The crisis threatening Australia’s nickel and lithium operations is further proof of the dangers of taking mining for granted.
The enormous benefits of the emerging clean energy mining boom are not going to materialise with the wave of a wand.
This incredible opportunity for Australia to be a critical minerals powerhouse must be seized, it must be supported and it must be protected.
To view this critical minerals crisis solely through the lens of commodity cycles and market distortions misreads the moment, and the forces conspiring to chip away at Australia’s mining strength.
It is the emergence of a worrying new world for Australian mining. Our competitiveness on the world stage is being eroded.
On the cusp of a global clean energy mining boom, Australia’s hard-won economic advantages are being eaten up by global competitors that operate in jurisdictions where the costs are low and the policy environment is certain, stable and fair.
The insatiable global demand for critical minerals should have Australia in pole position; set to reap enormous dividends as nations scramble to get their hands on the very metals and materials that will build the clean energy economy of the future.
But our ascendancy is being challenged, and while the widespread shutdowns enveloping the nickel and lithium sectors are alarming in isolation, they spell danger at what may be coming down the road for other minerals and metals.
It is not enough to simply point across the Timor Sea and blame market forces when the reality is, adverse domestic policies are compounding the problem and pricing our mines out of the market.
That is the reality that dare not escape the lips of our political leaders: The cost of doing business in Australia is becoming a noose around our necks.
And that is the present predicament. Add on the impending cost of regressive changes to industrial relations law, thrust through the parliament without a care in the world to what it would do to productivity and economic growth. Spoiler alert: a negative impact.
Add the impending arrival of strict and costly environmental approvals, and threat of increased taxes and royalties.
The cumulative effect of these policies are not only a critical blockage to the investment required to build the mines of the future; the very mines that will drive Australia towards meeting its net zero target. They are eroding the competitiveness of our industry.
Attempts have been made by the Cook Government to provide partial royalty relief but given the scale of the crisis that is gripping the State, and the potential economic fallout, the response has been underwhelming.
What has been proposed merely increases the debt burden on struggling mining operations, asking companies to charge the full expense of any partial royalty relief on its accounts and record the liability on the balance sheet.
The only benefit of this basic loan is a short-term cash saving. While company debt tracks skyward.
While this relief is being deployed by the State Government, the Federal Government has a clear role to play in providing policy settings that can improve investment conditions for mining and alleviate this excessive cost base.
Last week’s decision to revisit the Critical Minerals list and include nickel is an important step. But there is a further role for the Federal Government here; one that requires urgency.
Limited, temporary support in the form of production credits should be used as a strategy to attract investment in mining and minerals processing and integrate them in the supply chains of strategic partners.
Project approvals must be streamlined, to reduce duplication and ensure decisions truly balance environmental, social and economic factors.
Currently, projects face a myriad of approvals both at an operational level and for the supporting infrastructure that it relies on.
Policy changes are required to ensure approvals processes are fast, efficient and robust – and approached in a clear and co-ordinated way.
In contrast to bulk commodities like iron ore and coal, mines for battery and magnet minerals and metals are smaller operations, have different cost profiles and require access to common infrastructure.
It is crucial that work ramps up on the delivery of multi-user infrastructure facilities, to help unlock deposits that lack even the most basic infrastructure.
There is history here also to lean on.
Australia’s ranking as a global leader in essential commodities such as iron ore and coal was not accidental.
It was the result of decades of collaboration with Japanese, South Korean, and Chinese industries to develop mines, infrastructure, and processing capacities, ensuring Australia became the supplier of choice for global steel mills and power stations.
These enduring relationships have not only facilitated trade and investment but have also propelled Australia’s economic growth.
As the global demand shifts towards minerals essential for achieving net zero, the question arises: can Australia replicate its past successes in this new era?
The urgency is palpable; we do not have decades, perhaps not even years, to correct our course.
The challenge now is identifying the necessary changes to seize this monumental opportunity and ensure Western Australia, and indeed the entire nation, remains at the forefront of the global mining industry in the transition to a net zero future.
Tania Constable is the Minerals Council of Australia CEO