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Rare earth miners ‘need support’ to bolster manufacturing future

February 9, 2022

Rare earth miners ‘need support’ to bolster manufacturing future

Critical mineral and rare earth miners require greater support from the Federal Government to jump-start a new auto industry, according to a new report by The Australia Institute.

Critical mineral and rare earth miners require greater support from the Federal Government to jump-start a new auto industry, according to a new report by The Australia Institute.

Australia is missing out on significant export value by shipping raw materials overseas rather than processing them domestically, the Institute’s Dr Mark Dean noted in his latest paper Rebuilding Vehicle Manufacture in Australia.

This is most obvious in the case of spodumene (lithium ore) refining, Dr Dean said.

In 2017, Australia netted $1.1 billion through its spodumene exports, but research from the Future Battery Industry Cooperative Research Centre showed the bulk of processing – including precursor production work worth $22.1 billion – was undertaken overseas.

Similar scenarios have played out in Australia’s copper and nickel industries, too.

Dr Dean said Australia can better realise and capture this missed value by developing an electric vehicle manufacturing industry and better processing the raw materials dug out of the nation’s soil. 

But doing this will require more government support to better link miners with supply chains to better insulate the industry from commodity downturns.

Equally, Dr Dean said, the government should look to encourage research and development programs within relevant mining sectors.

“Industry policy will need to incentivise mining companies and interests to increase their R&D expenditure in ways that commit them to domestic value-adding processes. Beyond any direct incentives, this can be achieved with developed Australian supply chain capabilities,” he said. 

“This will maximise the flow of raw inputs to domestic industrial production instead of to overseas buyers that will produce the batteries that we don’t. Mining companies will continue to simply export their raw commodities if Australia does not develop manufacturing activities that demand refined, processed lithium.”

Government throws support behind mine

The report comes a week after the Federal Government announced it would provide a $140 million project financing loan to Hastings Technology Metals’ Yangibana rare earths mine in Western Australia.

The project is tipped to be Australia’s second-largest rare earths exporter behind Lynas Corporation, and this round of financing follows the government’s earlier pledge to support Australian companies entering the rare earth space.

Supply of these minerals has become a crucial geopolitical matter given the important role they play in green energy technology and China’s current near-monopoly over their extraction and export.

The government’s $1.5 billion Modern Manufacturing Strategy – released in October 2020 – included critical mineral and rare earth project development as one of its six key areas of focus.

Under the program, the government intends to grow Australia’s rare earth and critical mineral processing capabilities to create greater value for the nation.

“Australia has significant reserves of the critical minerals and metals which drive the modern global economy. These are used to manufacture advanced technologies such as electric vehicles, mobile phones and renewable energy systems,” the government said at the release of the strategy. 

“However, because the majority of primary ores are shipped overseas for processing, Australia derives a small share of the potential overall benefit. Australia can capture greater benefit from these value chains by undertaking further value adding and manufacturing here.”

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