Development of Australia's new Critical Minerals Strategy

By Igor Bogdanich, Todd Rankin
Boards & NEDS Critical Minerals Energy Mining

Industry input sought but relatively short timeline for consideration 5 min read

The Australian Government has committed to developing a new Critical Minerals Strategy with a view to cementing Australia's position as a global supplier of choice for processed critical minerals, and to unlock its potential as a clean energy superpower.

Critical minerals are a key component of technologies required to facilitate the transition to renewable energy and electrification. To assist in the development of the new Critical Minerals Strategy (the Strategy), the Government is seeking industry and community stakeholder input in response to questions included in it's recently released discussion paper on the new Strategy, as well as general feedback in relation to the critical minerals sector. 

In this Insight, we outline the five main areas of focus for the Strategy and explore how the Government intends for them to strengthen Australia's position globally.  

Key takeaways

  • Recognising that Australia has a narrow window of opportunity to capitalise on the rapidly increasing global demand for critical minerals, the Government is developing a new Strategy directed at seizing these opportunities and moving Australia up the global value chain in this sector.
  • The Government intends for the new Strategy to focus on:
    • creating economic opportunities;
    • developing new sovereign capabilities and industries;
    • building reliable, competitive and diverse supply chains;
    • supporting clean energy technologies; and
    • supporting sustainable critical minerals development.
  • Given critical minerals will be a key focus for the Government over coming years, we expect critical minerals projects to receive significant funding and regulatory assistance. The Government is eager to partner with industry to both develop the new Strategy and to propel the development of the sector into a major source of economic and job growth for the country. Industry participants who actively engage with government stakeholders will derive the benefit of this governmental focus to obtain private investment, develop key technologies and progress their projects to commercial viability.
  • We therefore encourage stakeholders to provide written submissions in response to questions contained in the Discussion Paper relating to each of the above proposed foci, alongside general feedback related to the new Strategy and the sector more broadly. Submissions can be sent to until 3 February 2023.

Who in your organisation needs to know about this?

The board, management, and legal and commercial teams that either are stakeholders or have an interest in the mining-intensive nature of energy transition.

Details of the Australian Government's proposed new Critical Minerals Strategy

Background - the 'Australian Critical Minerals Strategy: Discussion Paper' 

On 2 December 2022, the Government released a discussion paper marking the launch of industry and community stakeholder consultation on the development of its new Strategy (Discussion Paper). The Discussion Paper outlines the Government's priorities for the development of the critical minerals sector, including the proposed policy settings to advance the sector's growth.

Despite Australia's critical minerals endowment, the new Strategy is being developed to address both the expected increase in domestic and global demand for critical minerals in the coming decades, and the considerable challenges that critical minerals projects may face, including:

  • complex mineralogy;
  • bespoke processing technology solutions;
  • substantial capital requirements to develop deposits located in remote areas; and
  • highly concentrated supply chains due to opaque markets with limited pricing data.

The Strategy is hence intended to add value to Australia's resources industry, grow our domestic downstream processing and manufacturing industries and support decarbonisation. It is also intended to complement other Government priorities, including: 

  • the $15 billion National Reconstruction Fund (NRF);
  • Powering Australia (including the National Electric Vehicle Strategy and Australia’s emissions reduction target);
  • the Australia Made Battery Plan; and
  • A Future Made in Australia.

The five areas of focus proposed to underpin the new Strategy, upon which the Government is seeking stakeholder input, are:

1. Creating economic opportunities 

The Government intends to create economic opportunity for both urban and regional Australia by leveraging Australia's existing resource endowments and capabilities to capture higher value-add activities in the supply chain. For example, downstream processing has been identified as a key area for sector expansion. It is also proposed to establish regional 'heavy industry' hubs in locations with a concentration of critical mineral reserves to capitalise on Australia's existing resources expertise and create highly skilled, well-paying jobs.

2. Developing new sovereign capabilities and industries

The Government proposes to help de-risk projects by accelerating private investment via various targeted initiatives, as well as providing equity and financing support to assist projects to achieve commercial viability.

The Government intends to build a 'sovereign industrial base' that will facilitate more advanced downstream critical mineral processing and the manufacturing of mid-stream and precursor products domestically. This expansion, in the context of the increasing global demand for critical minerals, is intended to embed Australian projects in existing and emerging supply chains and strengthen the resilience of Australia's domestic supply chains by minimising its overreliance on other nations.

To meet the Government's objectives of growing a sustainable domestic industry, it is considering how best to help progress critical mineral projects at all stages of development to commercial viability. Recognising the various financial and technical complexities faced by critical minerals projects that can be a barrier to investment, the Government proposes to help de-risk projects by accelerating private investment via various targeted initiatives, as well as providing equity and financing support to assist projects to achieve commercial viability.

Another key objective is to improve coordination between government, industry and academic R&D efforts to attract domestic and international investment for the development of processing technologies and to create new, world-leading intellectual property.

3. Building reliable, competitive and diverse supply chains

Increasing global demand for critical minerals requires supply chains that are stable and resilient which, in turn, necessitates diversification of these supply chains. Current concentration in the refining and processing end of critical minerals supply chains leaves them vulnerable to disruption, price volatility and bottle-necking.

The Government believes that by addressing the need for diversification in international critical minerals supply chains, specifically through collaboration with overseas partners, these supply-chain risks can be mitigated.

Emphasis is placed on partnerships with international governments and businesses for providing Australian critical minerals projects with access to global opportunities, which would contribute to more diverse, competitive and resilient supply chains. The Discussion Paper notes that Australia is part of numerous international critical minerals initiatives, which the Government hopes will drive the international demand for, and investment in, Australian critical mineral projects.

4. Supporting clean energy technologies 

By increasing Australia's refining and processing capabilities, the Government hopes to attract a significant pool of international investment in clean technologies to transform Australia into a 'clean energy superpower'.Renewable energy sources such as solar and offshore wind are significantly more critical-mineral intensive than their fossil fuel counterparts, meaning projected medium-term demand for critical minerals required to support the energy transition is expected to exceed supply from existing projects.

By increasing Australia's refining and processing capabilities, the Government hopes to attract a significant pool of international investment in clean technologies to transform Australia into a 'clean energy superpower'.

The Government also believes that proposed investment in domestic renewable energy sources will be able to produce the significant amounts of energy required to power critical minerals projects in a low-emissions manner and will further drive international investment in Australian projects.

5. Supporting sustainable critical minerals development 

With an increasing focus on the social licence to operate, maintaining international recognition of Australia's high ESG credentials is integral to Australia remaining an attractive destination for international investment and collaboration.

Governments and industry alike are placing greater emphasis on demonstrating their ESG credentials to the market to show they are ethical and sustainable producers of critical minerals. The Government has stated that effectively partnering with First Nations People, creating safe and inclusive workspaces and high standards of environmental protection will be key ESG objectives of the new Strategy.