining sector and reputation as a solid investment destination and a broadly trusted strategic partner.

By refreshing the Critical Minerals Strategy, the government is hoping to set Australia up for a boom that lasts, with shared benefits. Chalmers envisions public capital working as a strategic complement to private investment, by managing early-stage risk and facilitating coordinated investments up the value chain.

Foreign investment will also be encouraged to help meet longer term investment requirements —  in fact, he expects that attracting more global capital that aligns with our interests will be essential. This will require cooperating more closely with key partners on investment opportunities at all stages of the value chain.

Success would see our critical minerals wealth help move us closer to energy independence; supply chain security; a high-value economy; and a stronger strategic position on the international stage.

A number of our Portfolio companies have critical minerals projects in Australia, so we of course welcome government support of the industry. We also agree that there is a huge opportunity to develop this industry including downstream value-add opportunities in Australia.