The global energy transition will rely heavily on critical minerals for the development and widespread adoption of renewable energy technologies, electric vehicles, and energy storage systems. As the world moves towards a low-carbon economy, this means the demand for critical minerals will rise, creating opportunities for Australia's mining sector to contribute to the energy transition while supporting economic growth and job creation.

The scale of these opportunities is reflected in the Australian Government's publication of the 2023-2030 Critical Minerals Strategy that sets out its objectives, priorities and principles for the development of a national critical minerals industry. The aims of the Strategy include to build international partnerships to facilitate the supply of critical minerals to global markets, develop a sovereign critical mineral processing capability, and create economic opportunities from critical minerals extraction and processing.

Following on from several sessions on critical minerals at IMARC 2023, of which MinterEllison was Legal Partner, we ask Josh Dellios about the potential for critical minerals in Australia and what is required to achieve that potential, including the barriers that must be overcome.

Is Australia positioned to become a global leader in producing critical minerals like it has been for raw primary minerals?

Australia has one of the world's largest critical minerals deposits and is already the world's largest producer of lithium, third largest producer of cobalt, and fourth largest producer of rare earths. In addition to its abundant resources, Australia's pipeline of numerous energy developments and projects, established mining industry, strong trade relationships, and relatively developed ESG standards means it is well placed to be a global leader in the critical minerals sector. In the short to medium-term, customers for critical minerals mined in Australia will likely include countries with growing renewable energy and high-tech industries, such as the USA, European nations, and Asian markets. In addition, as Australia progresses with its own energy transition, there will be a domestic demand for these minerals.

What will be required to achieve this leadership?

A competitive edge is required to achieve this leadership as other countries, including China, the USA, and Canada, are significant competitors in the critical minerals exploration and production market. China currently has a strong position across the global supply chain, while the USA and Canada are actively investing in their critical minerals sectors to reduce dependence on foreign sources. The most notable reform was the United States' Inflation Reduction Act 2022 which has set aside AUD$520 billion for decarbonisation and clean energy investments and has the potential to lure global capital, resources and talent. Achieving that competitive edge in the international market will require:

• Strategic investments - A significant investment in new capital and workforce training will be necessary to facilitate Australia's pivot to critical minerals. This includes upgrading infrastructure, adopting new technologies, and developing targeted skills programs to ensure a skilled and knowledgeable workforce capable of meeting the unique demands and challenges of the critical minerals sector.
• A favourable legislative environment - To facilitate investment in critical minerals, Australia may need to review and amend existing legislation to create a more favourable environment for exploration, development, and production. This could include streamlining regulatory processes, offering incentives for investment, and promoting collaboration between the public and private sectors to ensure the growth and competitiveness of the critical minerals sector.
• Policy support - The Australian Government should configure its policy settings in ways that allow domestic industries to benefit from, and remain competitive in response to, international regulatory changes. An example of such an initiative is the Climate, Critical Minerals and Clean Energy Transformation Compact (Compact), which in May 2023 established clean energy and a shared industrial base as the third pillar of the US-Australia alliance. The US National Security Council and the Australian Department of Industry, Science and Resources are scheduled to finalise practical measures of the Compact, which could be used to position Australia as a key supplier of critical minerals to meet the USA's legislated energy project ambitions.

What barriers are there to critical minerals exploration and mining in Australia?

For Australia to achieve its critical minerals ambitions, there are barriers to overcome. Examples of some of the barriers to critical minerals exploration and mining in Australia, and approaches that may help overcome them, include:

• complex regulatory processes, which would benefit from streamlined regulations
• limited infrastructure and high capital costs, which indicates a need for targeted investments in infrastructure development
• the need for advanced technologies to process and extract these minerals efficiently, which would benefit from collaborative efforts among industry, government, and research institutions

While these barriers share some similarities with those in the iron and coal industries, such as regulatory processes and infrastructure requirements, they are exacerbated by critical minerals often requiring more specialised extraction and processing techniques, as well as a higher level of expertise in handling the unique environmental and social impacts associated with their development.

The Australian mining industry has the potential for leadership in critical minerals, leveraging its extensive experience, skilled workforce, and advanced technologies. However, achieving this potential will require targeted investments, research and development, and collaboration between industry, government, and research institutions to navigate the unique challenges and opportunities presented by the critical minerals sector successfully.

Contact us to discuss how your mining company might navigate the challenges to realise critical minerals opportunities in Australia.