Thanks Michelle [Gunn, Editor, The Australian] for the introduction, to The Australian and especially John Lehmann for the invitation – and what a great idea to get this group of people in the room together, at an important time.
And to everyone at PwC – for hosting us today, and for the contribution you are making to the growth of Australia’s critical minerals sector, including that fascinating and encouraging Aussie Mine report a few weeks back.
And I got a lot out of Tom’s [Seymour, CEO PwC] thoughts in The Oz earlier in the week as well.
But long before any of us were thinking and talking about the potential of what lies beneath the ground, for tens of thousands of years First Nations People were living off this country, thriving on it, and caring for it.
I acknowledge the traditional owners of these lands and all lands we work and walk on – their culture and customs, and elders past and present.
I recognise I’m in a room packed with industry leaders and experts, and I strongly suspect there isn’t anything I can tell you about your industry that you don’t already know – that’s not what I’m here to attempt today.
You’ve got Madeleine King a bit later on – she’ll be going into plenty of detail about the decisions we have taken and the investments we are making.
So for my contribution today, I thought I could help kick things off by setting the scene a bit – giving you the Government’s perspective at more of a macro level:
- The potential that we see in critical minerals.
- The economic case and the strategic case for going all‑in.
- And the complex intersection of interests we’ll need to manage along the way.
And in doing so, I hope I can pull together the different threads of work that the Government is undertaking.
I said that this gathering comes at an important time.
Right now, the world’s getting a reminder in real‑time of the costs and consequences of over‑relying on a substantial supplier of a critical resource.
The Russian invasion of Ukraine has delivered a Russian‑made energy crisis the world over.
Unsurprisingly, that’s helped elevate the conversations already underway about the highly concentrated nature of commodity markets, including critical minerals supply chains, as they currently stand.
In this context, Australia can boast:
- Some of the world’s largest reserves of globally significant deposits
- A mining industry with some of the world’s most talented people
- And a reputation as a solid investment destination.
This means that some of the world’s more confronting geopolitical realities are also compelling opportunities for our country.
Mining has done so much to drive our national prosperity to this point.
And in this next era, it will underpin Australia’s position as a clean energy superpower.
This is a sector too often misunderstood.
Some people don’t seem to get just how crucial the mining industry is, and will be, to our net‑zero and clean energy ambitions. I know Madeleine talks about this a fair bit, and she’s right to do it.
Our country has the iron ore the world needs to build renewable energy infrastructure.
Our country has the minerals and rare earths the world needs – to build batteries and cars, to build wind turbines and solar panels, phones and fighter jets, MRI scanners and satellites.
And in a global market where dirtier mining practices overseas have diminished the status of green consumer goods – our country has the capacity to become the trusted supplier to the emerging green super‑firms.
We have exactly what the world needs, exactly when the world needs it.
So from that, I draw this conclusion:
Critical minerals could be the opportunity of the century.
This is a generational opportunity that we cannot miss or mishandle.
Our government recognises this – and we are determined to make sure that this historic opportunity translates into industrial strength, and long‑term prosperity for our country and for our people.
The economic opportunity
And when you put this moment in its historical context, that opportunity looks even clearer.
Just as the invention of the combustion engine brought about an oil boom, the advent and expansion of electric vehicles is bringing about a minerals rush.
Global sales of EVs more than tripled just between 2019 and 2021. Many customers are already waiting up to a year to have theirs delivered.
The number of EVs produced globally is projected to increase by 30 per cent a year for the next 30 years.
That means lithium, cobalt, nickel and graphite for the batteries – and copper and rare earth elements for their permanent magnets.
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.
To meet the world’s climate goals by 2050, the production of these minerals to satisfy battery demand will need to grow by about 450 per cent.
By one estimation, at the rate we are going and are expected to proceed at, over the next 30 years the world will need to mine more minerals than what has been extracted during the 70,000 years previous.
We are already the world’s largest producer of lithium, third largest producer of cobalt, and fourth largest producer of rare earths.
The value of lithium exports was more than four times higher last financial year than the year before, and it’s expected to be nearly three times higher again this year.
And if I can try and distil the conundrum and the opportunity this way, taking lithium as the example –
We supply about 55 per cent of the world’s lithium.
A Future Batteries CRC report from a few years back estimated that mining combined with processing – which we have a very small but growing proportion of – gives us an estimated 38 per cent share of the world’s $26 billion lithium mining and concentrate industry.
But we don’t have any share of the estimated $385 billion battery precursor industry.
Or any of the estimated $550 billion battery cell production industry.
And none of the estimated $1.7 trillion battery pack assembly industries.
So we can see that the further we move along the supply chain, and up the value chain, our contribution to it, and our dividend from it, fades away, and disappears.
And this is where our great opportunity lies – not just in extracting and then exporting the rare earths that we have and that the world needs –
But also in moving our way up and along the value chain –
Through processing, refining, upgrading, manufacturing, reusing and recycling –
Powered by renewable energy.
