The global ‘battery arms race’ has well and truly begun, and Australia is in a prime position to win by a considerable margin.
As the world transitions towards net zero emissions, the pathway forward will be powered by producing enough ‘critical minerals’ globally.
Mineral commodities that have important uses but no viable substitutes, yet face disruption in supply due to geological scarcity, geopolitical issues, divergent trade policies, and other factors, are defined as critical to economic and national security.
They are metals and non-metals considered vital for the well-being of the world’s major and emerging economies.
These critical minerals are needed to support the trillions of dollars of capital required to produce electric vehicles (EVs), solar panels, wind turbines, smartphones, and other high-tech applications that will create a low carbon economy.
Such is their importance, for the first time ever for the mid-tier 50 (MT50) – the largest ASX mining companies outside the ASX50 – the rise in the value of critical minerals companies outperformed gold companies, as of October 2021.
Mining is extremely critical to a low carbon global economy.
Fortunately, Australia has long cemented its credentials as a credible mining institution, reliable exporter of commodities, and a low sovereign risk jurisdiction.
It’s not that Australia doesn’t have enough critical minerals to go around.
They aren’t being mined in huge quantities and often simply extracted as by-products.
Big ticket ‘mainstream’ resources such as iron ore, gold, coal, and gas have long played a prominent role in forging Australia’s strong economy for decades.
Australia, you’re standing on it!
Yet right now, a multi-billion dollar opportunity exists for Australian governments and industry alike to drive investment in the upstream and downstream critical minerals sectors, especially given that they will forge our economy’s path for generations to come.
To put it into perspective, at least 30 times as much lithium, nickel and other minerals may be required by the EV market by 2040 to meet global climate targets, according to the International Energy Agency (IEA).
South Australia has recognised this opportunity and is taking a leading role in fostering a world-class critical minerals sector.
The state is focusing on establishing and growing not only production and supply, but capabilities to expand the downstream processing and periphery sectors.
The very ones that will innovate the next generation of green energy technologies, such as batteries for EVs with more range and longer life, and solar PV technological innovation.
South Australia is stimulating the growth of a rich and diverse critical minerals ecosystem by nurturing cross-sector collaboration and driving investment through initiatives such as the Thinking Critical South Australia challenge.
The global challenge, which is offering incentives and prize money, aims to attract innovators, entrepreneurs and businesses from across the globe to submit ideas to deliver value to the sector.
It’s a blueprint that could prove critical for the rest of Australia.
Failure to invest in critical mineral downstream processing and manufacturing industries could result in losing the global battery arms race.
Fortunately, as the “Lucky Country”, we have a natural endowment of mineral resources and more importantly, an abundance of critical minerals.
Australia has the world’s largest resources of rutile (titanium), zircon (zirconium) and tantalum; the country ranks in the top five globally for its resources of critical minerals like antimony, cobalt, manganese ore, niobium, tungsten and vanadium; is the world’s top producer of lithium; and, is the second-largest producer of zircon and rare-earth elements.
As examples, titanium is used in mobile phones, lithium and cobalt are used in batteries for EVs, while rare earths can be used in rechargeable batteries for electric and hybrid cars, computers, wind turbines, catalysts in cars and oil refineries, as well as monitors, fibre optics, superconductors and glass polishing.
Australia is already a world-leading resource exporter and we supply many countries with high-quality, ethically sourced minerals using environmentally sustainable practices.
So the opportunity at hand is simply to think outside the box to support critical mineral extraction and develop the downstream ecosystem.
Critical minerals have a silver lining
Currently, many critical minerals such as platinum-group elements, rare-earth elements, zircon, tantalum, chromium, tungsten, cobalt, cadmium, selenium, germanium, tellurium, and rhenium are recovered as by-products.
They are mostly extracted from processing the ores of major commodities such as copper, zinc, lead, nickel and gold.
In some cases, the revenue generated from the by-products can exceed that from the major ore being mined – for example gold is a by-product from porphyry copper deposits.
The idea of turning a mining by-product into a commercially viable commodity actually dates back to the 1800s and it all started in South Australia.
Silver production in the state began in 1841 as a by-product of smelting lead ore from Australia’s very first metal mine, located at Glen Osmond, an eastern suburb of Adelaide.
While silver is found in its pure state, the metal is more commonly combined with other elements, and half the world’s silver production is obtained as a by-product in the processing of lead, copper, and zinc ores.
This same opportunity Australia discovered with silver, exists for critical minerals.
Thinking critically is the challenge
Mining is critical to technology advancement.
The very materials that are extracted from the ground are needed to produce the technology that in turn, will be used to make mining production more efficient.
The industry has always been at the forefront of technological transformation in its endless quest to reduce operating costs and increase efficiencies.
Drones collecting real time data from often inaccessible or dangerous locations, and driverless trains and trucks moving large volumes of commodities around the clock, are recent advances achieving these ends.
Such tech to create machinery like driverless trucks or drones requires critical minerals.
Therein lies an opportunity to focus on innovative ways to extract these minerals more efficiently.
The next wave of advancement making production more economic and bolstering the downstream processing sectors that will create these technologies, will come from the next generation of ideas like the Thinking Critical South Australia challenge will produce.
If we can improve ways of mining materials like platinum-group elements, rare-earth elements, zircon, tantalum, and chromium, among others, and extract them commercially, Australia’s critical minerals ecosystem will be the hub of technological advancement across the whole supply chain.
As the Minerals Council of Australia ambitiously wants the industry to reach net zero emissions by 2050, it stands to reason that with 180 years of mining experience, the country is in pole position to take the extraction of these critical minerals as a by-product to a commercially viable industry in and of itself.
Once we develop new economic ways to produce these minerals in large quantities, by further investment, innovation, and by creating tens of thousands of critical minerals jobs, Australia can lay the foundation to achieve net zero.
For our economy and the planet, it is critical we do.