We’re well-placed to drive industry to a better future

Electric vehicle sales rose nearly 40 per cent in 2020 to an estimated 3.1 million units, and forecasts for 2030 range from 30-40 million units.

COVID has signed the death warrant of vehicles powered by the internal combustion engine, as growth in electric vehicles during the zenith of the pandemic outpaced expectations.

There has been an irreversible commitment by governments around the world to reduce transport emissions and build the infrastructure to support lithium-ion battery vehicle electrification.

Led by disruptor Tesla, all prominent car makers are following suit, announcing final production dates for internal combustion engine vehicles between 2030 and 2040.

Battery technology is rapidly improving, and the cost of conventional versus electric cars is heading towards parity with $US100/KWh storage cost approaching. This represents an extraordinary opportunity for Australia, as the demand for minerals for clean energy and batteries will grow exponentially.

Electric vehicle sales rose nearly 40 per cent in 2020 to an estimated 3.1 million units, and forecasts for 2030 range from 30-40 million units.

Australia is in the fortunate position of possessing abundant critical minerals and world-best mining expertise and infrastructure. Our country is the largest producer of hard rock lithium and has significant nickel, graphite, cobalt, manganese and rare earths resources. These are used for lithium iron batteries as well as wind turbines, electronic devices such as smart phones, and defence applications.

But much of these resources are stranded at the moment. Large capital costs, perceived risks of complex extraction, and long project lead times impede traditional capital raising. Manufacturers of anodes, cathodes and cells — elements of battery technology — remain wary of the risk of investing in mining.

Australia has to think not only about liberating its resources, digging them up and shipping them out, but also designing a downstream processing route so that the extracted minerals can be transformed into battery-grade chemicals, thereby enhancing the nation’s resource economics.

In this way, Australia can become a price maker, not a price taker. At the moment, critical mineral processing is dominated by China — 70 per cent in the case of cathode materials, 90 per cent in the case of rare earths and 100 per cent in the case of graphite, the dominant anode material.

This did not come about because of a nefarious plot by China to hold the world ransom to supply. Rather, the West was happy to dump its ores and concentrates on China, leaving it to the Chinese to carry out the ugly processing techniques with high carbon output. Unsurprisingly, China looked to the future, and supported this industry with cheap access to land and reagents, recognising a long-term strategic pay off.

A crossroads has been reached where this hegemony must change. The US and Europe have set out plans for self-sufficiency in supply chains. Depending for critical minerals on a single nation — China — is no longer an acceptable risk.

Additionally, environmental sustainability rules being mandated on car makers to limit the carbon footprint create a need for supply chains with less complex transportation and cleaner processing. Australia is uniquely placed to re-enter the car industry by establishing downstream manufacturing of battery-grade chemicals in industrial hubs with low or zero carbon footprints.

Even if battery manufacturing is beyond reach, at the very least Australia can produce precursor cathode and anode materials along with intermediate battery grade products. Australia is developing some world-class technology in chemical processing and lithium-ion battery electrode optimisation. With an expanding renewables inventory, Australia can lead the way in battery storage.

Instead of sending to China an ore which is only 6 per cent lithium — yes, that is 94 per cent waste we are exporting — or sending rare earths concentrate to Malaysia for oxide separation followed by refining in China, we should be doing this separation and processing here.

There are some encouraging signs. Take Australian Strategic Materials, which has a rare earths resource in Dubbo, NSW. Its operations linked to South Korea will result in a collaborative bilateral supply chain that advances Australia in rare earths processing, and provides Korea and its dominant battery and other leading industrials with security of supply. This is genuinely win-win.

A final point to stress is the opportunity for Australia to diversify its trade routes.

A case in point is South Korea. Korea is Australia’s third largest export partner after China and Japan. Australia enjoys a $15.5bn trade surplus.

POSCO, Korea’s national steelmaker, is the largest single importer of raw materials from Australia. Yet few people would know this, given the lack of airtime this relationship gets.

The synergies in battery minerals between Australia and Korea are clear, and this middle-power co-operation would be timely. The same is true of Australia and Japan. Will Australia seize these opportunities?

Ross Gregory and James Kruger are executive director of and consultant for Altor Electric, which specialises in advising on business opportunities for firms involved in critical and battery minerals.