On November 25, 2022, the Australian partnered with PricewaterhouseCoopers (PwC) to present the Critical Minerals Summit, aimed at answering questions about how Australia will make the most of its unique, valuable, and plentiful reserves of critical minerals to accelerate the energy transition and supercharge the economy.
However, the summit – featuring Treasurer Jim Chalmers and Madeleine King, the Minister for Resources and Minister for Northern Australia – rehashed the same points that have been repeated ad nauseam regarding the renewable scenario, with next to no mention made of the funding required to help achieve these goals.
The funding toward projects that was mentioned illustrates only the minuscule efforts the Australian government has so far made in comparison to the global leaders in this field, the U.S. in particular.
Over the last few years, basically every type of investor from fund managers down to Mums and Dads have become very familiar with the concept of the growth of EV sales and the components involved in their manufacture. Most people are also well aware of China’s dominance of the supply chains for these key components – especially lithium, but also rare earths, nickel and graphite.
And yet, rather than breaking any new ground, both Mr. Chalmers and Ms. King instead chose to walk a well-worn path by echoing these points and rattling off the various all-too-familiar statistics concerning this surge, all the while pushing the big picture narrative of how Australia can be a “clean energy superpower,” thanks to its “mining industry with some of the world’s most talented people,” as Mr. Chalmers described it.
Let’s be clear here, it’s not for a want of ideas this country’s progress is being held back. That is obvious from the new Critical Minerals Strategy Ms. King laid out, which aims to:
- Create economic opportunity – including for regional Australian communities;
- Develop new sovereign capabilities and industries – including growing our downstream processing and manufacturing capacity;
- Build reliable, competitive and diverse supply chains – including through international partnerships and investment;
- Support clean energy technologies and
- Ensure high environmental, social and governance credentials, including genuine partnership with First Nations Australians.
What is lacking, however, are some concrete statements from those responsible as to how this or any other strategy is to be implemented and, above all, paid for. A definitive timeline and solid funding mechanisms will go a long way to convincing people that Australia is taking the necessary steps to achieve its net zero goals and keeping up with other leading nations in this regard.
Take the US, by way of example.
Last month, the Biden administration awarded US$2.8 billion in grants to 20 companies to produce EV batteries within the United States. The funding helped to domestically produce battery-grade materials including lithium, graphite, and nickel.
This comes a part of the mammoth US$1.2 trillion Bipartisan Infrastructure Law, which aims to rebuild America’s roads, bridges, and rails, expand access to clean drinking water, ensure every American has access to high-speed internet, tackle the climate crisis, advance environmental justice, and invest in communities that have too often been left behind.
The new spending legislation would allocate more than $550 billion to help transform the U.S.’s current supply of energy to renewable sources, whilst shifting to a network of electric powered vehicles, in the form of cars, buses and ferries.
By enacting this into law in November 2021, the U.S. made a bold statement that is serious about achieving its net zero goals and effecting the energy transition in a timely and orderly manner.
In comparison, we were told on Friday that Australia has contributed $A50 million to set up a new Research and Development Hub, with another $A50 million set aside in the new budget for grants to help early- and mid‑stage projects get up and running.
Even taking into the consideration the vast and undeniable difference in financial capability between the two countries, this amount is microscopic to the point of being embarrassing, especially when Australia and the U.S. both have the same ideological desire to shift from Chinese supply chains in as rapid a fashion as possible.
Whilst the Albanese government has announced that they will be investing A$2 billion for the Northern Australia Infrastructure Facility (NAIF) to support the Government’s regional and Northern Australia agendas, it is unclear at present how much of that funding will actually go toward renewable energy and critical minerals
On a more positive note, Ms. King mentioned that she had signed a critical minerals partnership with Japan’s Ministry of Economy, Trade, and Investment. The partnership will be able to facilitate Japanese investment in Australian projects to support the further development of the domestic critical minerals sector while securing the supply needed for its advanced manufacturing industries.
This is definitely a step in the right direction, allowing for more avenues for funding and a clearer path to reduce dependency from China to diversify supply chains.
The big takeaway from last week’s summit is that, if the Albanese government is serious about creating a critical minerals supply chain, then they need to act quickly and provide further clarity to the companies seeking funding. Once a transparent and clear pathway to funding can be established, beyond just the rhetoric, then Australia might just have the ingenuity and wherewithal to play its part in supplying the world with critical minerals. Actually deliver, rather than simply promise to.
