Treasurer Jim Chalmers has described critical minerals as a “generational opportunity” that the federal government cannot afford to miss or mishandle.
In an address at The Australian Critical Minerals Summit in Sydney on Friday, Dr Chalmers indicated that the government is determined to translate what may be the “opportunity of the century” into industrial strength and long-term prosperity for Australia.
He said that Russia’s invasion of Ukraine has given the world a reminder of the costs and consequences of relying too heavily on a significant supplier of a critical resource.
“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,” said Dr Chalmers.
According to the Treasurer, Australia has some of the largest reserves of globally significant deposits, a skilled mining industry 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,” he said.
“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.”
As part of his speech, Dr Chalmers highlighted the “minerals rush” being brought on by electric vehicles, sales of which more than tripled between 2019 and 2021.
The number of EVs produced globally is expected to increase by 30 per cent per year for the next 30 years, leading to even higher demand for lithium, cobalt, nickel and graphite for use in batteries as well as copper and rare earth elements for permanent magnets.
While Australia currently supplies around 55 per cent of the world’s lithium, the Treasurer noted that the country has a very small share of the processing industry and no share of the battery precursor, battery cell production, or 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,” he said.
“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.”
Dr Chalmers said that this will help cement Australia’s position in the global supply chain for low‑emissions technologies, create more jobs and grow the economy.
“To put it as simply as I can, our international friends need to rely on someone, so let’s have them relying on us,” he said.
Foreign investment ‘welcomed and encouraged’
While investment in the critical minerals sector has so far largely been focused on securing the resource, Dr Chalmers suggested that this is beginning to change.
“We are now seeing interest from overseas investors looking for investment returns, and in projects further up the value chain,” he said.
“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.”
The Treasurer said that increased attention to these kinds of projects from a wider range of investors would be a good thing, but with some caveats.
“Foreign investment is a good thing when it’s in our national interest,” said Dr Chalmers.
“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.”
The federal government has pledged $15 billion in funding for critical minerals as well as clean energy manufacturing, medical manufacturing, new technologies and agriculture through the National Reconstruction Fund announced in this year’s budget.
