There is little novelty in recognizing that the Australian minerals industry stands on the cusp of a new era driven by decarbonization of the global economy. Where possible – and increasingly, the definition of “possibility” is being redefined by the economic forces of innovation – the fossil fuels that drove industrial growth and prosperity through the 20th Century will be replaced in our energy ecosystem by renewable and hybrid power systems.
As with any disruption, that change brings with it potential value for those with the capacity to successfully embrace it – and decarbonization stands in particular as an unparalleled opportunity for the Australian minerals sector.
Put simply, a sustainable global economy based on renewable energy needs more mining. The wind, solar, and other forms of renewable electricity production that could meet the energy needs of a decarbonized world demand increased production of a host of industrial metals. One 3MW wind turbine alone requires on the order of 330 tonnes of steel, 4.6 tonnes of copper, 3 tonnes of aluminium, and 2 tonnes of rare earth elements. The same is true of the batteries and transmission systems required to covert these renewable electricity production systems to an integrated and consistent supply network. By some estimates, meeting climate stabilization targets agreed to in Paris in 2015 and at the UN Climate Change Conference in Glasgow this year (COP26) will require a quadrupling of mineral supply for clean energy technologies by 2040. For many readers of this article, that may be a span of time within their working life.
In terms of raw abundance, many of these commodities are not in any danger of exhaustion. Market economics has largely ensured adequacy of supply for most metals throughout the industrial age. Higher demand or perceived shortage drives increased prices, stimulating exploration and innovation, and making lower-grade mineral bodies viable to maintain supply. The changing drivers of a decarbonizing global economy change this equation.
Put simply, a sustainable global economy based on renewable energy needs more mining
As part of its commitment to ambitious carbon emission reduction targets, the European Union has announced plans to impose a carbon price on energy-intensive imports, including aluminium, steel, and other industrially important metals. With a reinvigorated focus emerging from COP26, other key Australian trading partners are likely to follow suit in evaluating – and pricing – the energy and emissions intensity of the industrial goods and materials they import. Recognizing the consequences of this historic momentum, leading management investment houses already require firms to disclose and manage climate-related risks, and many companies are actively auditing their supply chain emissions and driving suppliers to reduce the emissions intensity of raw materials.
As such climate-related disclosure becomes an increasingly common component of procurement and governance processes, the benefit of being a low-carbon producer is likely to ripple through the mining industry. We cannot expect to meet future resource demands by pouring more and more energy into digging ever-larger holes and processing lower-grade deposits.
Production of the future will require miners and mineral processors to identify new ways to discover, develop, and process ore bodies that both make economic sense and meet the environmental standards of local communities and global markets. Although representing a complex challenge, operators who are able to find the innovation solutions supporting transition to lower-emissions mineral production will see their economic competitiveness increase as a result.
Overcoming challenges
In Australia, we have the good fortune – or perhaps that could more rightly be expressed as the national foresight – of a substantial ecosystem of leading researchers and research institutes actively working to address the kinds of scientific and engineering challenges that could stand in the way of such innovation. At the Minerals Research Institute of Western Australia (MRIWA), we work to harness this research infrastructure specifically to support our mineral industry – catalysing, supporting, and co-funding research with industry partners.
Think of what MRIWA delivers to the mining industry as a symbiotic relationship – like algae living within the bodies of colonial corals. In that case, the algae get protection from the elements, the corals get extra nutrients, and the result is the Great Barrier Reef. Through our co-funded research programme – with a current portfolio of A$87.6M invested across 73 projects – we help to bring the best research minds to bear on the challenges of the Western Australian mining industry, delivering improved economic, social, and environmental benefits to the people of Western Australia (WA) from our state’s remarkable mineral endowment.
Last year, for example, Australian mines – largely in WA – supplied 49% of the world’s lithium production to meet the resource needs of a rapidly growing battery industry, bringing in around A$1.08B export dollars in the process. Current forecasts suggest this figure could more than triple by 2023 – but despite this dominant position in the global market, none of Australia’s lithium is exported in the pure refined form used in battery manufacture. Instead, our resources are largely exported in mineral form for processing overseas – principally in China. Not only does this export of mineral concentrates forego the potential added value of producing a refined product, but in producing concentrates to suit Chinese refinery specifications, local miners lose between 25–50% of the recoverable lithium in their resource, amounting to an estimated A$713M per year of lost value. Work to develop local processing capacity that could reduce these losses is underway – with the Tianqi lithium hydroxide plant at Kwinana in WA a notable step towards this vision, but technical and financial issues continue to challenge this operation.
By supporting research at the Future Battery Industries Cooperative Research Centre to address these challenges, MRIWA is working with leading researchers to develop technology solutions to make lithium refining both compatible with the strict environmental standards of Australia, and globally competitive in cost and efficiency. By supporting integrated processing of WA mineral resources deeper into the value chain, this research will deliver both greater economic benefit to the local economy, and reduce the emissions intensity of producing and exporting these important resources.
Managed well, this research-driven innovation supported by MRIWA provides a critical long-term advantage, particularly when adapting to changing global conditions.
In terms of raw abundance, many of these commodities are not in any danger of exhaustion
Much like a junior mining company jettisoning R&D expenditure to protect cash reserves when conditions get tough, reef-forming corals sometimes eject the algae that normally lives within their bodies, bleaching the reef. Tough for the poor algae, but that’s the way the ecosystem rolls – the coral does what it has to for short-term survival.
When things return to normal, though, it’s the corals that strike that relationship back up that are more vigorous and competitive, and go on to dominate the next generation of the reef. Do you want to take a guess at what happens to the corals that don’t get a symbiotic partner back on board?
