Opportunity or Overreach: Is Australia Making the Right Moves for Critical
Australia is currently betting big on critical minerals.
Government support is growing, with the country positioning itself as a key player in the global energy transition; however, some are convinced that the nation is rushing into a crowded race.
The Albanese government recently vowed to establish a critical minerals strategic reserve upon re-election, pledging an initial investment of A$1.2 billion. In an April 24 announcement, the government outlines that the reserve would build on the Australian government’s extensive investment in critical minerals through two new mechanisms.
Does an Australian critical minerals reserve make sense?
National offtake agreements are one of the planned mechanisms. These would allow the government to acquire agreed-upon volumes of critical minerals from commercial projects via voluntary agreements, or to establish an option to purchase at a given price, holding security over these assets as part of the strategic reserve.
The second mechanism outlined is selective stockpiling, wherein the government promises to establish Australian stockpiles of certain key critical minerals produced under offtake agreements as required.
Following the government’s announcement, Tania Constable, CEO of the Minerals Council of Australia, published a piece on the move, questioning whether a critical minerals strategic reserve is the best approach.
In her view, the initiative is “certainly not without domestic risk,” and “may impact the commercial viability of operations through continued downward pressure on commodity prices.”
Australia’s current critical minerals strategy
Australia’s current Critical Minerals Strategy is focused on the period from 2023 to 2030, and is centred on developing strategically important projects, attracting and unlocking investment and promoting the country as a world leader in environmental, social and governance (ESG) performance.
It also includes a commitment to reviewing the country’s critical minerals and strategic materials list every three years, updating it in response to global strategic, technological, economic and policy changes.
As of writing, 31 critical minerals were recognised in Australia, plus six strategic materials.
AU$4 billion in total commitments are covered under the strategy, including AU$2 billion from the Critical Minerals Facility via Export Finance Australia, and an extra AU$2 billion in 2024.
In an article in the Australian, Lynas Rare Earths (ASX:LYC,OTC Pink:LYSCF) CEO Amanda Lacaze criticises the government’s critical minerals policy, arguing that it is “flawed and…
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