Australia, like Canada, is well placed to be a global leader in the critical minerals sector. Our nation has the natural endowment, technical expertise and experience, global mining footprint, and mining capital base to back a claim to worldwide leadership. 

As advanced industrialised nations seek to diversify and strengthen supply chains for critical minerals, they need a well-coordinated, harmonised system that exploits market dynamics and targeted government intervention. Instead, critical minerals lists and strategies vary widely between nations, while a plethora of disconnected international agreements challenge coordination of development of new supply chains. 

Australia could well be key in resolving this challenge, if it can facilitate better international, domestic, governmental and private-public cooperation. 

A new ASPI Special Report, Reclaiming leadership: Australia and the global critical minerals race ^[1], finds that a tangled web of actions by like-minded producer and consumer nations, designed to facilitate new, secure and sustainable supply chains for critical minerals, threatens to fragment global efforts. 

Further, while Australia has become a party to many agreements and processes involving critical minerals supply chains, it has not yet shown how it will work beyond its shores with partner nations to develop a global network of supply chains involving other mineral producer countries as well as itself. Its current Critical Minerals Strategy ^[2] focusses only on domestic production for supplying customer nations. 

Critical minerals ^[3] are those which are essential to the global energy transition, high technology and defence and for which supply is at risk of disruption. Supply risk stems from the concentration of mining and processing of many critical minerals in the hands of just a few nations. This exposes supply chains to natural disasters, civil strife, regional conflict and withholding of sales for geopolitical reasons. 

New sources of production and processing, linked to customer nations by secure and sustainable supply chains, are needed to meet demand ^[4], particularly in industrialised economies such as the United States, Japan, Korea, Britain and European Union members. 

Analysis of lists of minerals deemed ‘critical’ by major consumer nations and by Canada and Australia, the two major suppliers apart from China, reveals fragmented classifications. Among more than 50 minerals that the countries variously identify as critical, only 13 are classified as such by all of them. 

Harmonisation of the disparate lists of minerals deemed critical is needed to provide the basis for more coordinated efforts to develop new supply chains. 

The main consumer countries plus Australia and Canada have concluded a web of agreements aimed at building new supply chains based in their own territory or in mineral-rich developing countries. For example, the US-led Minerals Security Partnership is resulting in new supply chains from Australia to the US as well as from others, including African countries. Australia’s role is to lend governance expertise and encourage investment to underpin sustainable production in third countries. Other agreements are similar. 

Most of the agreements have a common aim: to diversify and secure supply chains and ensure their sustainability from environmental, social and economic perspectives. 

But the sheer number of agreements and their tendency to compete with each other inhibits achievement of the objective. This seems to have been driven by geopolitical desires to sign agreements rather than getting on with implementation. 

Ideally, international agreements should be rationalised by number and content, with the aim of reducing complexity and achieving greater commonality and unity of purpose. 

In any case, the focus should be on practical collaboration to facilitate private sector investment in exploration and mining, and in particular, construction of additional processing capacity to reduce dependency on China and to develop more diverse, secure and sustainable supply chains. 

The Australian government and associated entities have signed on to 25 international agreements and processes. A 26th is now in negotiation with the European Union. Implementation of and compliance with this number of agreements will be very challenging for the government. Improbably, 16 of Australia’s critical minerals agreements involve the United States. While rationalisation of agreements may not be possible, a single Australian strategy to implement them is essential. 

Australia is well placed to expand its role as one of the major producers of critical minerals, with its world-leading minerals endowment and strong credentials in environmental, social and governance (ESG) processes. The Australian government’s participation in so many critical minerals agreements and processes shows it is enthusiastically pursuing opportunities for exports and inward investment. It and most state governments are encouraging domestic critical minerals exploration, mining and processing, with incentives including financial support. 

Australia’s influence over critical minerals supply chains extends well beyond its borders, however. While it hosts the largest critical minerals industry of any nation apart from China, companies based in Australia or listed on its stock exchange have a huge global footprint. S&P Global data ^[5] shows their 2023 critical minerals exploration expenditure outside Australia totalled US$739 million, more than double what they spent in Australia. Of 109 critical minerals mining and processing operations owned by Australian companies, nearly half are outside Australia. 

This footprint reflects the technology, skill and experience deployed by Australian explorers and miners, which enable them to succeed in all operating environments, including those that are particularly challenging in terms of geology, governance and social and environmental impacts. 

The Australian government should ensure it has a clear picture of the activities of Australian minerals companies’ operations overseas and their success factors. It should formulate strategies to encourage their investment in other nations and contribute to global supply chains. 

At least 12 of the agreements to which Australia is party include commitments to work with partners to develop a matrix of supply chains involving both developed nations like Australia and mineral-rich developing nations such as in Africa and Latin America. The object is to secure a reliable and sustainable stream of critical minerals to customer Australia’s strategic partnersnations. 

Australia’s worldwide footprint, ESG record and international agreements create both an opportunity and an obligation to extend its critical minerals strategy to include facilitation of global supply chains.  

Its Critical Minerals Strategy therefore should be revised to reflect the commitments it has made, encourage overseas investment by its companies, and set out domestic and international strategies and actions for achieving global supply chain objectives. 

Common to most international agreements is the objective to make new, more diverse supply chains sustainable and hence more secure. This means ensuring that new supplier nations, many of which are developing countries, have the capacity to govern mineral production soundly and ensure high ESG performance. Many agreements therefore include commitments by developed producer and consumer nations to provide technical support and capacity-building in governance.   

To provide quality control, however, supply chain partners should develop common sustainability and security standards and establish auditable certification for partner nations and corporate suppliers. 

How Australia responds to these leadership imperatives in critical minerals will not only determine economic benefits to the nation but will also impact the world’s ability to achieve the minerals security and the sustainability required for the global energy transition and inclusive economic growth.