Australias next mining boom could be green as race to net zero intensifies

Investors are betting the world’s accelerating push away from fossil fuels to clean energy will drive a boom in demand for a range of materials such as copper and lithium, opening the door to lucrative new economic opportunities for Australia.

Pledges made by a growing number of nations, including Australia, at this week’s COP26 climate summit to hit “net-zero” greenhouse gas emissions by 2050 are adding to expectations that key ingredients needed to make wind turbines, solar panels, lithium-ion batteries and electric vehicle infrastructure are on the verge of an unprecedented surge in demand.

The clean energy era is poised to deliver an unprecedented boom for a new set of Australian commodities.Credit:Janie Barrett

“This is because clean energy technologies need significantly more of these materials than fossil-fuel-based electricity generation technologies ... for example, demand for lithium is expected to grow 70 times over the next two decades,” said Tim King, chief investment officer at Melior Investments.

“Australia is immensely well positioned to leverage from this.”

Globally, Australia ranks among the top-three countries by share of known reserves for copper, cobalt, lithium and nickel. While demand from the clean-energy transition will increase over decades, works to bring new supplies to market can often take years of minerals exploration and construction, and are being planned already.

Melior, an investment manager backed by Atlassian founder Mike Cannon-Brookes, said it was vital to direct capital to Australian companies capable of producing new and more diversified supplies of critical metals to “pave the way towards a clean energy future”.

“Australia has as a land of abundant renewable resources of wind and sun, the ability to transform a fossil fuel-driven economy to a renewable economy through green hydrogen, and then all the minerals that go into those technologies where Australia is abundantly resourced,” Mr King said.

“The net zero 2050 commitment is often framed as an [economic] negative that’s going to cost jobs in coal mining communities, which it will, but what tends to get forgotten is that there are also tremendous opportunities.”

It comes as a new analysis from consultancy Accenture â€" released last month in collaboration with trade unions, key business groups and climate advocates â€" found that clean energy goods and services could generate as much as 395,000 new jobs across Australia and $89 billion in new export trade by 2040 including green hydrogen, green metals and critical minerals.

Some of Australia’s biggest resources giants are racing to secure supplies to feed the supply chains of the future. BHP this year struck a deal to sell its oil and gas business to Woodside, partly to free up cash to spend on building exposure to what it calls its “future-facing” commodities of copper and nickel. It has also struck deals with Elon Musk’s Tesla and a lithium-ion battery maker owned by Toyota and Panasonic to supply nickel from WA’s Nickel West mining, smelting and refining operations.

Rio Tinto, which is already pursuing significant plans to expand its exposure to electric vehicle ingredients copper and lithium, last month set aside another $US3 billion for new investments, and said it was “absolutely” interested in assessing opportunities in other clean-energy minerals.

However, with elevated prices for all battery minerals this year, producers and investors are wary of the danger of volatility returning to smaller markets such as lithium. Benchmark lithium prices fell sharply in 2018 amid a rush of new mines colliding with a slowdown in electric car sales.

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