{"id":78676,"date":"2023-03-31T11:30:51","date_gmt":"2023-03-31T00:30:51","guid":{"rendered":"https:\/\/www.aspistrategist.ru\/?p=78676"},"modified":"2023-06-13T15:24:50","modified_gmt":"2023-06-13T05:24:50","slug":"making-the-most-of-australias-endowment-of-critical-minerals","status":"publish","type":"post","link":"https:\/\/www.aspistrategist.ru\/making-the-most-of-australias-endowment-of-critical-minerals\/","title":{"rendered":"Making the most of Australia\u2019s endowment of critical minerals"},"content":{"rendered":"
<\/figure>\n

The geostrategic scramble to reduce supply-chain dependencies for critical minerals has overshadowed opportunities for Australia to use its resources to provide major benefits for the nation. There are clear and achievable pathways for downstream processing of critical minerals to contribute substantially to meeting Australia\u2019s aspirations for net-zero emissions<\/a>.<\/p>\n

As it stands, Australia\u2019s critical minerals sector is shaping as a primary exporter of insignificant scale. \u2018Dig and ship\u2019 remains the path of least resistance, and extracted volumes, actual and forecast, won\u2019t make a meaningful imprint on the balance of payments. While some work is being done to change this, it\u2019s mainly at the start of the value chain. The travails<\/a> that Lynas Rare Earths is experiencing in relocating its processing capability from Malaysia illustrate the challenges Australia faces in developing downstream processing.<\/p>\n

There\u2019s no shortage of ambition, however. The Export Finance Agency\u2019s $1.25 billion loan<\/a> to Iluka Resources to construct a rare-earths refinery at Eneabba in Western Australia marked a renaissance of interventionist industry policy. The decision raised eyebrows in industry and project-finance circles: private capital markets were seen as capable of facilitating a well-established player and the government had until then been broadly averse to picking winners.<\/p>\n

The Labor government\u2019s October budget earmarked major initiatives, including significantly increased funding for the Northern Australia Infrastructure Facility and the creation of a \u2018value-adding in resources fund\u2019 as part of the $15 billion National Reconstruction Fund. The 2022 critical minerals strategy<\/a>, developed by the previous government, established a $200 million accelerator initiative and provided $50 million over three years for a virtual research and development centre.<\/p>\n

A refresh of the minerals strategy is underway<\/a> that aims to tie these efforts together. The discussion paper released last year by the Critical Minerals Office, while heavily informed by the strategic direction of the US, did a good job of identifying national priorities and outlining the challenges confronting the sector. Its central goal is to move Australia beyond its role as a feedstock for trusted partners that have become deeply dependent on China and Russia.<\/p>\n

The government\u2019s agenda for rare earths and critical minerals is being repositioned as part of the transition to clean energy, rather than simply a by-product of fractured global supply chains. Facilitating the electric vehicle revolution via offtake agreements for lithium and rare-earth elements used in batteries has a desirable green tinge. Yet the themes behind this shift go further back, running through the West\u2019s rejection of Huawei\u2019s 5G network, the Donald Trump administration\u2019s \u2018America first\u2019 platform, the rise in nationalism during the pandemic, and Russia\u2019s invasion of Ukraine.<\/p>\n

This is where clear eyes and steady hands are required, as risks of unilateralism abound. The US Department of Energy\u2019s 2021 strategy<\/a> to support domestic critical mineral supply chains is an exemplar of strategic coordination across government, industry and research. It clearly defined the US national interest and served as a precursor to the vast subsidies provided under the Infrastructure Investment and Jobs Act and the Inflation Reduction Act. Those policies directly challenge Australia\u2019s economic interests and are a salient reminder of the need to build productive capabilities that can both complement and compete with US companies.<\/p>\n

Concurrently, significant pressure is being applied on Australian companies to sell directly to the critical minerals buyers\u2019 club that\u2019s emerging in the West. The message is that building reliable, competitive and diverse supply chains means not exporting to China. This represents a de facto limitation on access to Australia\u2019s largest trading partner. It heralds a third phase of the post-war trading system and warrants close attention.<\/p>\n

In the first phase, directly following World War II, the global industrial base centred on the modular design of multinational corporations. Efficiencies were extracted through deep integration across countries and trading blocs, scaling the factors of production, and exerting direct influence over standard setting. The economic and legal landscape reflected US hegemonic leadership and the West\u2019s design of multilateral organisations and frameworks.<\/p>\n

The resulting surge in purchasing power, particularly in the East, along with a series of financial and banking crises, dimmed the appeal of modular design and paved the way for a second phase of complex vertical interdependence. Interdependence allows corporations to understand and be drivers of the values and concerns of governments, stakeholders and shareholders. The range of concerns has broadened significantly to include the sustainability agenda.<\/p>\n

