Despite the build-up to the strategy’s release, however, there is little concrete that’s new in it beyond the commitment of an additional $500 million in ring-fenced loans from the Northern Australian Infrastructure Facility.
King argues that rather than handing out “baubles of cash”, it provides the framework that will inform the Albanese Government’s priorities and future budget decisions.
Through the existing National Reconstruction Fund, there’s also already been another $1 billion earmarked for value-adding in resources and another $3 billion for renewable and low emission technologies – although how this will be applied remains vague. The $2 billion Critical Minerals Facility established by the Morrison government has provided $1.5 billion of low-cost loans to three strategically significant projects.
The definition of minerals “critical” to national security or the economy varies from country to country. The Albanese government will consider adding minerals like nickel, zinc and tin to Australia’s existing list of 26.
“There’s obviously more for the government to do,” King said. “I don’t shy away from that. But it’s important we have a strategy that guides us in what we spend so it’s responsible spending. It’s not a shopping list.”
It’s true delivering on Australia’s goals needs a more integrated policy approach from governments than a series of low-cost loans or discrete funding – even if these can be crucial for progressing particular projects.
The need to streamline approvals and to build vital infrastructure, often areas of state responsibility, is part of that. So is translating Australia’s deep competence in bulk mining into the specialist chemical treatment, technology and processing skills required of a critical minerals industry – let alone any move into more sophisticated manufacturing.
Key industry players are still complaining that federal financial assistance for the sector is inadequate compared to hundreds of billions of dollars of subsidies and tax breaks for renewables investment unleashed by the Biden Administration’s Inflation Reduction Act.
Many businesses had initially hoped the Albanese government might consider broader-based tax incentives, for example, despite its stretched budget. But Canberra has no intention of trying to emulate the US, with King insisting Australia just can’t compete with that level of capital.
Instead, the government hoping to use Australia’s status as a close ally and the prospect of it being considered the equivalent of a domestic supplier to provide Australian companies access to US investment, technology co-operation, contracts and customers.
“That’s why the compact with the Biden administration is so important,” King said optimistically. “So we can use our remarkable natural endowment and take advantage of that and work with the US to make sure we get their investments in this country.”
Progress is unlikely to be as smooth or fast as that reassurance sounds. But it certainly helps that the US, like the rest of the West, is suddenly desperate to counter China’s dominance of critical minerals supply chains, particularly in rare earths, by relying on trusted allies.
China, for example, has spent decades building up an indispensable role as a vertically integrated global supplier of rare earths, including the processing of metals and magnets vital for new technologies. In the background, China curbs production for strategic reasons or ups it to temporarily drive down prices, using volatility to discourage competitors.
Chinese companies are also increasing investment in rare earth projects in other countries, including Australia. This is leading to some Australian businesses calling for greater restrictions while others welcome Chinese investment and processing technology or are happy to sell mostly unrefined concentrate to China.
It means that quickly making Australia more self-reliant in terms of specialised processing of critical minerals – or the more remote dream of green manufacturing and battery production – is appealing for governments to promise. It’s much more difficult to achieve.
Some states, particularly Western Australia, are sensibly intent on creating industrial hubs and shared infrastructure to underpin processing and manufacturing capacity of individual companies.
But Australia will always be a very high-cost country in terms of competitiveness. Compensating for that requires promoting its high environmental standards as an even more valuable advantage – along with Australia’s strong protection of intellectual property rights and its focus on national security.
Yet while there’s a stated urgency on advancing Australia’s resources economy into new directions, the various state and federal approval processes, often overlapping, are only becoming more protracted. The Albanese government’s updated environmental laws are expected to add to that timeframe. Energy costs for intensive processing are still going up sharply.
The result is that Australia’s critical minerals prospects need considerably more hard substance as well as hopeful strategy papers.
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