• Submissions

Submission to Australia’s Critical Minerals Strategy: Discussion Paper

The world must undergo an extraordinary deployment of clean energy technologies to achieve global net zero emissions by 2050, along with a massive increase in global production of the material inputs required to manufacture the necessary technologies and infrastructure.

With faster and more streamlined approvals and cheaper energy, the economic opportunity critical minerals present for Australia is significant. Global mining investment is expected to increase by US$100 billion annually from current levels to produce the mineral commodities required for the world to achieve net-zero emissions by 2050.1 This equates to about A$4 trillion of investment required between now and 2050.

Australia is fortunate to have the mineral resources, stable political system, world leading exploration geoscience and environmental management systems needed to meet the growing global demand for critical minerals, including mineral fertilisers and minerals at risk of longer-term supply disruptions. However, unless the Australian Government puts business growth and investment at the centre of its policy making these attributes are not enough to seize the opportunity before us.

Mining investment cannot be taken for granted in the face of strong and growing competition from other countries. And yet, without investment in mining and early stage processing there will be no opportunity for mid-stage and end stage manufacturing in Australia.

The Australian Government has a clear role in providing policy settings that improve investment conditions for mining in general – and critical minerals in particular – if Australia is to successfully attract the capital and technology needed to capture this opportunity and support long-term industry growth and job creation.

That will require a sophisticated and integrated approach to national and international economic policy. It will require the development of more strategic and economic partnerships that go well beyond free trade agreements and establish mutually supportive domestic policy settings between Australia and its key partners – policy settings that integrate the supply chains for the minerals and manufactures needed by our separate economies. Technology transfer from the USA to Australia is the reason we have an aluminium industry today. Policies, such as the USA’s Inflation Reduction Act (IRA) should preference investment in and technology transfer to Australian mining, minerals processing and manufacturing.

The Government should, as a priority, work with its international partners (for example the USA, Japan, South Korea, India, UK and Europe) to establish preferential policy linkages supporting the investment capital, sharing of intellectual property and technology, and the reliable and secure supply of minerals and their manufacture.

However, to successfully establish our mining and manufacturing future we must also look at our domestic policy and regulatory settings. We also need to be competitive as a destination for capital. Our ability to attract the necessary capital and become the lead global supplier of processed critical minerals and metals and their manufacture means we need to find ways to remove our economic and policy friction points and infrastructure inefficiencies that drag on our economic objectives. We need to drive a domestic economic policy realignment that delivers reliable and affordable energy, skills, technology and infrastructure.

Australia is an expensive place to do business. We have a high-cost business environment relative to our competitors in the minerals sector: with a high cost energy and transport infrastructure, chemicals and other inputs, skilled labour, land, transport, tax rates and high costs associated with regulatory processes and approval delays.

There is an opportunity for Australian federal and state governments to work together and bring a co-ordinated strategic approach to common infrastructure planning and investment. The opportunity is to significantly reduce unit costs by identifying and harnessing economies of scale and scope in energy, transport and other input industries for mining, processing and manufacture.

Precincts or hubs that deliver economies of scale and scope could significantly reduce the cost differential across the range of minerals needed for the transition to net zero. Copper, fundamental to electrification and the pathway to net zero by 2050 is not considered a critical mineral despite its predicted short supply globally.

Domestic policy settings and policy stability are also of critical importance to Australia’s capacity to attract multi-billion dollar capital investments into mining, processing and manufacturing projects. Currently there are significant policy and regulatory disconnects and differences between federal, state and territory governments that create frictions and inconsistencies, driving up costs, adding delays or worse, driving onshore processing offshore.

Co-ordinated and consistent economic policy and regulation is a priority. The Australian government must work with the states and territories to undertake a strategic review and regulatory-policy map that identifies and removes inconsistencies and conflicts and develops a roadmap to policy and regulatory coordination. The current national hydrogen regulatory review coordinated across the commonwealth, state and territory governments through the Energy and Climate Change Ministers Forum provides an excellent example of how such a review should be progressed for mining, minerals processing and manufacture.

Australia’s potential to develop its critical mineral industry is only limited by its ambition, which must be supported by tangible and targeted policies to attract investment.

Read the full submission

MCA Submission to Australia’s Critical Minerals Strategy – 17 Feb 2023