The article provides an overview of the Mining Council of Australia's (MCA) Future Critical report 2023.
Australia is now grappling with an urgent challenge that could shape its economic future. As global markets shift towards cleaner energy solutions and high-tech industries, Australia's mineral resources have the potential to be a cornerstone of its prosperity. However, the nation's capacity to attract mining investment is at a crossroads, with rising costs, declining productivity, and increased policy risks casting shadows over its mineral-rich landscape.
A Call for Urgent Action
Recent findings by the Centre for International Economics and the Productivity Commission highlight the stark reality: Australia's labor productivity and investment are in decline, threatening its once-vibrant mining sector. A staggering 1.1% productivity growth across industries has halved since the Hawke-Keating reforms of the 1990s, contributing to stagnant investment in mining capital stock. The nation also contends with the third highest company income tax rate among OECD countries, eroding its competitive edge on the global stage.
Australia's Potential
Despite these challenges, Australia boasts enviable reserves of critical minerals, including nickel, zircon, rutile, uranium, gold, zinc, lithium, copper, bauxite, cobalt, tungsten, ilmenite, vanadium, and manganese. Geoscience Australia reveals that 80% of the nation remains under-explored, offering vast opportunities for new mineral discoveries. Moreover, the country is positioned as the world's leader in recoverable resources of several essential minerals.
Urgency and Investment Required
To meet the growing global demand for minerals-intensive electric vehicles and energy storage batteries, Australia must overcome the pressing need for more than 260 new mines by 2030. The International Energy Agency (IEA) projects that nickel, cobalt, copper, and lithium mines must significantly increase to satisfy this demand. The urgency of this situation calls for immediate action from both government and industry stakeholders.
Crucial Steps Ahead
To address these challenges and unlock Australia's mining potential, experts recommend five critical areas of focus:
- Deliver Efficient Public Infrastructure and Services: Clearing roadblocks and improving infrastructure is essential to attracting mining investment.
- Make Support for Mining a Political Imperative: A strong political commitment can foster a favorable investment environment.
- Put Business and Productivity at the Center of Fiscal Policy: A competitive tax structure and regulatory settings can enhance productivity and investment.
- Advance Policies that Support Competitive Project Returns: Policies should encourage and reward competitive returns for mining projects.
- Reduce the Regulatory Burden to Attract Investment: Streamlined regulations can make Australia a more attractive investment destination.
A Decisive Opportunity
Australia's prospects for sustained national prosperity are entwined with its ability to seize the moment. As the world rapidly shifts towards clean energy and advanced manufacturing, Australia's mineral resources could play a pivotal role. However, for this vision to materialise, urgent and well-calibrated actions are necessary. Government and industry must collaboratively address rising costs, declining productivity, stagnant investment, uncompetitive taxation, and policy risks. Only through these concerted efforts can Australia ensure its place as a leading force in the global mining landscape and reap the rewards of the next resources boom.
