If there was doubt in anybody’s mind, recent government activities leave no room for uncertainty that the resources sector will remain bread and butter for Australia’s economy.
Fittingly, Minister for Resources and Northern Australia Mathew Canavan led his foreword to the National Resources Statements, which the government released in February, by referring to the title of Geoffrey Blainey’s history of Australian Mining: “The rush that never ended”.
(Never mind that a rush is not usually associated with a sustainable endeavour you want to tie an economy to.)
But the truth of the matter is that, while contributing only around 8% to GDP, the resources sector and the mining services sector together generate most of the country’s exports (more than 70% is expected this year on the back of a record $264 billion). Six of Australia’s top ten goods are commodities (iron ore, coal, natural gas, gold, aluminium and petroleum).
By developing the National Resources Statement, the first in over two decades, and a Critical Minerals Strategy 2019, which both build on a report by the Recources 2030 Taskforce, the government aims to ensure Australia’s good fortune with commodities continues well into the future.
The Statement’s overarching vision is no less than creating the world’s most advanced, innovative and successful resources sector.
It centres on Australia’s diverse range of mineral and energy reserves, including bulk commodities such as thermal and metallurgical coal, natural gas, iron ore, bauxite and uranium, as well as precious metals such as nickel, copper, zinc, gold, silver and lead.
The country has also significant potential in emerging critical minerals, notably lithium, which present an “incredible opportunity for Australia.” Australia is the world’s largest producer of lithium holding nearly 17% of known global reserves and spurred by foreign investment, including from Chinese and US companies, Australia is in the process of establishing five lithium benefication plants in Western Australia. It promises to be a very lucrative endeavour given that processing lithium ore to lithium hydroxide increases the value of product by around 20 times.
As detailed in the Critical Minerals Strategy released at the end of March, Australia and especially Western Australia, is also blessed with large resources of cobalt, manganese, tantalum, tungsten, and zirconium. It is ranked sixth in the world for rare earth elements and second for production, with still large untapped potential.
Many of these and other critical minerals have unique properties that make them increasingly sought after for the manufacture of modern technologies such as mobile phones and computers, flat-screen monitors, wind turbines and solar panels, and electric cars.
How much the government has set its eyes on boosting critical minerals, such as lithium, in Australia is evident with the recent decision to prioritise $20 million for projects targeting the sector in the upcoming seventh Cooperative Research Centre Projects round.
The government will also provide $34.45 million over five years to the CRC for Optimising Resource Extraction.
Other actions laid out in the strategy paper include the $218 million MinEx Cooperative Research Centre which will deploy the next generation of drilling technology. Mentioned is also Australia Minerals, a unique group that is facilitating increased investment in exploration, especially in greenfield areas.
While harnessing demand for such new resources is also a priority of the National Resources Statement, it looks more broadly at strengthening the conditions and opportunities for the sector.
This includes promoting resources exploration and developing basins of high prospective potential:
A central role in driving exploration is assigned to Geoscience Australia by providing pre-competitive data. It’s Exploring for the Future program, already supported with $100 million, is set to be expanded into the southern parts of Australia, and extended for four years.
The government is also examining the feasibility of expanding the Survey of Mineral Exploration which aims to improve data on greenfield exploration.
Another priority of the Statement is to promote Australia’s strength in resources to overseas investors, an avenue that has been somewhat neglected in the past. “We have typically not invested in the specific promotion of our nation as a destination for resources investment,” it says in the document.
In this context it is perhaps somewhat surprising that while Australia’s regulatory framework for mining and petroleum activities is complex and needs to be improved, the robust environmental regulations in this country could actually be a potential advantage.
“...these environmental protections allow Australia to differentiate itself in the eye of resource commodity buyers and investors...”.
They also provide opportunity for mining services, for example services in environmental management and restoration.
Since the resources boom, Australia’s mining services sector has grown considerably, and is generating significant export income (around $15 billion in 2015).
But future success will require significant investment in R&D and better collaboration between industry and academia.
“We must embrace technological change,” is one of the Statement’s key policy principles.
It recognises the expected impact of disruptive technologies, detailing that future growth of the resources sector will come from the increased use of data and analytics, artificial intelligence coupled with automation and robotics, the deployment of advanced extraction technologies and the commercialisation of specialist technologies.
Australia is well placed to lead these developments, and thus make good on the second part of the Statement’s vision: delivering benefits for sustained prosperity and social development for all Australians.