Overview
Australia’s vast supply of natural resources have supported the nation’s thriving economy for decades. Historically, mining companies and junior explorers across the country focused predominantly on energy-producing commodities such as coal, oil and gas.
In this alert, we discuss an overview of critical minerals, covering the Australian Government’s recent release of its Critical Minerals Strategy.
The effects of climate change have finally forced the world to reconsider its reliance on these finite resources and, instead, look to generate energy from renewable sources. This pivot, together with recent technological advances and changes in consumer sentiment towards sustainability, has resulted in a variety of other minerals becoming equally essential to the functioning of modern society.
Securing access to these strategic, high-value commodities is a key focus for governments around the world, and many western nations and multi-national corporations are working to achieve this goal as ethically and sustainably as possible.
Australia’s mineral resources, together with the country’s robust labour laws and environmental protections, positions our nation globally as a secure, reliable, and ethical supplier of these critical minerals – a fact which has been recognised by the Australian Government in recent years, and on which it is now working to capitalise.
What are critical minerals?
Geoscience Australia has defined critical minerals as metallic or non-metallic elements which have two characteristics:
- it is essential for the functioning of our modern technologies, economies or national security; and
- there is a risk that the mineral’s supply chain could be disrupted.1
The Australian Government currently considers 26 different resource commodities, set out in the table below, to be critical minerals.2
These types of mineral resources are used to manufacture advanced technologies such as fibre-optic cables, semi-conductors, mobile phones and computers, as well as having applications in the defence, aerospace and medical industries. Many of these resources are also used in low-emission technologies such as electric vehicles, wind turbines, solar panels, and rechargeable batteries.
The risk to supply chains can come from a variety of factors, including geological scarcity, natural disasters, pandemics, and war, as well as situations where the production or processing of the relevant mineral is dominated by individual countries or companies that could restrict supply.3
The Australian Government’s Critical Minerals Strategy
In March 2022, the Australian Government released its Critical Minerals Strategy (2022 Strategy) which is intended to grow the country’s critical minerals sector to “expand downstream processing and help meet future global demand” for these strategic resources.4
An updated strategy is currently being drafted (2023 Strategy),5 following a brief consultation period in which businesses and stakeholders were offered an opportunity to make submissions on the proposed new strategy. While the specific funding and initiatives of the 2023 Strategy will remain unknown until later this year, it seems that the 2023 Strategy will focus on:
- developing new sovereign capabilities and industries;
- building reliable, competitive and diverse supply chains;
- supporting clean energy technologies; and
- supporting sustainable Critical Minerals development.6
Although the terminology between the 2022 and 2023 Strategies has been updated, the government’s strategic purpose remains unchanged – secure Australia’s position as a powerhouse in the global critical minerals supply chain, thereby protecting the nation’s future prosperity and national security interests.
In anticipation of the release of the 2023 Strategy, this article examines the implementation of the 2022 Strategy to date. This information gives a snapshot of the impact of the 2022 Strategy on the critical minerals industry within Australia, and can provide businesses with insights into the types of projects which are likely to attract investment under the 2023 Strategy and beyond.
Implementation of the 2022 Strategy: Grants and key projects
In late 2022, the Australian Government announced that a total of $50 million in grants had been awarded to six key projects:
- Alpha HPA Ltd – $15.5 million towards Alpha HPA Ltd’s ‘HPA First’ Product Expansion Project to add new capabilities to the ultra-pure aluminium chemical plant being developed near Gladstone, Queensland. The project will produce materials for the lithium-ion battery and synthetic sapphire markets.
- Cobalt Blue Holdings – $15 million to accelerate a Definitive Feasibility Study for the company’s Broken Hill Cobalt project, including final engineering designs and drilling for further resource definition, to produce intermediate and battery-ready cobalt products in Australia.
- EQ Resources Ltd – $6 million for tungsten production through recovering mine waste and reactivating open-pit mining in Mount Carbine, Queensland for use in metal alloys for defence, transport and other applications.
- Global Advanced Metals Pty Ltd – $4 million for a tantalum and tin recovery plant at Greenbushes in Western Australia, increasing the volume of tantalum that is produced in Australia.
- Lava Blue – up to $5.24 million for the company’s project to develop modular re-processing technology to recover high-purity alumina, magnesium and other critical minerals from vanadium mine waste, which will increase product recovery and help to diversify production into new materials.
- Mineral Commodities Ltd – $3.94 million for developing an Australian integrated graphite ore-to-battery anodes business, producing battery grade graphite, based in Munglinup, Western Australia.
These grants demonstrate investment in junior projects at various stages of development, and with a focus on a variety of different critical minerals including aluminium, cobalt, tungsten, tantalum, alumina, magnesium and graphite.
