Australia's resources industry will benefit from the transition to a net-zero economy for decades to come

Australia’s ranking in global economic resources

Australia holds the world’s largest economic resources of gold, iron ore, lead, nickel, rutile, uranium, zinc and zircon and is a top five global producer of fifteen mineral commodities, including bauxite, coal, cobalt, gold, iron ore, lead, lithium, manganese, nickel, rare earths, rutile, tantalum, uranium, zinc, and zircon.

Australia is ranked world number one for lithium production and for the supply of bulk commodities of bauxite, iron ore and rutile, while it is ranked third in the world for rare earths production. Importantly, some of these minerals like lithium, nickel, rare earths, uranium, and zircon are critical minerals used to generate and store renewable energy, build electric vehicles, and manufacture future-facing technologies and electronic devices

What are critical and strategic minerals and why are they important?

The Australian Government maintains two lists of minerals and materials that are considered important to Australia’s modern technologies, the economy and national security. They are the Critical Minerals List and the Strategic Materials List. Both lists were updated in February 2024. The lists are updated every three years to reflect global strategic, technological, economic and policy changes.

The Critical Minerals List contains minerals that are essential to our modern technologies, our economy, and our national security. Australia’s Critical Minerals Strategy describes the future demand for critical minerals from our strategic international partners and focuses on minerals that are vulnerable to supply chain disruption. The list includes lithium, nickel, rare earth elements, titanium, and zirconium.

The Strategic Materials List contains minerals that are important for the global transition to net zero and broader strategic applications, specifically the priority technologies set out in the Critical

Minerals Strategy. However, the supply chains for these materials are not considered sufficiently vulnerable enough to meet the criteria for the Critical Minerals List. Australia’s strategic materials are aluminium, copper, phosphorus, tin and zinc.

Minerals on both lists are recommended by the Critical Minerals Office which follows a clear process to decide which minerals appear on the list by consulting extensively with industry, peak bodies, state governments and other key stakeholders that most likely include the US government and US Secretary of Defence.

Implications for investors

Australia is a resource-rich country with abundant critical raw materials and bulk commodities. Unlike other countries, Australia is not concerned about running out of these resources, as we have significant mineral reserves and can continue to export them globally.

This explains why in 2023, Australia’s mining exports were worth a record $466 billion, accounting for 18 percent of Gross Domestic Product and employing almost 300,000 people with many more indirectly employed by related industries. Mining is a growth industry and several of the minerals produced by Australian companies are in supply deficit and are of significant strategic importance to a clean energy global economy. Furthermore, Australia is a reliable supplier in a world of increasing geo-political and economic uncertainty, placing a premium on the product of Australian mineral exporters that can provide the vast quantities of minerals and materials required for an expanding and changing global economy as it evolves to a world of net-zero carbon emissions.

Another key implication for Australian investors is that the ‘Emerging Asia Region’ will be the next frontier of significant consumption of metals sourced from Australian producers. These countries which include China, India, Indonesia, Malaysia, the Philippines, Thailand, and Vietnam have a combined population of about 3.4 billion people, with an average GDP per capita of less than a third of that of China. Moreover, these countries are increasingly focused on the energy transformation for their economic and social development to adapt the China model of industrialisation and supply chain management. This trend points to a significant metals and materials deficit in the region, of which Australian producers will be major suppliers and therefore major beneficiaries.

Australia’s rich geology has underpinned the nation’s development since the 1850’s gold rush days and is now foundational to the implementation of large-scale emission reduction technologies necessary to address the global challenge of climate change.

Discerning investors who recognise the critical and strategic importance of the minerals and materials that are essential to the global clean energy evolution are likely to derive superior investment returns in the decades ahead.