Australia must invest in developing an evidence-based, competitive set of critical minerals, rather than aiming to capture a broad and vague midstream supply chain, attendees at this week's AusIMM Critical Minerals Conference in Brisbane heard.
Canberra risks sinking money into projects which are "strategically attractive in theory but structurally unrealistic in practice" if it does not refine its goals, Critical Minerals Association Australia managing director Namali Mackay said on 21 September.
The federal government set a wide-reaching aim to build sovereign capability in critical minerals processing and extract more value onshore from Australian resources in its 2023-30 critical minerals strategy.
The Queensland government has also outlined a goal of moving critical minerals from the ‘pit-to-port' model to a ‘pit-to-process-to-product-to-port' model, according to state's 2025-30 manufacturing strategy.
But Australia must take a realistic approach about which parts of the supply chain it can, and should capture, Mackay cautioned.
Australia has experience and comparative advantages in shipping generic bulk commodities such as iron ore and alumina, but many critical minerals have no generic grade because they must go through lengthy qualification processes tied to a specific customer's needs, Mackay said.
Moreover, Australia's midstream competitors in east and southeast Asia are closer to end-use centres of demand and benefit from industrial clustering, which allows closer cooperation between refiners and manufacturers, reducing logistics, energy, and human capital costs, she added.
While midstream products lead to a value addition, they also come with higher costs associated with reagents, technological complexity, and skilled labour, Mackay warned, arguing that Australia should not see international collaboration on refining with partners in Japan, Korea, Europe and the US as a failure of domestic capability.
There may be some cases where the strategic value of a mineral may outweigh its short-term market value, justifying government-subsidised production, but the government must clearly outline the rationale and public benefit in these instances, Mackay said.
The devil is in the details
The "sweet spot" for Australia's midstream processing ambitions could be generic intermediary products such as sulphates and oxides, engineering firm GHD's critical minerals lead Sam Taylor said.
Australia should focus on products which can pivot to customer demand changes in today's rapidly shifting market, Taylor said, citing lithium sulphate as an example of an intermediary product which can be further processed into either lithium carbonate or lithium hydroxide, which are primarily used in lithium-iron-phosphate (LFP) and high-performance nickel-cobalt-manganese (NCM) batteries.
Focusing on the upper end of the midstream would allow Australia to remain technology-agnostic while companies compete for downstream market share in east Asia. This would ensure a larger market for Australian products and reduce price volatility. Processing spodumene into lithium sulphate would achieve the midstream goal of a significant value-add compared to a concentrate production while hedging risk, Taylor added.
Antimony metal and antimony trisulphide are also promising options, because Australia already produces antimony concentrate and sees healthy demand from both conventional and emerging use cases, he said.
Meanwhile, mixed rare earth oxides and mixed rare earth carbonates might be the "sweet spot" for Australia's rare earths industry, leaving downstream manufacturing to international partners, Taylor said.
Australia should also aim to recover more value from strategic by-products such as tantalum from lithium processing and gallium from alumina refining, moving sideways in existing markets that have not been fully captured rather than into the more competitive downstream sector, Taylor said.