Critical minerals funding
Investment in the critical minerals industry is part of broader strategy by the Australian Government to support clean energy technologies and expand the nation’s capabilities and industries. Various investment facilities and funds have been established as a mechanism for government funds to be allocated to projects across key industries, some of which are described below.
| Critical Minerals Facility | The $2b Critical Minerals Facility (Facility) was established to provide funding for businesses in the Critical Minerals export supply chain.7 The Facility is available to projects that are aligned with the Critical Minerals Strategy, and which are otherwise in Australia’s national interest.8 Approximately $1.5 billion has been allocated to date.9 |
| Value-Adding in Resources Fund (part of the National Reconstruction Fund) | The National Reconstruction Fund10 will now include the $1 billion Value-Adding in Resources Fund, which is intended to work alongside the Critical Minerals Facility and is expected to use similar funding mechanisms.11 |
| Critical Minerals Development Program | As part of its 2023 Strategy, the Australian Government is allocating $50 million into the pre-existing Critical Minerals Development Program (Program) for competitive grants to support projects producing, or planning to produce, critical minerals at the early to mid-stages of development, provided the project activities are substantially undertaken in Australia.12 Grants could be used for feasibility studies, engineering design work, and building pilot or demonstration facilities, among other activities. 13 |
| Other agencies and investment facilities | The Critical Minerals Strategy will complement other government priorities, incentives and facilities recently established in this space, including:
|
What can businesses expect with the Australian Government’s 2023 Critical Minerals Strategy?
Despite the change in federal government and the new, upcoming iteration of the Critical Minerals Strategy in Australia, businesses can expect to see (and receive) continued investment in the critical minerals industry over the medium-to-long term horizon.
The Australian Government has recognised that our country’s vast natural resources allow Australia to play an important role in the global supply and processing of critical minerals, as well as the manufacturing of advanced technologies that utilise these processed minerals.
What are the future prospects of critical minerals in Australia for business and industry?
Critical minerals represent an extraordinary opportunity for Australian businesses throughout the mining, construction, and manufacturing industries. If you have any queries regarding the policies being implemented in this space and how they might be best leveraged to benefit your operations, reach out to our Resources and Energy team.
What are Australia’s critical minerals?
| Australia's Critical Mineral list | |
| High-purity alumina | Niobium |
| Antimony | Magnesium |
| Beryllium | Manganese |
| Bismuth | Platinum-group elements |
| Chromium | Rare-earth elements |
| Cobalt | Rhenium |
| Gallium | Scandium |
| Germanium | Silicon |
| Graphite | Tantalum |
| Hafnium | Titanium |
| Helium | Tungsten |
| Indium | Vanadium |
| Lithium | Zirconium |
Source: Australian Government, Geoscience Australia, Critical Minerals list.
1. Geoscience Australia, 'Critical Minerals at Geoscience Australia'.
2. According to Geoscience Australia these Critical Minerals “have been selected by assessing Australia’s geological endowment and potential with global technology needs, particularly those of partner countries such as the United States, United Kingdom, Japan, India, South Korea and Canada”: Geoscience Australia, 'Critical Minerals at Geoscience Australia'.
3. Lithium is a perfect example of a mineral which is both essential to modern life (being a vital component of batteries) and which is at risk of supply chain disruptions (China controls approximately two-thirds of the world’s lithium processing capacity): Wired, 'The World Can’t Wean Itself Off Chinese Lithium'.
4. Australia's Critical Minerals Strategy 2022.
5. The 2022 Strategy was itself an update to the first Critical Minerals Strategy, published in 2019: Critical Minerals Strategy 2019. The 2023 Strategy is being drafted following the release of a discussion paper in December 2022 and a submission period for stakeholders ending in February 2023.
6. Australia's Critical Minerals Strategy: Discussion Paper (December 2022). This focus is similar to the 2022 Strategy.
7. The funding is intended to complement commercial finance and comes in the form of loans, loan guarantees, bonds and working capital support: Export Finance Australia, 'Supporting Australian critical minerals projects'.
8. Export Finance Australia, 'Supporting Australian critical minerals projects'.
9. PwC Australia, ‘Funding our critical minerals industry: A Federal Budget reset opportunity’.
10. The broad purpose of the National Reconstruction Fund is to invest in processing facilities in Australia and expand the nation’s mining science technology capabilities and the resources industry generally. Resources, renewables and low emissions technologies are all considered priority funding areas. See Australian Government, Department of Industry, Science and Resources: National Reconstruction Fund: diversifying and transforming Australia’s industry and economy and media release for Anthony Albanese, '$1 billion value-adding in Resources Fund, 1 May 2022.
11. PwC Australia, Funding our critical minerals industry: A Federal Budget reset opportunity’.
12. Applications for this round of funding from the Program closed in February, with grants expected to be announced in May. While applications for this round of grants are no longer open, it is expected that future rounds will be held following the release of the 2023 Strategy: Australian Government, Department of Industry, Science and Resources: Critical Minerals Development Program.
13. Department of Industry, Science and Resources, 'Critical Minerals Development Program grants now open'.
14. Minister for Industry and Science, Supporting Australia's battery manufacturing industry to charge ahead.
15. Australian Taxation Office, 'Junior Minerals Exploration Incentive'.
16. Australian Government, Northern Australia Infrastructure Facility Investment Guidelines.
17. Media release, The Hon Dr Jim Chalmers MP: Hydrogen Headstart to power new jobs & industry.
18. Department of Industry, Science and Resources, 'Critical Minerals'.
19. Parliament of Australia, A Future Made in Australia.