Governments use many different terms to describe the documents they publish, including ‘policy statement’, ‘white paper’, and ‘strategy’. As a government chooses the term used, it is accountable for its appropriateness.
The recently released Critical Minerals Strategy is poorly titled; it isn’t about minerals, and it isn’t a strategy either.
Critical minerals as a growth sector to replace coal and gas exports, the global need for diversification in processing and the further downstream industry policy such as batteries have been previously discussed here.
These identify the distinction between minerals (a naturally occurring inorganic substance or a solid substance with a fairly well-defined chemical composition), the refined product of minerals (elements, usually metals) and the utilisation of those refined products.
The Institute of Rare Earth Elements and Strategic Metals focuses on the outputs rather than the ores. The Institute monitors global prices and conveniently lists the 17 rare earth elements as well as a list of strategic metals. The lists identify the major uses of each element.
However, using ‘minerals’ is a minor issue over language and will ultimately reveal a change in the meaning of minerals. The same cannot be said for labelling the document as a strategy.
‘Strategy’ is a word with many meanings. It has a military use where it is distinguished from tactics by the planning scale. In game theory, it means the option taken once all other players’ options are taken into account.
In business, it specifies how the company will make money over the planning horizon. In all cases, the defining feature of a strategy is clear, measurable outcomes and plans for realising those outcomes. The Critical Minerals Strategy has neither.
Let’s start with objectives. Everybody who has worked on a strategy or plan has been drilled on the importance of SMART objectives (Specific, Measurable, Achievable, Realistic, Time-bound).
The objectives listed in the strategy are almost none of these being:
- create diverse, resilient and sustainable supply chains through strong and secure international partnerships
- build sovereign capability in critical minerals processing
- use our critical minerals to help become a renewable energy superpower
- extract more value onshore from our resources, creating jobs and economic opportunity, including for regional and First Nations communities
Not only do these objectives not fit the template, they don’t fit well with each other. The first talks about the importance of building supply chains through international partnerships, while the second emphasises a sovereign capability in processing.
The third goes even further into elements of manufacturing to support renewable energy, which must go beyond mere batteries to solar panels and wind turbines.
The strategy attempts to make a virtue of its vagueness, saying:
To clearly signal policy priorities for the sector, Australia’s Critical Minerals List will be published separately to the Critical Minerals Strategy. The Strategy sets out the Government’s broad and enduring policy direction, while the List can be updated in response to global strategic, technological, economic and policy changes.
This self-description says the authors recognise they haven’t written a strategy; they have only written a policy statement.
Clearly, the critical minerals list will be subject to future changes that might not require a rewrite of the strategy. However, having a critical minerals list should have been the centrepiece of the strategy.
Let’s now consider Australia’s Critical Minerals List. The strategy says there are 26 minerals on this list; however, that is an incorrect count. The list contains 22 elements (mostly metals), two groups of elements, one semi-refined mineral (high-purity alumina) and one single-element mineral (graphite).
The two groups of elements are the Rare Earth Elements (of which there are 17) and the platinum group elements (platinum, palladium, rhodium, ruthenium, osmium and iridium).
The 17 Rare Earth Elements are often found together and are chemically very similar, making their separation in refining challenging. However, they are not substitutable in use, and it is unwise to refer to them as one resource.
What’s also missing is some objective basis for defining something as a critical element or resource.
To refer back, as the strategy does, to Australia’s Critical Technologies Statement becomes circular as the List of Critical Technologies in the National Interest identifies “Critical minerals extraction and processing” as one of the advanced manufacturing and materials technologies that have “a high impact on Australia’s national interest”.
Ultimately, our approach to critical elements and resources should start with a straightforward analysis of the existing world production, including the full flow from source mines to finished resources.
Following that, we identify likely global growth in demand and the opportunity for developing more Australian mineral resources to meet that demand. Finally, determine what we think are the efficient refining strategies that utilise our comparative advantages and leverage the comparative advantage of our trading and strategic partners while also ensuring the diversity of supply chains of these critical metals to ourselves and our trading partners.
Unfortunately, the Australian Critical Mineral Prospectus is the closest we come to that. However, this is little more than a pamphlet designed to get other countries to invest in digging up the resources. Even that is based on a historical view of the prospects for capital formation in Australia, given that we are now a net exporter of capital.
The government might be forgiven for all these weaknesses if not for failing to look at the fourth step in the critical element journey, resource recovery.
Recycling is becoming an acute issue in renewable energy as groups interested in delaying the transition to renewables falsely claim that solar panels and wind turbines are not recyclable.
Unlike oil and coal, the critical elements are not consumed in creating energy or any other application. Nevertheless, they are eventually replaced.
Governments in Australia have espoused a theory of ‘product stewardship’ in which producers are meant to take a whole-of-life view of their product and consider end-of-life strategies. This may be a reasonable approach in producer-driven change, but the energy transition is public policy driven.
The government needs to ensure effective recycling programs are in place. Furthermore, the time to develop recycling processes is when the volume is small.
While recovering critical elements can be considered competition to the resource extraction industries, they should be seen as a core feature of the industry’s environmental, social and governance (ESG) credentials.
In this regard, the former NSW government’s Critical Minerals And High-Tech Metals Strategy is superior to the Australian government’s effort.
While there are opportunities for innovation throughout the critical minerals supply chain, the greatest opportunities appear to be in recovery.
One paper estimates that only 12.5 per cent of the world’s e-waste is recycled, the rest going to landfill. The innovation opportunities cover policy, automation of e-wate dismantling and the chemical processes for resource separation.
Today, recycling is unattractive, given the gap between the price of the new resource and the cost of recovering the resource. But recycling technologies will be very sensitive to experience effects, and early government support can be expected to result in long-term profitable businesses.
The adage is that the best time to plant a tree was fifty years ago; the second-best time is now. The same is true of critical element recycling; the time to act is now.
David Havyatt is a former telco executive, former adviser to Federal Labor ministers and former advocate on behalf of energy consumers. He is a long term observer of Australian innovation policy.
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