Adding value before we export – cementing our position in the global supply chain for low‑emissions technologies.
Creating more jobs for Australians – with recent research indicating that just for WA and SA, building this industry could create more than 50,000 jobs out to 2050, before we capitalise on the downstream opportunities.
And growing the economy in strong, inclusive, and sustainable ways.
The strategic opportunity
And as we open our minds more to the downstream opportunities in critical minerals, we also need to be clear-eyed about the fact that more and more, critical minerals will become a locus of geo-economic competition.
At the moment, around 60 per cent of rare earths mining is in China.
But it’s dominance in this sector is best viewed along the supply chain – from start to finish.
Take an electric vehicle battery –
China mines more than 80 per cent of the globe’s graphite, but just 14 per cent of lithium, and negligible amounts of cobalt.
But when it moves to processing those minerals – more than half of the processing for lithium, cobalt and graphite happens in China.
- Produces three‑quarters of all lithium‑ion batteries;
- Is home to 70 per cent of the production capacity for cathodes and 85 per cent for anodes;
- And builds more than half of the world’s electric vehicles.
While Chile leads the world for extracting copper and rhenium – China leads the world in processing it.
While Indonesia leads the world for extracting nickel – China leads the world in processing it.
The DRC leads the world in extracting cobalt – China dominates the processing.
And while we extract the most lithium – it is, again, China that does the lion’s share of the processing.
In 2022, you don’t need to look that far back or that far forward to appreciate the challenges and risks that such concentration can pose.
This kind of concentration creates supply chains that are especially vulnerable to disruption – with economic consequences that are far‑reaching and deeply‑felt.
What we are seeing with the supply of gas now, we have seen plenty of times before with supply of oil – where supply and price become hostage to geopolitical competition, conflict, or circumstance.
That’s in part why we are now starting to see some discussion among lithium‑producing nations in South America on a possible agreement among them on production and pricing, and in Asia on a similar set up for nickel and other key battery minerals.
Rather than locking down supply chains and trying to create an OPEC‑like set up for critical minerals, we would be better off responding by diversifying global supply chains and making them more resilient.
And that means Australia becomes more essential to them.
A few weeks ago the PM and I were in Indonesia for the G20 – and of the dozens and dozens of topics that were covered across all our conversations, there was one that kept coming up, which I found really striking.
Lithium. Australian Lithium.
The President talked about it. The Finance Minister talked to us about it. Their Chamber of Commerce as well.
In the States, we’ve already seen President Biden review the USA’s vulnerabilities – and commit to diversifying their international sources of minerals.
The European Union is heavily reliant on imports for minerals, and the UK is almost entirely reliant on imports.
So this makes the value proposition for Australia so compelling –
We have globally significant deposits of essential minerals; a highly skilled mining sector; a stable investment environment and strong regulatory and governance arrangements; and a reputation as a trusted strategic partner to many of the world’s major economies.
To put it as simply as I can – our international friends need to rely on someone, so let’s have them relying on us.
The Government’s approach
So those two big things are front of mind for us at the moment – the economic and strategic opportunities of critical minerals.
In terms of the work that’s underway from the Government –
I don’t want to walk too much onto ground that Madeleine will cover later on, but for the big picture, I think there are probably three main threads there that we are weaving together.
The first is our work to refresh the Critical Minerals Strategy – to plan ahead as best we can, and to make sure all of us, not just government, are walking in the same direction.
Madeleine will lead the work on the new strategy – making sure we get the big questions right.
How do we make these enormous opportunities work for us – to make ourselves the global critical minerals powerhouse we know we can be?
How do we make sure this opportunity isn’t just about digging and shipping, but leveraging a return for Australia – for our economy, our environment, and our people – that’s widespread and long‑lasting?
And what’s the geography as well as the geology of this opportunity?
We’re already leading the world with reserves of many minerals but only 20 per cent of the country has been explored – we really don’t know just how much potential is out there, unexplored and undiscovered.
So how do we make sure our regions benefit from the coming minerals boom?
This is something we think about a lot. What are the meaningful, lasting opportunities for places like Mt Isa, Cairns, Burnie, Dubbo, Alice Springs?
And it’s important that we do this now – that we think deeply about this now – because of where we are currently at with critical minerals in terms of investment and exploration and production.
Really still in its infancy.
Again, if you take lithium as an example –
In 2023‑24, it’s expected to have the same share of mining exports as LNG did back in 1993, almost 30 years ago.
Or where iron ore would have been just after the export ban lifted more than 60 years ago.
Where coal would have been more than a century ago.
So, if we could turn back time to those inflection points – would there have been things we would have done differently with our policy settings?
We want to be setting ourselves up for a boom that lasts with benefits that are shared – not tinkering around in the middle of it.
That’s why a new and improved Strategy – that you are properly consulted on, not just informed of – is so important.
