Weekend read: Not such a lucky country

From pv magazine ISSUE 07-08/23

With his 1964 book “The Lucky Country,” Australian Donald Horne created a label the nation wears with pride – even if the title was, in fact, an indictment. Australia’s luck had made it lazy, Horne felt, like a spoiled child whose fortune remains, despite mediocrity. Dealt winning hand after winning hand, the nation had never truly learned to play.

From gold to coal to iron, and now critical minerals, Australian soil holds a bounty. This is not to say Australians lack inventiveness but rather that the nation lacks the collective foresight to build upon such riches.

As the hype around Australia’s hydrogen export prospects dims, and renewable mega-projects such as the Asian Renewable Energy Hub and Sun Cable have begun to talk more of their domestic scope, ambition seems to be reclining back into the bosom of natural resources.

Australia is the world’s top supplier of lithium ore, is the third biggest for cobalt, and fourth for mined copper, nickel, and rare earths. The nation has deposits of basically every material needed for energy storage technology. There is money in digging but twice as much in refining and processing ores, let alone manufacturing battery materials.

“To produce one ton of [nickel-manganese-cobalt, NMC] batteries is about 30 to 50 tons of mined ore,” Mark Urbani, founder of battery recycling startup Renewable Metals told the WA Renewables and Critical Minerals Superpower Summit held in Perth, Western Australia, in June. Australia is mostly shipping waste to China, where 98% of Australian lithium is processed.

Digging to refining

At the same summit, Matt Dusci, acting chief executive of miner-cum-critical materials processor IGO, highlighted barriers his company has hit. Last year, IGO and joint venture partner Tianqi Lithium Corp., from China, produced Australia’s first commercial quantities of battery-grade lithium hydroxide, from the Kwinana lithium hydroxide refinery. IGO is also working with billionaire Andrew Forrest’s Wyloo Metals to construct a nearby facility for precursor battery cathode materials.

Alongside Albermarle, Australian Vanadium, Lynas, and Illuka, IGO is developing critical mineral refining and manufacturing in Australia and is the only one, thus far, to reach a finish line. IGO’s Dusci described the Australian landscape as “incredibly challenging.”

“We can compete on operating cost, we can compete on a safety and reliance jurisdiction, we can compete on ESG [environmental, social, and corporate governance], we can compete when it comes to having a true cost on carbon when producing,” he said. “Where we struggle is capital.”

In The Lucky Country, Horne describes Australia as deeply conservative – something investor and government adversity to “new industry” risk bears out. Australia, added Dusci, needs to “create an environment where government does share some of the risk.”

Starting blocks

Other nations recognise the opportunity of manufacturing energy transition materials as “a race,” says Tim Buckley, of Climate Energy Finance, pointing to the U.S. Inflation Reduction Act (IRA), and China’s spending, which Buckley says outpaces the United States four to one.

The United States is eager to “friendshore” mineral supply chains in Australia and the allies’ free trade partnership is expected to afford special access to IRA tax credits. “That’s very promising but I wouldn’t be holding my breath for the US taxpayer to send billions of dollars of subsidies for Australia,” said Buckley.

While Australia awaits foreign capital, rivals are poaching innovators and entrepreneurs, according to Kirk McDonald, from lithium battery innovation initiative Supercharge Australia. “The money is coming thick and fast for [startups] to leave,” McDonald told the minerals summit. He said an Australian company he had worked with recently had struggled to raise AUD 1.8 million ($1.2 million) in its homeland and relocated to bank a no-strings-attached AUD 8 million offer from the state of California.

That touches upon Australia’s lack of skilled labour. Years of under-investment in tertiary education is meeting a worldwide hunt for skilled workers. “We simply won’t have the labour force or the skills to build these new industries,” said James Choi, managing director at advisory J2, and a former Australian ambassador to Korea. “If we can’t build the skillsets here in Australia, we have to acknowledge that we do have to have more flexible work and immigration policies to allow skilled workers to build these new industries.”

The “brain drain” once worked in Australia’s favour but this no longer evident for engineers. The Australian Critical Mineral Strategy 2023-30, published by the government in June, is evident of this dearth. Within it is no design nor bold policy, only an AUD 500 million fund that lacks any energy specialization.

The strategy does note, “Foreign companies are securing ownership and offtake arrangements for a large share of Australian minerals, particularly lithium and rare earth elements. In this context, Australian processors and manufacturers may struggle to access supplies of Australian minerals in future.”

With “great lithium under beautiful forests,” as Western Australia independent MP Kate Chaney puts it, there may be little appetite for sovereign mineral wealth to be taken from under Australia’s feet. Mediocre may not be enough.