Australia's endowment of natural resources puts it in a phenomenal position to play a pivotal role in the future of energy transition. Mining, particularly of critical minerals, is going to be an enormous part of that transition.”
Bryn Davis, MinterEllison partner
The panel followed the release of the report, Supply chain solutions for critical minerals, which arose from MinterEllison's workshop series with Austrade, Monash University and the Australia India Chamber of Commerce. The workshop brought together experts to explore the challenges and opportunities for cross regional partnerships and projects across the critical minerals supply chain.
In this article, we reflect on some key points raised during the panel discussion about the regulation of foreign investment in critical minerals in Australia, which contributes to these supply chain challenges.
The foreign investment regulatory regime is a small yet important part of the sovereign risk equation for foreign investors looking to invest in Australia. In recent years, the constantly changing regulatory environment has influenced investors' perception of the sovereign risk associated with investing in Australia. For example, the foreign investment regime in Australia has been rewritten two to three times, there have been regular changes in the thresholds at which approvals are required, national security regimes have been introduced and application fees introduced and increased.
If there's one thing that has been certain in the foreign investment space in the last decade, it's been change. The greater the predictability that we can give the market, the greater the confidence that investors will have to make significant investments in long term mining projects.”
Bryn Davis, MinterEllison partner
Australia is competing with other jurisdictions for investment in the mining sector. Investment decisions are often made within a short time frame. While FIRB has taken large strides in recent years to provide a comprehensive regime and guidance, there remains a perception that the FIRB process is time consuming and unpredictable. Specific guidance regarding those areas perceived to be particularly sensitive (such as critical minerals), and timely decision making, will be important for ensuring that foreign investors continue to see Australia as an attractive destination for capital.
Given the significance of critical minerals, and the complexity of the national interest issues behind investments in critical minerals, it seems like we are unlikely to see much more guidance than what we have now. This makes it even more important that investors have assessed the FIRB risk as early as possible in relation to these kinds of investments, and factored this regime into their investment structures and timetable.
