Highlights from the 2021-22 Federal Budget
- $100m over four years to extend the Junior Minerals Exploration Incentive scheme
- $20m towards a Global Resources Strategy to help diversify exports and find new markets for Australia’s resources technology
- $9.3m over five years to pilot the targeted Regions of Growth (ROG) program
- $3m funding to explore Tasmania’s resource potential
- Temporary levy on offshore petroleum production to fund decommissioning and remediation in the Laminara-Corallina oilfields
The Critical Minerals and Resources Technologies roadmap reveals new opportunities for the resources sector to become more technologically enabled, and to take that innovation to the world. Under the Modern Manufacturing Initiative – and with their clear focus across all six priority sectors on automation and smart manufacturing – a collaborative approach and investment in R&D could cut production costs, improve efficiency, reduce emissions, and increase the accuracy of resource exploration.
The demand for resources isn’t going away. The global infrastructure spend by governments to boost economies is just starting and infrastructure requires resources. If anything it will increase as we recognise in a post-COVID world that our systems and supply chains simply aren’t fit for purpose, it behoves us then to make our resources sector smarter and more sustainable.
It’s not just about iron ore and coal anymore, which Australia is undoubtedly best known for. With technology becoming more pervasive, connecting our phones and our businesses, but also increasingly our homes and cars, comes the demand for lithium and Rare Earth minerals.
Australia has some 30 percent of the global lithium reserves. This is really a huge
opportunity for Australian companies to exploit and process these reserves. There are some early signs of success with respect to lithium, because right now they are building two processing plants in Western Australia.
Rare Earth is a bit of a sleeper. It's got various minerals used in components in terms of computers, loudspeakers, smartphones and the aerospace industry. Currently, China has some 50 percent of global Rare Earth reserves and 80 percent of global production. Customers will want a diversity of supply and Australia has the opportunity to feed into this.
There is a clear intersection between the resources sector and Australia’s energy future. Almost an endless loop, where one feeds into the other. The resources sector requires vast amounts of energy for production and requires access to affordable and sustainable energy. The resources sector also plays an important role in Australia’s transition to an affordable and sustainable energy future.
The fly in the ointment is trying to get everyone to agree on what the transition looks like. Energy Minister Angus Taylor continues to spruik the Government’s gas-fired recovery plan as the logical next step. The Australian Energy Market Operator (AEMO) has declared gas uncompetitive against renewables. Hydrogen is a sector with huge potential – but could take years to develop into a fully-fledged energy alternative.
Having many resources and varied options isn’t always a bad thing – so long as we can reach a consensus. Regardless, the well-oiled machine that is the resources sector will be prepared to take up the slack.
On the topic of preparedness, I’m perhaps most optimistic about Australia’s attractiveness to investors. A key requirement of customers that buy commodities is security and reliability of supply. Australian suppliers have demonstrated the ability to deliver through the COVID epidemic. For example, Brazil has not been able to keep up its iron ore production volumes, with one Brazilian miner – Vale – not expecting production to return to full speed until the end of 2022. Iron ore prices have risen. Australia delivers. We have low sovereign risk. Political stability. Economic stability. We should take advantage of this opportunity and use it to pursue new markets, increase market share for our traditional commodities, and also to develop our emerging minerals.