Updating Australia’s Critical Minerals List: issues paper

Department of
Mines, Industry
Regulation and Safety

Australia’s Critical Mineral List issues paper

Submission by the Western Australian Government

August 2023
Submission
The Western Australian Government welcomes the opportunity to provide a submission to the Australian Government’s Critical Minerals List issues paper.

This submission was prepared by the Department of Jobs, Tourism, Science and Innovation and Department of Mines, Industry Regulation and Safety.

Please find below responses to questions posed in the issues paper.

Is the current set of criteria still fit for purpose?
Yes, the current criteria remains fit for purpose.

Minerals that should be considered for addition to the list
The Western Australian Government requests the inclusion of nickel and copper to the critical minerals list, as both minerals meet the current criteria. Their addition is consistent with the objectives of Australia’s Critical Mineral Strategy and aligns with the priority technologies identified under the strategy. Further information supporting their inclusion is provided in Attachment A – Nickel and Attachment B - Copper.

Should Australia differentiate between criticality or importance of minerals, and the capability to process them, through categories within the list or a separate category that sits alongside the list?
Critical minerals is a rapidly developing sector, and as such, there is merit in maintaining a simplistic approach to support clear communication and avoid unnecessary complexity.

However, should a more sophisticated approach be explored, consideration should be given to the purpose of such lists, their practical implications and the intent of Australia’s Critical
Mineral Strategy.

As a jurisdiction that predominantly exports raw and processed minerals, the utility of
Australia’s Critical Mineral List is largely linked to its ability to communicate where Australia can meet the supply chain needs of our strategic partners. Identifying a mineral as a critical mineral also provides a pathway for companies to obtain government support, such as grant and loan programs currently limited to the critical mineral sector. Given this, careful consideration should be taken when deciding to exclude a mineral from the Critical Minerals
List where Australia is a major producer or is highly prospective.

There could be merit in adopting a multi-tiered approach or separate list (e.g. energy transition materials list), particularly for ‘important’ minerals that may not meet all critical mineral criteria, if this provides a pathway to communicate Australia’s mineral offering and better supports Australia’s industry development objectives (e.g. ‘important’ minerals are also eligible for the same government support as critical minerals).
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However, an alternative and preferred approach would be for the Australian Government to allow for discretion when applying the current critical mineral criteria to ensure the intent of
Australia’s Critical Mineral Strategy is met (i.e. to ensure Australia extracts more value onshore from its resources). For example, notwithstanding recent supply chains disruptions to global nickel markets, supporting Australia’s nickel industry clearly aligns with the intent of Australia’s Critical Mineral Strategy. Nickel is a vital mineral in the global energy transition, and Australia is well placed to grow its participation in nickel supply chains, including by expanding its nickel processing capabilities.

What lessons could be learned from other countries’ approaches or the ways in which they consider their criteria for listing critical minerals?
As previously discussed, there is merit in adopting an approach that supports clear communication. Australia’s current critical mineral criteria is broadly consistent with that of other countries.

What should trigger an update to the list?
The global economic and political landscape can change rapidly, and over the past few years, critical mineral supply chains have experienced major disruptions. The
Russia/Ukraine conflict, COVID-19 pandemic and announcement of foreign government policies, such as United States’ Inflation Reduction Act of 2022, have all affected supply chain dynamics.

The Western Australian Government supports the Australian Government’s decision to decouple Australia’s Critical Minerals List from the Critical Minerals Strategy and recommends an annual review of the Critical Mineral List, in addition to ad hoc amendment, where necessary.

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Attachment A – Nickel
Essential to modern technologies, economies and national security
Nickel is essential to modern technologies and economies as a key input in the manufacturing of lithium ion batteries.

While nickel has traditionally been used as an alloying element, particularly in the manufacturing of stainless steel, the importance of nickel as an energy transition mineral has grown significantly over the past five years. From 2017 to 2022, demand for nickel for clean energy applications has more than doubled from 6 per cent of total demand to 16 per cent, largely driven by increased demand for nickel-base lithium ion batteries.

