Australia stands at a critical crossroads in the global energy landscape, having produced a staggering 45% of the world’s lithium in 2023. Yet, despite this impressive figure, the nation faces a pressing need to bolster its critical minerals refining and processing capabilities. As the world pivots towards renewable energy, the demand for critical minerals—essentially the backbone of technologies like solar panels, wind turbines, and batteries—has skyrocketed. With lithium, nickel, and cobalt taking center stage, the stakes have never been higher.
China currently holds the reins, dominating both extraction and processing of these vital resources. The International Energy Agency (IEA) estimates that China controls an alarming 58% of global lithium extraction and an even more staggering 65% of cobalt processing. This monopolistic grip raises red flags for many nations, particularly as recent price fluctuations have put the spotlight on the urgent need to diversify supply chains. Australia, with its rich reserves and commitment to high environmental, social, and governance (ESG) standards, emerges as a prime candidate for new partnerships in this arena.
However, the critical minerals market is still in its infancy, grappling with volatility that can send prices tumbling. The World Economic Forum reported a 75% drop in lithium prices in 2023, following a jaw-dropping 400% increase in 2022. This rollercoaster ride has led to the shuttering of several Australian nickel and lithium projects. BHP’s closure of its nickel processing facilities in Western Australia and Albemarle’s scaling back of its lithium refinery are stark reminders of the market’s instability.
Despite these setbacks, experts like Henry Sanderson from Benchmark Mineral Intelligence maintain that this downturn is merely a hiccup in a larger cycle. “A lot of miners globally are struggling at the moment—either shutting down mines and processing plants or holding back investments,” he notes. This sentiment is echoed by Carl Spandler from the University of Adelaide, who suggests that the recent price drops are just a “snapshot” of the broader instability inherent in the critical minerals market.
Yet, there’s a silver lining. Projections for electric vehicle (EV) and battery demand remain robust, fueled by nations’ ambitious clean energy targets. As Chris Vernon from CSIRO’s Australian Critical Minerals Research and Development Hub points out, mining is cyclical; booms and busts are part of the game. What’s crucial now is stabilizing the market by supporting key players in the industry as they navigate this transition.
The Australian government is taking significant steps to enhance its processing capabilities, pledging A$10.2 million for critical mineral processing facilities and A$5.8 million for trade enhancement initiatives. Additionally, the Future Made in Australia package allocates A$22.7 billion, with a substantial chunk aimed at downstream refining and processing. Bilateral agreements with the EU and the US further bolster Australia’s position, creating new trade routes and reducing reliance on Chinese supply chains.
However, the clock is ticking. Experts warn that Australia must secure long-term investments to establish a comprehensive critical minerals supply chain, including essential infrastructure like battery manufacturing plants and refineries. The political landscape complicates matters, as governments often prioritize short-term gains over long-term investments. This contrasts sharply with China’s strategic, long-term planning, which has allowed it to dominate the market.
As Australia moves forward, the focus must be on making the tough decisions required to invest in this vital sector. “It is a tough situation, but there are some areas where governments will have to make a decision and say, yes we’re going to support this because it’s important to our economy and it’s important to decarbonisation,” Vernon asserts. The IEA predicts that mineral demand for clean energy technologies will nearly triple by 2030 and quadruple by 2040. The question remains: will Australia seize the moment and position itself as a leader in the critical minerals market, or will it be left behind in the rush towards a renewable energy future?
