Prime Minister Scott Morrison will press business and industry to help lift efforts to develop as quickly as possible a domestic critical minerals processing capacity amid fears China is too dominant.
While Australia is already a fast-growing global supplier of the rare earth and other critical minerals needed for a vast array of technologies from fighter jets to electric vehicles and iPhones, it’s only capturing a small share of the overall potential benefit because it doesn’t process those materials.
Scott Morrison wants Australia to be both a resources giant and a processor of rare earths. Photo by Edwina Pickles
On Thursday Mr Morrison will release a 10-year “road map” to create more processing capacity as well as opening the door to applications for a $1.3 billion fund to help manufacturers ramp up production, and commercialise products for global supply chains.
“The government will be looking at opportunities to not only collaborate with industry and to make strategic investments, but also for industry players and businesses to work together to invest in strategic projects that will boost Australia’s manufacturing capabilities and expertise in the resources sector,” the government says in the report.
The moves are part of a broader push to make Australia one of the developed world’s linchpin suppliers of rare earths and critical minerals as concerns grow over China, which currently dominates supply.
Australian companies such as Lynas and Iluka Resources are already shipping many of those resources offshore – including to the US which is rapidly developing its own capacity with Australian support – but Mr Morrison is now eager to drive what many in the industry have been demanding for years and even decades: to add more value to the materials mined in Australia.
The manufacturing initiative “will help position Australia as not just a global leader in the resources sector but also in the manufacturing of the technology used, as well as turning the raw materials into value-added products,” Mr Morrison will say.
“Today’s funding will help unlock investment from industry to help build manufacturing capability and competitiveness in Australia’s resources sector while taking advantage of a significant global growth sector.”
The Resources Technology and Critical Minerals Processing Roadmap says that while Australia is well regarded, it needs to bring more innovation to customers.
“To do this, the industry must invest in projects that translate and commercialise new ideas into products and service,” the government writes in the report.
“Australia has significant reserves of the critical minerals and metals which drive the modern global economy.
“These are used to manufacture advanced technologies such as electric vehicles, mobile phones and renewable energy systems.
“However, because the majority of primary ores are shipped overseas for processing, Australia derives a small share of the potential overall benefit.
“Australia can capture greater benefit from these value chains by undertaking further value adding and manufacturing here.”
The Morrison government is pressing for more domestic processing, for instance of lithium hydroxide for batteries as a way to drive economic growth in regions such as the Hunter, Western Australia and Central Queensland.
The report recognises that many Australian companies face technical and market barriers, and acknowledges that more investment is needed and that market prices are often distorted by dominant global suppliers.
“To secure more market share and more downstream activities, manufacturers need to demonstrate a reliable processing capability and the ability to scale to meet specific customers requirements,” the report says.
“These factors make it difficult to access finance without public funding and risk sharing.”