The Treasurer of Australia has released the Intergenerational Report 2023, which declares that the global demand for critical minerals needs to increase by up to 350 per cent by 2040 for the world to reach net zero emissions by 2050.
The report also says that while the global net zero transformation is expected to drive changes in the structure of Australia’s economy that will be challenging, it will also create growth opportunities in existing and new industries.
Australia is in a strong position to benefit from these opportunities, with some of the world’s largest reserves of critical minerals such as lithium, cobalt and rare earth elements, which are key inputs to clean energy technologies.
Overall, the report expects the mix of resources produced by Australia’s mining sector to change significantly. In export-oriented sectors like mining, the pace of change will be significantly influenced by the pace of emissions reduction and economic transformation undertaken by the rest of the world.
The report also states that Australia has moderate-to-high potential for more undiscovered critical minerals, with well-established mining regions covering just 20 per cent of Australia, and the remaining 80 per cent largely under-explored.
Global demand for Australian thermal coal exports are expected to decline as trading partners move toward net zero emissions. However, Australia’s extensive critical minerals reserves, in combination with traditional strengths such as iron and aluminium, are some of the essential ingredients in global emissions reduction as inputs for electric vehicles, batteries and renewable energy generation technologies.
Australia’s many critical minerals – lithium, cobalt, manganese, rare earth elements, etc. – are crucial for a number of emerging renewables technologies, such as battery manufacturing and permanent magnets used in wind turbines and electric vehicle motors.
Additionally many Australian minerals are critical in defence, aerospace, automotive manufacturing, telecommunications and agricultural technology.
As such, the report says that substantial growth is projected in minerals, including critical minerals, that are essential to the net zero transformation, such as lithium, nickel, copper, zinc and bauxite.
Australia is already the world’s largest producer of lithium (spodumene concentrate) and is well placed to meet future global demand for lithium. The report projects that Australia’s export volumes of spodumene concentrate will double over the next five years from 2022, while nickel export volumes are projected to grow by 50 per cent.
The report says that Australia’s industrial response could harness mineral reserves and abundant sources of renewable energy to supply critical minerals, hydrogen and green metals needed for modern, sustainable economies and to materially affect global climate trajectories.
The Australian critical minerals industry has the potential to scale up and meet a significant share of this anticipated demand, and Australia has the abundance of resources, established industry, technical expertise and track record as a stable, reliable and responsible supplier to support the level of investment required.
Industry response
A statement released by The Minerals Council of Australia (MCA) in response to the report said that there is no doubt Australia is well placed to capitalise on this once-in-a-generation mining boom, and that it has the potential to underpin the nation’s prosperity for decades to come.
“We have the critical minerals, we have the expertise and we have the ingenuity to lead the world through this trillion-dollar mining boom, as the world transitions to a clean energy economy, and develops new technologies,” the statement said.
“But there are no certainties, and no inevitability. The risks of Australia missing the boat are increasing by the day. Our global competitors are already stealing a march, attracting investment, opening up opportunities, and unleashing business to lead the charge.”
The statement said that Australia has become a more difficult place to do business, and a riskier place to invest because of higher costs, long approval delays, and repeated interventions by governments.
“We may have some of the biggest deposits of critical minerals than anywhere in the world, but to develop those opportunities requires enabling policy settings that attract investment and build confidence.
“Otherwise our wealth of critical minerals is at risk of remaining in the ground, as miners pursue options elsewhere, as some of our biggest miners are beginning to foreshadow.”
The MCA statement said that greater investment uncertainty, exhaustive delays in environmental approvals and the proposed introduction of rigid and costly industrial relations laws are combining to blunt Australia’s ability to fully capitalise on this critical minerals boom.
“The Intergenerational Report makes clear the immense challenges facing the Australian economy and government budgets in the coming decades.”