The third phase seeks to delimit globalisation, if not interdependence, by imposing barriers to trade and capital mobility, principally based on national security and supply-chain sovereignty. Australia\u2019s comparative advantages\u2014abundant critical minerals, industrial capability, jurisdictional stability, robust capital markets and close proximity to the Indo-Pacific\u2014are effectively harnessed by trusted partners.<\/p>\n

Only time will tell how this grand experiment plays out. For now, there are two initiatives that Australia can and should embrace that are agnostic to the rapidly shifting global landscape.<\/p>\n

First, a sober reassessment is required of the state of Australia\u2019s critical minerals expertise and research and development capacity. Levels of know-how and intellectual property are relative weaknesses, not the strengths often advertised. R&D in Australia has been trending down for decades, including at the CSIRO, the national scientific research agency. Brain drain has contributed to the broader decay, as have disparate incentive structures between research and industry.<\/p>\n

Breaking down these silos and promoting alignment is a critical interim objective. R&D is where Canberra can have the most impact per dollar spent, while remaining technology-neutral and avoiding the pitfalls of corporate welfare.<\/p>\n

Second, where sovereign capabilities can be defined, scaled and deployed locally, they should be facilitated and even championed. Look to Darwin\u2019s Middle Arm Sustainable Development Precinct, which is shaping as Australia\u2019s most strategically important industrial zone. Supported by billions of dollars of federal funding and neighbouring key defence capabilities, the precinct is a critical gateway for landlocked Northern Territory industries and an opportunity for common-use infrastructure to be designed and optimised at scale. It\u2019s also a test for the NT government in terms of implementation amid high community expectations, particularly in relation to the energy transition and inclusion of First Nations peoples.<\/p>\n

The Middle Arm precinct is set to emerge as the starting point for the nationwide deployment of large-scale solar resources and highly engineered water infrastructure. This, along with the proximity of a large, urbanised workforce, will facilitate the emergence of new industries that will certainly involve critical minerals.<\/p>\n

My company, Tivan Limited, plans to produce two critical minerals, vanadium pentoxide and titanium dioxide, at Middle Arm, using technology developed in conjunction with the CSIRO. Tivan\u2019s Speewah resource<\/a> in Western Australia has the potential to produce more than half of the global vanadium supply outside China and Russia, with a project life in the hundreds of years.<\/p>\n

The project is sufficient to develop a large-scale, modular vanadium redox flow battery<\/a> (VRFB) sector in Australia to progressively transition industrial facilities, towns and cities from coal and gas as primary sources of electricity. These sources represent around one-third of Australia\u2019s carbon emissions, so abatement can make a significant contribution to reaching net zero.<\/p>\n

While the consolidated efforts of government, industry, research and community will be required to ensure cost-competitiveness in the emerging grid battery sector, there\u2019s no engineering or know-how constraint. We continue to collaborate with the CSIRO in the field of critical minerals processing, and the original patent for VRFB was secured by the University of New South Wales in 1986. The VRFB sector is now taking shape rapidly in China, reflecting the technology\u2019s superiority for long-duration grid storage compared to lithium-based alternatives and pumped hydro.<\/p>\n

ASPI\u2019s upcoming Darwin Dialogue is a welcome opportunity to introduce key stakeholders to these initiatives and to highlight Australia\u2019s capabilities in defining projects that are unambiguously in the national interest, central to the climate transition, and entirely sovereign in design and capability.<\/p>\n

On 12\u201314 April, ASPI, with the Northern Territory government\u2019s \u2018Investment Territory\u2019 program, will host the inaugural\u00a0<\/em>Darwin Dialogue<\/em><\/a>. The 1.5 track dialogue will bring together government, industry and academia representatives, including delegations from Japan and the United States, to discuss establishing secure supply and value chains for mining, processing and refining critical minerals outside China.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

The geostrategic scramble to reduce supply-chain dependencies for critical minerals has overshadowed opportunities for Australia to use its resources to provide major benefits for the nation. There are clear and achievable pathways for downstream processing …<\/p>\n","protected":false},"author":1695,"featured_media":78678,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_mi_skip_tracking":false,"footnotes":""},"categories":[1],"tags":[3479,2619,2464,2750,332],"class_list":["post-78676","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","tag-critical-minerals","tag-rare-earths","tag-renewable-energy","tag-supply-chain","tag-technology","dinkus-darwin-dialogue"],"acf":[],"yoast_head":"\nMaking the most of Australia\u2019s endowment of critical minerals | The Strategist<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.aspistrategist.ru\/making-the-most-of-australias-endowment-of-critical-minerals\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Making the most of Australia\u2019s endowment of critical minerals | The Strategist\" \/>\n<meta property=\"og:description\" content=\"The geostrategic scramble to reduce supply-chain dependencies for critical minerals has overshadowed opportunities for Australia to use its resources to provide major benefits for the nation. 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