Updating Australia’s Critical Minerals List: issues paper

14 August 2023

Critical Minerals Office
Via: CMOconsultation@industry.gov.au

Updating Australia’s Critical Minerals List: issues paper

The Northern Australia Infrastructure Facility (NAIF) is pleased to provide this submission to the Critical Minerals Office’s consultation into Updating Australia's Critical Minerals List.

As a corporate Commonwealth entity financing projects and business in the Northern Territory,
Queensland and Western Australia, NAIF plays a significant role in developing northern
Australia. Since its establishment NAIF has become a trusted partner of the north and a key enabler in critical minerals projects through its financing mechanisms.

The proportion of critical minerals projects in NAIF’s pipeline has increased as demand booms for northern Australia’s significant deposits. As a leader in this sector, NAIF has already committed $655 million to four critical minerals and rare earth projects worth more than $2.3 billion; in turn, these projects will deliver a $5.6 billion boost to the Australian economy, supporting 2,500 jobs.

In NAIF’s lending pipeline – and going through a due diligence process – are another five critical minerals projects worth nearly $6 billion into which NAIF could invest around $950 million, supporting thousands of new jobs. A further four projects worth $1.5 billion are being actively investigated by NAIF, potentially giving the region even more of an economic boost.
Altogether, these projects – four in Western Australia, four in Queensland and one in the
Northern Territory – would help meet the huge global demand for critical minerals, expanding the sector in northern Australia and developing sovereign capability to build reliable, competitive and diverse supply chains for Australia and its key international partners.

As a lender with a unique mandate of creating economic growth and public benefit to support investment and jobs, NAIF’s priority has been to reduce the risk profile on projects vital for economic growth to attract more private capital.

Working with proponents during project development phases, NAIF provides expertise to help optimise capital structures. It also provides cornerstone debt to crowd-in other financiers and leads the technical due diligence on behalf of the lender group.

These strategies support critical minerals projects as they face the significant gap between what is the mine opportunity and the complexities of mineral processing. Critical mineral projects currently under consideration by NAIF include developments in rare earths, vanadium, lithium hydroxide, high purity alumina and silicon.

This submission will center on NAIF's emphasis on addressing key questions where we believe there is an opportunity to add value.

PO Box 4896, Cairns QLD 4870 | P 1300 466 243 | www.naif.gov.au
For minerals that are currently on the list, or minerals that should be considered for addition to or removal from the list:

Nickel: Nickel is an important addition to the list of critical minerals by the government due to its significance to various industries and national economies. There are many reasons why government might consider nickel to be important and warrant its inclusion, such as use in industrial applications, infrastructure development, advanced manufacturing but more significantly for renewable energy technologies where nickel sulphate and phosphate play a crucial role in the development of renewable energy technologies, such as lithium-ion batteries used in electric vehicles (EVs) and energy storage systems.

Australia has significant nickel resources in the form of both sulphide and laterite deposits, however current global supply of nickel sulphate is heavily concentrated towards Indonesia and China. Due to its widespread use in essential industries, ensuring a stable supply of nickel is important for Australia's economic and strategic interests. Dependence on foreign sources for nickel poses a risk to national security and economic stability.

The rationale for including nickel on the critical minerals list makes sense to establish varied supply chains and reduce the risk of relying too heavily on one source. NAIF's interactions with several nickel refining projects highlights that these projects require substantial investment, and attracting investors could require government aid such as concessional finance, grants, or equity to help develop these capital-intensive ventures. This underscores nickel's importance in the critical minerals listing, emphasising its role in fostering strong and sustainable economic growth.

Molybdenum: The inclusion of molybdenum on the critical minerals list is important for several reasons, primarily due to its essential role in various industries and its potential impact on economic, technological, and strategic aspects. Molybdenum is used to make alloys, when added to steel, it increases strength, hardness, electrical conductivity and resistance to corrosion and wear. China is the largest global producer of molybdenum, followed by Chile and the United States. Molybdenum is typically found in association with copper, and several copper deposits in the Mt Isa region contain elevated levels of molybdenum that could potentially be extracted commercially.

Including molybdenum on the critical minerals list could result in an increased focus on these projects and the development of a new molybdenum supply chain in Australia.

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? This differentiation could reflect the size and maturity of markets and the different challenges or barriers faced:

NAIF supports the idea of distinguishing between the importance levels of minerals. While the comprehensive list helps identify key minerals, it would be beneficial to categorise their criticality. This would help NAIF direct its financial focus effectively.

Certain minerals on the critical list serve various purposes across different sectors. For instance, zircon appears on the list, but only a small portion is used for critical applications like

PO Box 4896, Cairns QLD 4870 | P 1300 466 243 | www.naif.gov.au
zirconium metal in high-tech sectors (critical). The majority of zircon is employed for non- critical purposes like ceramic glazing of tiles and bathroom fixtures (non-critical).

Therefore, providing clarity on the specific critical aspects of minerals would aid NAIF in determining project alignment with the Government's critical minerals strategy. This way, NAIF can discern which projects are in line with the strategy and which ones may not meet the government’s agenda and therefore may be less relevant.

What should trigger an update to the list? For example, global strategic, technological, economic or policy changes:

The Critical Minerals list needs flexibility to add new resources as global trends change. For instance, although copper isn't presently critical, its demand might surge due to increased renewable energy adoption, potentially straining supply chains.

The list should possess the ability to incorporate new resources, when necessary, without requiring fresh consultations. While routine consultations are important, they could occur on a scheduled basis rather than each time.

Yours sincerely,

Craig Doyle
Chief Executive Officer
Northern Australia Infrastructure Facility

PO Box 4896, Cairns QLD 4870 | P 1300 466 243 | www.naif.gov.au