De-risking, the process of reducing geopolitical risks and dependency on large suppliers, has become a popular trend in recent times. Many countries are seeking to take control of the production of key products, such as critical minerals for batteries and solar cells, in order to become less reliant on dominant suppliers like China.
China currently controls a significant percentage of processed raw materials for rare earths, cobalt, and lithium, raising concerns that it could use its market share as an economic leverage during political conflicts. As a result, countries in the West are turning to Australia as an alternative source. Australia is the largest producer of raw lithium and ranks third and fourth in cobalt and rare earths respectively. The country also has significant reserves of other metals essential for the energy transition.
Recognizing the importance of critical minerals in achieving a net-zero energy consumption, the Australian government plans to shift from its traditional dig-and-ship economy to a more value-adding approach. By building up local processing capacities, Australia aims to reduce its reliance on other countries for further processing and occupy important markets itself.
The Australian government has recently presented its strategy for critical raw materials until 2030. It has committed AUD 2.3 billion in subsidies, with an additional AUD 500 million from the Northern Australia Infrastructure Fund. The government also plans to promote the construction of local processing plants and the production of renewable energies and hydrogen to position Australia as an energy exporter.
Australia has already established alliances and agreements with countries critical of China, including the USA, Great Britain, Germany, the European Union, Japan, South Korea, and India. For example, Germany and Australia have agreed to conduct a joint study on developing Australian industries in the extraction, processing, and recycling of critical minerals, ensuring a secure supply for Germany’s manufacturing and recycling needs.
As countries recognize the risks associated with resource dependence, efforts are being made to secure critical minerals locally and build value-adding capacities. Australia’s rich reserves and partnerships position it as a reliable alternative supplier in the growing demand for critical raw materials in the decarbonized economy.