Nickel-base lithium ion batteries, such as nickel-cobalt-aluminium (NCA) and nickel- manganese-cobalt (NMC) battery chemistries, are predominantly used to power electric vehicles. As demand for batteries and electric vehicles continues to grow, so will the importance of nickel to modern technologies and economies. Under the International Energy
Agency’s (IEA) Net Zero Emissions by 2050 Scenario, clean energy applications could account for nearly two-thirds of total nickel consumption by 2035.

Vulnerable to supply chain disruption
Indonesia accounts for around half of all mined nickel production, followed by the Philippines
(10 per cent) and Russia (7 per cent). Indonesia, China and Russia together account for around two-thirds of refined nickel production.

As highlighted in the IEA’s Critical Minerals Market Review 2023, nickel has faced challenges of illiquidity and volatility in prices due to its concentration of supply and geopolitical tensions. Most notably Russia’s invasion of Ukraine has caused significant disruption to nickel markets over the past 18 months. These supply constraints could be further exacerbated as foreign governments adopt policies geared towards economic nationalism, such as export restrictions and local content-linked subsidies. For example, the
United States’ Inflation Reduction Act of 2022 creates incentives for Original Equipment
Manufacturers to source critical minerals from within the United States or from countries with a Free Trade Agreement with the United States.

Needed by Australia’s strategic partners
Many of Australia’s top trading partners recognise nickel as a critical mineral, including the
United States, Japan, Republic of Korea, China, Canada and India. In addition, the IEA added nickel to their Critical Mineral List in 2022.

Nickel is also included on the United Kingdom’s critical minerals “watchlist”, which are minerals deemed to be potentially increasing in criticality, and is identified as a strategic raw material by the European Union.

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Australia’s resource potential
Australia is a major nickel producer and well placed to capture greater market share.

Australia accounts for around a fifth of global nickel reserves and is currently the fifth largest producer of nickel, accounting for around six per cent of global production. Nearly all of
Australia’s nickel mining and processing sector is currently located in Western Australia, although production recently recommenced in Tasmania and opportunities exist in
Queensland to follow suit.

Western Australia’s well-established nickel refining industry includes companies like
Ravensthorpe Nickel and BHP Nickel West, whose products are sold into international battery supply chains. Companies including IGO, Pure Battery Technologies and Austvolt are also looking to establish precursor cathode active material (P-CAM) manufacturing facilities in the state, which represents a further value-adding step in battery-grade nickel refining.

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Attachment B – Copper
Essential to modern technologies, economies and national security
The leading end-use of copper is in building construction, but it is also used in power generation and transmission. Batteries, and electric vehicle motors and charging infrastructure also require copper. Electric vehicles require five times more copper than vehicles with internal combustion engines.

Vulnerable to supply chain disruption
At present, more than 23 per cent of mined copper comes from Chile, followed by Peru and the Democratic Republic of Congo (DCR) who each produce 10 per cent. Refined copper is dominated by China who has 42 per cent of production.

The IEA has noted that in a scenario consistent with climate goals, expected supply from existing mines and projects under construction is estimated to meet only 80 per cent of copper needs by 2030.

While Chile is one of the richest sources of copper in the world, the mining industry has faced declining ore grade and, along with Peru, has faced water shortages. In Peru, community protests have periodically required the suspension of some copper operations.
Supply from the DRC could be constrained in light of global trends towards improved
Environmental, Social and Governance (ESG) outcomes. Lastly, the third largest copper mine in the world is set to open in Russia this year, with supply likely impacted by the ongoing Russia-Ukraine war and trade sanctions.

Needed by Australia’s strategic partners
Some of Australia’s strategic partners recognise copper as a critical mineral, including Japan and India.

The US has recently added copper to its critical minerals for energy list and is identified as a strategic raw material by the EU.

Australia ’s resource potential
Despite having the second largest copper reserves globally (11 per cent), Australia represents 4 per cent of mining and 1.5 per cent of refining. With known deposits and active mines operated in Western Australia, Tasmania, South Australia, New South Wales and
Queensland, there is an opportunity to leverage our strong mining and ESG credentials to increase Australia’s contribution to global markets.

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