Australia’s critical minerals list set for a major rethink
The Albanese government will adopt a new definition for “critical minerals” influenced by the needs of Australia’s defence and trade partners, in a move that could drive domestically abundant commodities such as coking coal, bauxite and iron ore onto the list.
Over the past five years, the United States, Japan, South Korea and the European Union have expanded the list of minerals they consider critical to national security and economic growth, in response to concerns China might use its dominance of mineral supply chains as a coercive tool.
Resources Minister Madeleine King says domestic scarcity of minerals will not be a prerequisite for inclusion on the critical list. Oscar Colman
Resources Minister Madeleine King suggested those concerns were valid in a year that China had moved to limit exports of gallium and germanium, two minerals vital for the manufacturing of microprocessors, defence applications and decarbonisation infrastructure.
Most nations’ critical minerals lists reflect the raw materials that cannot be secured domestically for their most important industries, but Ms King told The Australian Financial Review Energy & Climate Summit that domestic scarcity would not be a prerequisite for inclusion when she updates Australia’s list later this year. Inclusion on the list could mean favourable regulation, smoother project approvals, and access to funding.
“Our critical minerals list is different to some other nations. Other nations craft theirs on what they have, what’s scarce and what they can’t get, whereas we’ve got most of it. So it’s crafted on another basis of what is of geostrategic importance for us and our neighbours,” she said.
“We also have to consider our region and our partners because they’re an important part of our prosperity. That’s always going to figure in it.”
Ms King named bauxite, iron ore, coking coal, copper and nickel as Australian commodities that were crucial for trade partners, although she stopped short of confirming they would be added to the list.
”Our resources build cities, they build airplanes, ships and motor vehicles, and they will contribute to realising our own green energy aspirations and those of our trading partners,” she said.
‘Like-minded’ foreign investors only
The NSW and federal governments enacted emergency powers this year to compel thermal coal miners to sell a portion of their output to domestic customers at capped prices in a bid to protect power supply and limit power price rises.
Asked whether that intervention was evidence that thermal coal was a “critical” mineral, Ms King signalled she was unlikely to give the fossil fuel that designation.
“I’m not sure about that ... we genuinely have quite a lot of thermal coal. But we also know ... each [coal-fired power station] around the country has a set date for closure,” she said.
“Metallurgical coal, on the other hand, is needed for steel ... and we expect other countries will need that coal as well for their production.”
Whitehaven Coal boss Paul Flynn said in June that Ms King should consider the important role that Australian thermal coal played in the energy systems of close defence partners such as Japan and Korea.
Ms King said she worried that activism targeting gas and mining projects would put the energy transition at risk and slammed protesters who appeared in a Monday night episode of ABC’s Four Corners targeting the Perth home of Woodside Energy chief executive Meg O’Neill.
“How do they [the activists] think they’re going to keep their community running if these projects stop? And it beggars belief that some of this ignorance exists in a state like Western Australia, which is powered by gas,” she said. “We will need a lot of these offshore gas projects to be able to process the minerals that we need for the green energy transition. The biggest growth in the use of gas in Western Australia is minerals processing.”
Ms King has vowed that only “like-minded” foreign investors would be welcome in Australia’s critical minerals sector; a comment that has been widely understood to preclude Chinese investment.
Ms King told the Summit that a Chinese headquarters would not automatically rule out a prospective investor, and she publicly praised acquisitive Chinese company Tianqi for its work in Australia’s lithium sector over the past decade.
“We have to take every case on its merits,” she said of foreign investment.
“There will be restrictions in the [US government’s] Inflation Reduction Act on what an entity of concern is, and for the Americans, a lot of that is state-owned enterprises subject to the oversight of the People’s Republic of China and then the communist government there.
“That will be a consideration in some projects, it naturally would be. But I would note that Tianqi lithium is one of the first builders of a lithium hydroxide plant in Australia, and I thank them for the efforts they have made in doing that because it’s made Australia have some ability to process lithium spodumene into lithium hydroxide.”
Tianqi and its partner IGO Limited lobbed a $136 million takeover bid in January for Western Australian lithium explorer Essential Metals, which was scuppered at the eleventh hour by Chris Ellison’s Mineral Resources.
Essential has since embraced a friendly takeover from Develop Global; a company that counts Mineral Resources as a substantial shareholder.
Read more from the AFR Energy & Climate Summit
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- How 3.5m households could be the ‘unsung heroes’ on road to net zero Energy produced by solar panels on 3.5 million Australian households is equivalent to four Snowy Hydros, but not enough is being done to capitalise on it.
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- Opinion | The energy transition is gridlocked, regulators have no answers It’s crunch time for the switch to renewables and regulators are pleading with business to invest more and quickly. But progress is stalling and the obstacles in the way are getting bigger.
- Chanticleer | Israel-Hamas war will rock an already edgy oil market Peter Coleman says a ‘worry factor’ from the Israel-Hamas war will lift oil prices in the short term. Longer term, it’s more evidence energy abundance is over.
- Bowen’s $387b nuclear price tag ‘doesn’t make sense’ A Westinghouse Electric executive argued bringing nuclear into the energy grid could be done far more cheaply, as the Coalition said it would consider overturning the ban.
- AEMO, CEOs in call-to-arms on clean energy build-out The nation’s energy market operator will urge developers to exploit all available government schemes to get projects into construction, and get community backing.
- Why BHP is against ‘sugar hit’ subsidies for critical minerals BHP boss Mike Henry says governments will stoke investment more sustainably through policy reform than by handing out subsidies that distort markets.
- ‘Go hard, be brave’, says $15b green bank boss National Reconstruction Fund chairman Martijn Wilder said Australia needs a WWII-style “Marshall Plan” to decarbonise the economy fast.
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