Big holes in flawed Australian mineral strategy

Australia's Minister for Resources, Madeleine King, released the government's long awaited "plan to grow our critical minerals industry" on 20 June. The first utterances in ‘Critical Minerals Strategy 2023-2030', immediately after the table of contents, proclaim the role of First Nations peoples. Their "voices and knowledge", the strategy report affirms, are critical to the success and sustainability of the sector.The deference to aboriginal Australians stands in marked contrast to the complete neglect, in the following 50 pages, of another group with an unambiguous role in the industry's success. Vague generalised references to stakeholders and industry participants aside, there is not a single statement recognising the ‘voices and knowledge' of the entrepreneurial geologists and financiers hailing from the private sector who must surely be critical to the success and sustainability of the industry, as they have always been.Sure, the industry has been populated by some unsavoury characters. Failure rates are high. Managerial quality is inconsistent. But the critical minerals industry would be nowhere without the risk taking, foresight and unrelenting determination of those leading the charge to find resources and build mines. Without embracing the ongoing culture, skills and knowledge of those who have transformed a complex mineral endowment into an industry, any government strategy would prove embarrassingly implausible. No number of First Nations peoples could adequately substitute.The Australian government is late to the party. And, yet, the strategy report is written as though the industry has no future without its official "vision" and "pathway". Growth is already well underway. Resources are being identified, skills recruited, markets cultivated, financiers engaged and infrastructure constructed. With so much momentum already evident, the industry will post strong growth with even a minimal future government contribution. Strategy for 2030The strategy envisions that, by 2030, Australia will have "grown the geostrategic and economic benefits of its critical minerals sector" and become "a globally significant producer of raw and processed critical minerals". Australia is well on track to fulfilling this official vision. Well done, government! Instant success!The strategy document draws no distinction between what was going to happen anyway and what is now likely with the government's refreshed agenda.Omission of any quantifiable targets against which the government can be held accountable simply facilitates a basic dishonesty about its role.The strategy authors write as if 2030 is a long way off. The report itself concedes that "new mining, processing and manufacturing projects can take more than 10 years to reach production". In other words, foundational decisions about 2030 outcomes have already been taken. The government is trying to sneakily grab credit for the work of others. There is nothing in the strategy statement to reassure investors that the industry will be larger or more profitable as a result of Minister King's newly framed intervention.Rather than creating investment certainty, the strategy fosters numerous doubts about future policy impacts. The government warns that "we cannot spread our efforts too thin". In doing so, it promises that it "will identify minerals that are inputs to priority technologies that support Australia's national interest".The mooted list of priority minerals will apparently include some, as yet unspecified, subset of critical minerals. Criteria behind the national interest test remain undisclosed. For all practical purposes, no strategy exists until the government explains the nature of the national interest test and what officials infer about mineral development priorities.With the government determined to pick commercial winners and losers, the chances of economic white elephants diverting valuable funds from market driven investments also rise.The absence of definitive statements about which minerals will receive government backing renders the so-called strategy useless as an investment decision making tool.Even with a well-defined list of priority minerals, the path toward assistance might prove troublesome. "Gender equality and First Nations engagement strategies will inform part of the assessment criteria for grant programs", according to the strategy. With limited funds on offer, an otherwise compliant company could be beaten for funding by another with a higher gender equality rating. Or, perhaps not. Who knows?The strategy document warns that ownership of mineral resources, particularly lithium and rare earth elements, by foreign companies could affect Australia's strategic and energy security. It foreshadows interventions to ensure domestic supply of critical minerals for downstream projects.A threat of supply diversion must leave overseas investors uncertain about their tenure. Nor could Australian companies guarantee fulfilment of otherwise legally binding raw material offtake commitments.Like minded?The government wants to attract investment from "like-minded countries and global companies". It says it will track and monitor foreign investment in critical minerals projects to ensure it is not counter to Australia's national interest. Presumably, ‘like-minded' means ‘no Chinese'. But it could also mean bans on US, Japanese or Korean money if their investments threaten to divert minerals earmarked for the government's more highly favoured downstream projects. The government promises, without specifying a timeframe, to identify "where we can be most competitive and prioritise policy support". Isn't that the same as saying we do not yet have a strategy? The Australian government recognises it is a minnow among global giants competing to maximise their national shares of renewable energy value chains. It wants its actions to be "proportionate to the size of our economy". That may sound sensible enough until one recognises that Australia is steward of a hugely disproportionate share of the world's critical minerals.Having a government so enmeshed in setting priorities will be a novel experience for Australian miners. They will have to choose between waiting for government signals and moving ahead on their own initiative.Already, many Australian companies have decided to leave for more certain, and financially lucrative, policy environments in the USA, Canada and Europe. More will follow the path offshore, drawing on Australian savings.The so-called strategy turns out to be little more than a series of loosely linked thought bubbles bereft of positive guidance for investment decision-makers. *John Robertson is a director of EIM Capital Managers, an Australia-based funds-management group. He has worked as a policy economist, business strategist and investment-market professional for nearly 30 years, after starting his career as a federal treasury economist in Canberra, Australia

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