Making the Most of Australia’s Endowment of Critical Minerals

The government’s agenda for rare earths and critical minerals is being repositioned as part of the transition to clean energy, rather than simply a by-product of fractured global supply chains. Facilitating the electric vehicle revolution via offtake agreements for lithium and rare-earth elements used in batteries has a desirable green tinge. Yet the themes behind this shift go further back, running through the West’s rejection of Huawei’s 5G network, the Donald Trump administration’s ‘America first’ platform, the rise in nationalism during the pandemic, and Russia’s invasion of Ukraine.

This is where clear eyes and steady hands are required, as risks of unilateralism abound. The US Department of Energy’s 2021 strategy to support domestic critical mineral supply chains is an exemplar of strategic coordination across government, industry and research. It clearly defined the US national interest and served as a precursor to the vast subsidies provided under Infrastructure Investment and Jobs Act and the Inflation Reduction Act. Those policies directly challenge Australia’s economic interests and are a salient reminder of the need to build productive capabilities that can both complement and compete with US companies.

Concurrently, significant pressure is being applied on Australian companies to sell directly to the critical minerals buyers’ club that’s emerging in the West. The message is that building reliable, competitive and diverse supply chains means not exporting to China. This represents a de facto limitation on access to Australia’s largest trading partner. It heralds a third phase of the post-war trading system and warrants close attention.

In the first phase, directly following World War II, the global industrial base centered on the modular design of multinational corporations. Efficiencies were extracted through deep integration across countries and trading blocs, scaling the factors of production, and exerting direct influence over standard setting. The economic and legal landscape reflected US hegemonic leadership and the West’s design of multilateral organizations and frameworks.

The resulting surge in purchasing power, particularly in the East, along with a series of financial and banking crises, dimmed the appeal of modular design and paved the way for a second phase of complex vertical interdependence. Interdependence allows corporations to understand and be drivers of the values and concerns of governments, stakeholders and shareholders. The range of concerns has broadened significantly to include the sustainability agenda.

The third phase seeks to delimit globalization, if not interdependence, by imposing barriers to trade and capital mobility, principally based on national security and supply-chain sovereignty. Australia’s comparative advantages—abundant critical minerals, industrial capability, jurisdictional stability, robust capital markets and close proximity to the Indo-Pacific—are effectively harnessed by trusted partners.

Only time will tell how this grand experiment plays out. For now, there are two initiatives that Australia can and should embrace that are agnostic to the rapidly shifting global landscape.

First, a sober reassessment is required of the state of Australia’s critical minerals expertise and research and development capacity. Levels of know-how and intellectual property are relative weaknesses, not the strengths often advertised. R&D in Australia has been trending down for decades, including at the CSIRO, the national scientific research agency. Brain drain has contributed to the broader decay, as have disparate incentives structures between research and industry.

Breaking down these silos and promoting alignment is a critical interim objective. R&D is where Canberra can have the most impact per dollar spent, while remaining technology-neutral and avoiding the pitfalls of corporate welfare.

Second, where sovereign capabilities can be defined, scaled and deployed locally, they should be facilitated and even championed. Look to Darwin’s Middle Arm Sustainable Development Precinct, which is shaping as Australia’s most strategically important industrial zone. Supported by billions of dollars of federal funding and neighboring key defense capabilities, the precinct is a critical gateway for landlocked Northern Territory industries and an opportunity for common-use infrastructure to be designed and optimized at scale. It’s also a test for the NT government in terms of implementation amid high community expectations, particularly in relation to the energy transition and inclusion of First Nations peoples.

The Middle Arm precinct is set to emerge as the starting point for the nationwide deployment of large-scale solar resources and highly engineered water infrastructure. This, along with the proximity of a large, urbanized workforce, will facilitate the emergence of new industries that will certainly involve critical minerals.

My company, Tivan Limited, plans to produce two critical minerals, vanadium pentoxide and titanium dioxide, at Middle Arm, using technology developed in conjunction with the CSIRO. Tivan’s Speewah resource in Western Australia has the potential to produce more than half of the global vanadium supply outside China and Russia, with a project life in the hundreds of years.

The project is sufficient to develop a large-scale, modular vanadium redox flow battery (VRFB) sector in Australia to progressively transition industrial facilities, towns and cities from coal and gas as primary sources of electricity. These sources represent around one-third of Australia’s carbon emissions, so abatement can make a significant contribution to reaching net zero.

While the consolidated efforts of government, industry, research and community will be required to ensure cost-competitiveness in the emerging grid battery sector, there’s no engineering or know-how constraint. We continue to collaborate with the CSIRO in the field of critical minerals processing, and the original patent for VRFB was secured by the University of New South Wales in 1986. The VRFB sector is now taking shape rapidly in China, reflecting the technology’s superiority for long-duration grid storage compared to lithium-based alternatives and pumped hydro.

ASPI’s upcoming Darwin Dialogue is a welcome opportunity to introduce key stakeholders to these initiatives and to highlight Australia’s capabilities in defining projects that are unambiguously in the national interest, central to the climate transition, and entirely sovereign in design and capability.

Grant Wilson is executive chair of Tivan Limited, a critical minerals company with major project status in the Northern Territory.This article is published courtesy of the Australian Strategic Policy Institute (ASPI).