Critical minerals potential too important to squander

Within seven years, the world will need more than 260 new lithium, cobalt, nickel and copper mines to meet global demand for minerals-intensive electric vehicles and energy storage batteries. The good news is that Australia has the resources to capitalise on the opportunity. The bad news is that the nation is being outpaced by rivals with more competitive policy settings. In Future Critical, a blueprint calling for urgent changes, the Minerals Council of Australia warns Australia is at risk of missing out on a “once-in-a-generation opportunity” to help meet global demand for critical minerals needed to assist the world in meeting net-zero targets.

The MCA’s 53-page Future Critical reform blueprint reflects many of the concerns raised by the Business Council in its “Seize the moment’’ report a fortnight ago. Problems identified by the MCA include Australia’s 30 per cent corporate tax rate, which is the third-highest in the OECD; stagnant investment in mining capital, which has plateaued over the past five years; and a halving of productivity since the Hawke-Keating reforms of the 1990s.

While mining has underpinned high living standards for decades and poured billions of dollars into the public purse for roads, schools, hospitals and welfare, future national wealth from mining is not assured, the MCA warns. It has sounded the alarm ahead of a dinner address from Anthony Albanese on Monday night in the Great Hall of Parliament House, national affairs editor Joe Kelly writes. Leading miners will be in Canberra for the sector’s annual Minerals Week program, which coincides with the resumption of parliament. The sector’s regulatory burden needed to be reduced, MCA chief executive Tania Constable said. The report puts the cost to the economy from a 12-month delay in environmental approvals at $51bn in cumulative GDP loss, based on the 16 years it takes to bring a new mine from discovery to production, she said. With Workplace Minister Tony Burke introducing his second round of industrial relations legislation this week, the Future Critical report argues against “further workplace relations changes that would reduce productivity”. The government is offering mining companies an olive branch, Ewin Hannan reports. It has confirmed a new test to prevent specialist contractors being inadvertently caught up in the controversial same job, same pay laws. But Ms Constable warned on Sunday that the labour hire changes would be a “dagger to the heart of investment in this country”, resulting in higher costs across the economy.

The Future Critical report warns that workplace relations legislation that reduces workers’ incentives and effort, or business workforce flexibility, would cause large reductions in labour productivity. But there is no single lever for improving productivity and international competitiveness, it acknowledges: “Policy must aim to continually improve investment conditions. This includes delivering internationally competitive tax settings, expanded trade and investment opportunities, efficient and effective regulatory settings, productive workplace arrangements, an efficient transformation to net-zero emissions and industry-focused skills and training.’’

Exploration and mining investment, the blueprint notes, depends on companies’ expectations of future financial returns. Australia’s effective tax rates on mining investment were among the highest compared to other mining jurisdictions. And competition for investment was increasing from established and emerging resource-rich countries strengthening their minerals sectors in Africa, South America, Southeast Asia, India and the Middle East. Governments and policy planners cannot afford to risk the unintended consequences of ignoring such a challenge.