Australia votes: Driving critical minerals growth key issues in elections

Ahead of the upcoming May 3 federal election, Australia's major political parties are vying to lead growth in the country's critical minerals sector, which can be used as trade leverage in increasingly volatile global markets.

Critical minerals have played a major role in the election campaigns of both the reigning Labor Party and the Coalition of Liberal and National parties.

Prime Minister Anthony Albanese responded to US tariffs in April by proposing a A$1.2 billion (US$767 million) critical minerals strategic reserve while on the campaign trail.

"The size and sophistication of our mining industry allows us to take maximum advantage of these resources. Australia is a supporter of free and fair trade and will continue to promote our national interests in a changing geostrategic environment. Increasingly uncertain times call for a new approach to make sure Australia maximizes the strategic value of critical minerals," Albanese said April 24 when announcing the strategic reserve.

Australia is the world's top lithium producer and a top-five producer of cobalt, manganese ore, rare earths, rutile, tantalum and zircon, according to Geoscience Australia.

Rowena Smith, CEO of rare earths developer Australian Strategic Materials, said in an April 30 statement that the plans for a strategic reserve "further highlight the global importance of Australia's rich critical mineral endowment and processing capability. Driven by the policy positioning of the new Trump administration and the resulting escalating trade tensions with China -- and beyond -- we are seeing an environment that is dynamically shifting, creating volatility and uncertainty in international markets."

Significance of exploration

Warren Pearce, CEO of the Association of Mining and Exploration Companies, acknowledged in his response to Albanese's A$1.2 billion reserve that "in the geopolitical context of today, critical minerals are more important than ever."

While Peter Dutton's Coalition pledged earlier in April to extend Australia's Junior Minerals Exploration Incentive with a A$100 million commitment over four years, "we're still waiting on Federal Labor to announce their plan for the JMEI to continue. Clearly, it's a no brainer to invest in exploration, the lifeblood of the resources industry," Pearce said in an April 24 statement.

The JMEI was created by a Coalition government in 2017 and re-funded in 2021. The initiative received support from both sides of politics each time, and has driven A$404 million in new greenfield mineral exploration activity, according to AMEC.

Dutton has also pledged to halve project approval times, which has long been a major concern of industry, by fixing the "broken approvals process for projects" and cutting red and green tape, and to invest A$3.4 billion in a 35-year exploration program to map all of Australia.

Shift in critical minerals focus

Under crushing pressure from multi-year low prices for nickel and lithium over the past year, Australian miners have called for a government strategy that would help them compete in the face of the US Inflation Reduction Act, which aided domestic critical metals extraction and processing in America.

Labor responded with a A$7 billion Critical Minerals Tax Initiative that was approved by the Senate in February. AMEC called the initiative "monumental," expecting it to "stimulate billions in new investment."

That follows Labor's allocations in the fiscal 2024 Federal Budget of A$1 million for a pilot educational program to strengthen the capabilities of Australia's critical minerals sector to "detect, prevent and mitigate foreign interference," A$10.2 million for pre-feasibility studies to develop critical mineral common-user processing facilities and A$5.8 million for a critical minerals trade enhancement initiative.

However, the Coalition wants to refocus the critical minerals list and strategy to "better align with the defense and strategic needs of Australia and its allies," and in doing so will add copper, zinc, bauxite, alumina, aluminum, potash, phosphate, tin and uranium to the critical minerals list, Dutton's office said in a statement to Platts, part of S&P Global Commodity Insights.

"Like the rest of the resources sector, the key challenge for our critical minerals sector is an Albanese Labor Government that has delayed approvals, drowned projects in red and green tape, and mismanaged the economy," Dutton said in the statement.

Free trade on life support

Shannon O'Rourke, inaugural CEO of Powering Australia, told Platts that "free trade is on life support in a more competitive world," though "Australia has responded robustly with measures including critical minerals production tax incentives, expanding the Export Finance Australia Critical Minerals Facility, the National Reconstruction Fund, and the other measures in the Future Made in Australia Act."

However, "critical minerals need to remain front and center in our trade and industrial strategy and requires bipartisan action towards the long-term goal of adding more value to our resources. We can't and won't be the world's mine forever," O'Rourke said, referring to the need to boost downstream processing capacity.

Powering Australia is the follow-on entity -- funded in Labor's latest budget -- to Australia's Future Battery Industries CRC, which will wrap up its program of works in June.

Albanese's office did not immediately respond to Platts' request for comments.