Because now is the time to get those bigger settings right, we can’t leave it for 20 or 30 years down the track.
Which leads to the second part of our work – improving our value‑add capacity – and the Budget I handed down exactly a month ago had a really strong focus on this.
More than $50 million to set up a new Research and Development Hub – bringing together experts from Geoscience Australia, from CSIRO and others, as well as industry, to support more research and development.
When you think that between 2015 and 2019, China filed more than 11,000 patents in critical minerals extraction and processing, five times more than the second largest filer, 10 times more than Australia –
When you think about that, you can see why it’s so important we back this in.
The Budget also included another $50 million for competitive grants to help early and mid‑stage projects get up and running.
You’ve got a strong ally in Ed Husic – a truly passionate backer of local industry, local innovation, local jobs.
And of course there’s our National Reconstruction Fund –
Which includes a $1 billion Value Adding in Resources Fund – linking with the $2 billion Critical Minerals Facility – and that’s going to be a big part of making sure the benefits of the critical minerals boom are spread right through our regions as well.
There are a heap of investments we are already making – like the loan the Critical Minerals Facility has made to Iluka to get Australia’s first rare earth oxide refinery off the ground, putting us on‑par with the US in terms of critical minerals processing facilities.
And with companies like Wesfarmers dealing themselves into rare earths mining and lithium refining, corporate Australia has demonstrated that it doesn’t need much encouragement – you’re seeing the value in this.
Rather than crowding‑out private investment, we’re thinking about how public capital can be a strategic complement – managing early‑stage risk and facilitating coordinated investments up the value chain.
That brings me to the third and final thread – our longer‑term thinking on our investment requirements, including foreign investment.
The pattern of investment in the sector in the past has focused, by and large, on securing the resource. That is starting to change. We are now seeing interest from overseas investors looking for investment returns, and in projects further up the value chain.
We welcome and encourage foreign investment in critical minerals – in fact attracting more global capital to our shores will be essential for us to realise the full benefits of this opportunity.
As global demand grows, we expect to see these kinds of projects attracting more attention from a wider range of investors than has been the case in the past.
And that’s a good thing. Foreign investment is a good thing when it’s in our national interest.
But as investment interest grows, and as the sources of that investment interest grow, we’ll need to be more assertive about encouraging investment that clearly aligns with our national interest in the longer term.
When we’re talking about investments in critical minerals we’re talking about investments in valuable resources, in strategically important land, in a product that has important future implications, and in industries that will underpin much of the global growth and progress in the 21st Century.
This touches every tenet of our national interest.
For these reasons, I have asked the Treasury to begin working with the Foreign Investment Review Board, with the Critical Minerals Office in the Department of Industry, with Geoscience Australia, DFAT and States and Territories to:
- Identify relevant data about investment in critical minerals companies
- Consolidate this data so we can better understand the dynamics of this investment
- And develop more sophisticated methods of tracking investment patterns in critical minerals in the future.
And part of securing crucial foreign investment is cooperating more closely with our key partners – on investment opportunities at all stages of the value chain.
That’s exactly what the bilateral Critical Minerals Partnership with Japan in October was about. It’s why Madeleine was back in Japan last week. And it’s why the Government’s Southeast Asia Economic Strategy to 2040, initiated by Penny Wong and led by Nicholas Moore, will include a focus on resources, energy and the green economy.
I hope all of that helps to paint a clearer picture of how our new government values this sector, where we see the opportunities coming from, and what we’re doing to help you and your industry realise them.
There’s a long way to go.
As I said at the start, perhaps this is our great opportunity of this century –
And we need to make sure it’s not a missed opportunity.
We’ll know it’s a success if our critical minerals wealth helps move us closer to these four things:
- Energy independence
- Supply chain security
- A high‑value economy
- And a stronger strategic position on the international stage.
And as our partners around the world increasingly ask themselves what’s required to power the clean‑energy technologies of the future, and to sustain their economies – we know this:
Australia can be the answer. Australian resources can be the answer.
And I want to finish on this point, if I can.
As I said at the start, it’s not properly or widely understood yet just how fundamental mining is to the clean energy transition that’s underway.
There are no batteries without lithium. No electric vehicles without cobalt. No solar panels and wind turbines without manganese.
There is no net zero without mining.
This transition simply cannot happen without you.
And so my hope is, with more work, and with more recognition of these realities – we will see the end of the ill‑informed and irresponsible assessment that mining is anathema to net‑zero.
And then we can ditch for good the misconception that we have to make a choice between being green or backing resources.
Your sector is not contradictory to a clean energy future – you are crucial to it.
As an enthusiast for Australian mining, I know that, my colleagues know that.
We value your contribution and recognise your role in building Australia’s economy to this point, and your role in building its future.
A future that’s made in Australia –
And an Australia that’s an essential part of a prosperous and peaceful future for our region, and the world.
Thanks very much.