Canada and Australia are key players in the global supply chain for critical minerals. Simultaneously the top two nations for receiving minerals investment and for providing minerals investment, they are perfectly placed to use critical minerals to facilitate the global energy transition, foster innovation and build their security capabilities.

Accordingly, both have released critical minerals strategies in the past year. They have also concluded agreements with each other and other like-minded jurisdictions, including the US, EU and UK, to cooperate in the development of robust critical-mineral supply chains.

Australia’s strategy ^[1], released in June 2023, is similar in most respects to its Canadian counterpart ^[2], released in December 2022.

Both adopt supply-chain approaches, but Canberra’s strategy is focused exclusively on Australia providing upstream components like exploration, drilling and extraction. Only the discussion of downstream elements, such as processing, is partner oriented.

Ottawa, on the other hand, takes a global view of the upstream and downstream components of supply chains, and considers Canada’s role throughout. It wants to develop supply chains from within Canada that connect to friendly economies, but also support sustainable supply chains that originate in other nations.

The Canadian strategy is consistent with the government’s longstanding view of the mining industry comprising activity within Canada’s borders as well as that of Canadian companies abroad.

The S&P Global database ^[3] reveals that Canada ranks first in the world in exploration investment for all minerals, and 57% of that investment in 2022 ($7.9 billion) was spent outside Canada. This gives Canada a huge influence over the discovery and development of critical minerals worldwide. Its 2019 minerals and metals plan ^[4] acknowledges this by naming ‘global leadership’ as one of its six strategic directions, and both it and the 2022 critical minerals strategy emphasise Canadian mining as leading sustainable development in minerals overseas, notably in developing economies.

Despite being the second largest global investor in exploration, Australia has taken an inward-looking approach. This is at odds with the global profile of the Australian minerals sector, which has large investments and extensive activities on every inhabited continent.

Of the 1,151 Australian exploration and mining companies identified by S&P Global, 856 operate in Australia and 428 operate in other parts of the world. Some operate in both. In 2022, more than a third of their combined $4.7 billion exploration budgets was spent outside Australia.

These companies operate 2,861 projects around the world: 1,953 in Australia and 908 overseas. Of these projects, 444 involving 282 companies have critical minerals as their primary commodities, with 241 such projects based in Australia and 203 outside Australia.

The reserves of critical minerals identified by these operations so far are valued at $1.815 trillion, $949 billion of which is in Australia and $866 billion outside Australia.

To October 2023, capital expenditure in Australian-operated critical minerals projects totalled $32 billion in Australia and $45 billion in other countries.

With such a massive stake in critical minerals, Australia needs to diversify from its domestic focus and adopt a truly global supply-chain strategy for critical minerals. One of its strategy’s objectives is to ‘create diverse, resilient and sustainable supply chains through strong and secure international partnerships’ and Australia’s critical minerals investment data makes a compelling case for greater collaboration, including upstream in other mineral-producer nations.

Australia’s allies are being sold short by its inward focus. This could be a missed opportunity to leverage formidable Australian investment, expertise and technology globally.

Like Canada, Australia has a responsibility to help developing countries apply strong sustainability frameworks to their production of critical minerals. Australian industry is being let down by poor government recognition of, and support for, its truly global reach.

This narrow view is not a new phenomenon. It has persisted under successive Australian governments, which until recent years didn’t even have a detailed picture of Australia’s global investment profile across all sectors, including mining. With incomplete information, governments focused almost exclusively on inward investment.

The exception was a period during the Rudd and Gillard governments in the early 2010s, when Australia expanded its economic diplomacy in Africa, Latin America and Asia. It focused on minerals-related trade and investment and supporting sound governance in these regions.

In fact, Australia has long used its aid program to quietly support developing countries to build their capacity to attract minerals investment and responsibly govern exploration and development. Australia recently provided funding to ASEAN nations to review their minerals cooperation action plan, and the Australian high commission in Ghana convened a mine security conference in September to help mining operations in western Africa meet emerging threats. And Australia has committed to working with other supplier nations in regions like Africa under the US-led minerals security partnership ^[5], which it joined in 2022.

Building on work like this, Australia should take a global view of minerals investment. It can invest in supplying critical minerals to like-minded nations while still supporting the sustainable development of these minerals in emerging economies.

Despite Australia’s short-sightedness, there’s much to recommend in both the Australian and Canadian strategies. Both strategies:

• emphasise the role each economy can play in creating more diverse and robust global supply chains
• prioritise developing their northern regions, which host much of their critical minerals
• recognise the need to build infrastructure that unlocks opportunities for minerals development, particularly in remote areas
• acknowledge that the participation of land-connected Indigenous peoples is necessary
• note that a larger and more diverse skilled workforce is needed to support growth
• detail the strong environmental, social and governance frameworks required to develop critical minerals with minimal footprint.

To add to these strengths, Australia should support the discovery and development of critical minerals deposits by Australian companies wherever they operate. This will nurture global supply chains between supplier, intermediate and customer economies, and make a much greater contribution to the global energy transition and security than taking a narrow, Australia-only upstream approach.