LONGREAD: the minerals critical for new energy, new technologies, the future

These critical minerals are “metals and non-metals considered vital for the economic wellbeing of the world's major and emerging economies, yet whose supply may be at risk due to geological scarcity, geopolitical issues, trade policy or other factors”.

"Reliance on one or a few countries for raw or processed critical minerals carries risks, exposing supply to changes in trade or domestic policy, geopolitical tension and internal political instability.”

They also present an opportunity for Australia.

The production of many critical minerals is geographically concentrated. Although geological scarcity is a factor, in many instances production is concentrated in countries with less stringent environmental and social regulations, which reduces the relative private cost of mining and processing, increasing profitability.

The capacity to recover critical minerals can also be a supply constraint. Rare earth elements are not in fact ‘rare’, they are relatively abundant in the earth’s crust. However, they tend be both widely dispersed, rather than concentrated in mineable deposits, and difficult to separate.

Downstream processing and manufacturing capabilities are also geographically concentrated for many critical minerals. China produces 62 per cent of rare earths while also controlling most of the global processing and refining. China is also the world’s largest producer and consumer of refined cobalt and it dominates lithium processing and refining.

Reliance on one or a few countries for raw or processed critical minerals carries risks, exposing supply to changes in trade or domestic policy, geopolitical tension and internal political instability.

When China reduced its rare earths exports in 2010, prices spiked.

Japan - the largest importer - faced an undersupply of the rare earth elements crucial to its technology supply chains. More recently, China considered the control of rare earth exports as a way to retaliate against the US’s introduction of tariffs and other trade barriers. The situation is more settled at the moment, with China agreeing to purchase scandium and yttrium (two rare earth elements) from the US earlier this year, but tensions could flare again.

Australian opportunity

Australia may benefit from the uncertainty around critical mineral supply chains.

In 2019, Australia and the US agreed to work on an action plan to improve the understanding, supply and security of critical minerals in both countries. Plans are now in progress for Australian company Lynas to contribute to the development of a rare earths processing plant in the US and for Arafura Resources, another Australian company, to export rare earth ore from the Northern Territory to the US for processing.

Australia and Japan have also committed to further cooperation on 5G technology and critical minerals.

Australia’s stable political environment and mining expertise make it a reliable place for businesses to invest. The Perth USAsia Centre notes Australia has bilateral free trade agreements in place or under negotiation with several major critical mineral consumers - China, Japan, Korea, the US, India and the EU - as well as relevant regional agreements.

New energy economy

The global move away from fossil fuels towards renewable energy relies heavily on the availability of critical minerals like lithium, cobalt, manganese and rare earth elements.

These are used in the solar panels, wind turbines, energy storage, charging infrastructure and electric vehicles that enable a lower carbon footprint.