Canberra needs to speed up approvals for development of critical minerals

The government needs a task force review to help kickstart the critical minerals sector, says PwC’s chief executive.

PwC CEO, Tom Seymour. Picture: The Australian / Gary Ramage

The federal government has been urged to modernise the nation’s mining regulations to kickstart a boom in critical minerals such as lithium, cobalt and vanadium and exploit a growing global market.

Tom Seymour, the CEO of PwC Australia, said there was great potential for the sector here because the energy transition of the world involved “most things being electrified” and there was also the need to build “a bunch of renewable energy to drive that electrification”.

“Whether it’s renewable panels or wind turbines right through to all the elements that drive electrification, you need an enormous increase in the critical minerals being supplied to the world,” he said ahead of The Australian’s Critical Minerals Summit, presented with PwC on Friday.

“You can go through every critical minerals category and it’s exponential, the increase the world needs.”

Mr Seymour said that while China was very rich in critical minerals, there were obvious supply chain constraints in relying on that source, which provided great opportunity for Australia which was well-endowed with those minerals, particularly in the north.

The potential for the sector was well recognised but urgent government action was needed to fill the gap between potential and actuality.

He said while Australia was expert in mining resources such as iron ore and coal, critical minerals presented different challenges because of the specialised chemical and processing skills needed and the lack of hedge markets to reduce investment risk.

“(Coal and iron ore) mines are largely logistics businesses,” he said.

“The complexity in those businesses tends to be what you’d call from mining to mill – getting the ore out of the ground and getting it to the mill, but the actual processing of it is relatively simple. Critical minerals tend to be much lower in bulk and less about logistics, but much more about complex downstream processing.

“There’s a lot of chemistry in critical minerals … So the first big gap is skills, the second is land access, in the sense that new mines have got harder to be brought to market because you’ve got a much more rigorous process, whether environmental, cultural heritage, indigenous land rights, to get access to the land.”

Mr Seymour urged Canberra to set up a task force review — not to deregulate, but to modernise the regulatory regime and speed mine approvals.

He said a lot of minerals needed offtake markets (which allow buyers to purchase product at a particular price as a hedge against future prices) but the lack of volume in critical minerals made them much harder to hedge.

“If you’ve got a 30-year project you need to finance and you’ve got an inability to hedge, it gets more difficult,” he said. “The only way you can offset that is to have your offtake contracts to almost be (with) equity participants in the projects. It’s a different sort of financing model.”

Japan and Korea were the obvious customers for Australia’s critical minerals “because that’s where the batteries are made” and the federal government needed “a much more dedicated and focused program to build bilateral trade relationships” with those countries.

Mr Seymour said that without the resolution of land access, critical minerals would continue to be too risky for investors. One option was for government to create conditions to accelerate investment.

“I definitely don’t think it’s an area government should be putting taxpayer funds at risk,” he said. “But can they make it easier for the private sector to risk their money?”

Mr Seymour said there was “a massive opportunity” for universities, especially those in Western Australia and Queensland, to develop a deliberate skills strategy to feed the industry.

Friday’s summit will be addressed by Treasurer Jim Chalmers; NSW Treasurer and Minister for Energy Matt Kean; and Madeleine King, federal Minister for Resources and Northern Australia. Details at pwc.com.au/criticalmineralssummit

Originally published as Canberra needs to speed up approvals for development of critical minerals