Intergenerational Report: Critical sector to pay for ageing Aussies

As Australia transitions away from coal and gas, an emerging, crucial sector will keep the government’s coffers lined to meet rising costs.

Australia’s burgeoning critical minerals sector will be crucial to transition the world to net zero and bolster the country’s coffers and pay for aged care, the NDIS and defence over the next 40 years.

The Intergenerational Report, to be released by the Treasurer on Thursday, explains that a 350 per cent increase in global demand of critical minerals will be needed by 2040 in order to reach the 2050 net-zero target, with broad expectations Australia will be relied on to meet demand.

The report will reveal that aged care, health, NDIS, defence and servicing government debt will be the biggest strains on the budget over the next 40 years – rising from one-third of GDP to one half by the 2060s.

It says critical minerals will be crucial to keeping the budget in good stead as the government moves away from coal and anticipates a decline in revenue from the fuel excise as more people transition to electric vehicles.

Already the world’s largest producer of lithium, Australia’s exports are set to double over the next five years alone, the report reveals, with forecasts anticipating global demand could be up to eight times higher by 2063.

The country’s vast reserves of nickel, zinc and bauxite – all critical for producing clean energy technology like electric vehicles and batteries – will also be in increasingly high demand.

Treasurer Jim Chalmers says Australia has what the world needs. Picture: NCA NewsWire / Martin Ollman

The report says Australia has potential for “more undiscovered minerals”, noting around 80 per cent of the country’s land mass has been under-explored.

It also notes Australia is one of the few countries in the world that has “all three key elements” of the aluminium industry.

“Aluminium is an important input to a number of technologies critical to the energy transition,” the report says.

“It features in electric vehicles, wind turbines, batteries and is a more sustainable building material due to its recyclable properties.”

Australia’s lithium reserves will be relied on around the world as part of the transition to net zero by 2050. Picture: NCA NewsWire / Naomi Jellicoe

Treasurer Jim Chalmers said Australia had a “big opportunity to deepen and broaden our industrial base and usher in a new era of economic prosperity for our country”.

“We have just what the world needs, just when the world needs it, and that’s what the Intergenerational Report has confirmed,” he said.

“We have the chance to do more than just rip and ship our minerals – we can mine, refine and manufacture them as well – creating more jobs and more opportunities for more Australians into the future.”

Resources Minister Madeleine King said the road to net zero “runs through the resources sector”.

“If we are to confront the challenges of climate change, we will need more mining – not less,” she said.

“The world will need our critical minerals to build the batteries and wind farms and solar panels needed to power the energy transition.”

Originally published as Intergenerational Report: Critical sector to pay for ageing Aussies