When will the Australia/US critical minerals deal bear fruit? Let’s ask a player

In a week when PwC Australia released a report saying just seven of 124 investment-ready critical mineral projects have received the green light for funding in Australia in the past financial year, I talked to my friend, Michelle Wood, the CEO of Gippsland Critical Minerals.

Fitz: Hi Michelle, but enough chit-chat. Two months ago, we had brass bands and balloons because Prime Minister Anthony Albanese and President Donald Trump had done a deal whereby – I think – America would buy our “critical minerals”, and Australia would get squillions!

MW: Yes, it was a great breakthrough. And all about recognising that China has become dominant in critical minerals and Australia and America both need to have a secure supply of them to make so much modern technology work.

Fitz: But this week, I read, PwC has come out with a report saying that while Australia has 124 investment-ready critical mineral projects – as the need has been so widely recognised for years now – only seven actually got started in the last financial year. As you are close to being on the list to carry my coffin in 30 years, I know I can trust you to give me the good oil, as I want to understand this issue. Are you ready to play?

MW: Indeed. It is complicated, difficult and slow to get new projects up and going in Australia. A lot of it plays back to this stuff that actually happened last month with the federal government passing the legislative reform on the EPBC . . .

Fitz: “EPBC”!? I actually thought we could start on a simpler level, like, “What are critical minerals?”

MW: [Laughing] OK, let’s do it like that. Governments came up with the term “critical minerals” to describe certain important materials – such as copper and nickel. And if you remember the periodic table at school, at the bottom are 17 little boxes, and they’re the “rare earth elements”, a subset of critical minerals.

Fitz: And what are they critical of? Those snooty elements at the top of the table, in shape to contest the Elementary Grand Final, who think they’re sooooo good?

MW: Maybe they are critical because it’s only recently that we have recognised their brilliance and done something about it! Basically, they are critical because of how important they are to modern technology, renewable energy and so many defence systems. It is not because they’re scarce, per se.

Fitz: And I gather they have been mined for years, but only this century or so have they really become desperately critical?

MW: Yes. Driven in large part by renewable energy, but also our demand for modern technologies such as mobile phones and robotics. Just prior to that realisation, though, lots of critical mineral mines around the world closed in the 1990s because the margins were so small.

Fitz: And that’s where the trouble started.

MW: That’s where China’s sheer dominance started. From the late 1990s and early 2000s China realised how important they were going to be to everything in the modern age, and so started buying mines and increasing processing capacity – helped by very low labour costs, government support and little regulation – and started finding, processing and stockpiling huge quantities of them.

Fitz: And so racing forward, when Trump became president the second time, his first move was to whack tariffs on everything that moved and most things that didn’t, to which China’s response was, “No more soup for you today, and no more critical minerals”?

MW: Yes, China went all-in on critical minerals. In Australia, we do iron ore, and they buy our iron ore. China controls more than 90 per cent of processing, and almost all the processing for the heavy rare earths the West relies on for defence and high-end magnets. The Chinese know how to do it: they’ve got the skills, the intellectual property, the machinery, they’ve come up with faster and faster ways to do it, not always the most environmentally sensitive, while the rest of the world was left behind.

Fitz: So the Chinese have Trump over a barrel of processed lithium, which he can’t have. And suddenly, because Australia has a lot of critical minerals, we are America’s new Best Friend Forever, again. Cue the bugles and balloons, this big deal is signed to much fanfare. What was the essence of the deal?

MW: America will commit billions of dollars to Australia, to secure rare earths and critical minerals, that can then go to America from a source that they can trust and rely upon – independently of China.

Fitz: OK, so from that moment, even Albanese’s most bitter critics say, “Actually, this is a good deal for Australia. Thunderbirds Are Go!” But then the PwC report comes out, saying Thunderbirds are actually flying like sick ducks into a headwind. Why are investors so slow to back these projects?

MW: Largely because of our regulations – which are important and necessary and which protect us and the environment.

Fitz: Which is where that new law that was passed a fortnight ago comes in, championed by Environment Minister Murray Watt, with the support of the Greens. Remind me? The guts of it?

MW: It’s called the Environmental Protection and Biodiversity Conservation Act (EPBC). Some are now calling it the “nature positive bill”. And it’s not there to weaken the environment regulations, but to give clearer rules and timeframes, so projects get a faster “yes” or a faster “no”, providing clarity to companies that want to invest, and better certainty as to how long things are going to take, from inception to production.

Fitz: Is it the feds taking over from the states or not?

MW: State governments still make the decisions, but it does also allow the federal and state ministers to prioritise projects deemed of particular importance and make regulators give much quicker approvals or refusals. Otherwise, companies end up spending millions of dollars just trying to get approval. For a lot of modern mines, it can now take nearly 20 years from discovery to production once you add exploration, studies, approvals and financing. It’s not really feasible for small companies to sustain that, but I think these new laws look good.

Fitz: OK, so in your case, I can’t help but notice that in the past three years, you’ve been constantly disappearing to Victoria to do something, something, mineral sands, something, something, heavy metals, something, dysprosium, terbium, something, something. If we can fit in a tight gratuitous plug – at least by way of using your own experience as an example of the issues – what is that all about?

MW: Our project is called the Fingerboards project in East Gippsland, and it seeks to mine zircon, titanium and light and heavy rare earths.

Fitz: OK. But as a serious question, how do your locals in beautiful East Gippsland know that you’re not going to ravage the earth and leave a huge and unsightly gash on Mother Nature’s shapely left breast?

MW: We are heavily regulated. The approval process is exacting and is reviewed by the public, by government, by community, by independent experts. But they won’t approve the project if we don’t put in place assurances about how we manage local impacts, how we work with First Nations peoples and ensuring we approach the project with transparency and strong levels of local engagement. I suspect that’s why a humble non-engineer like me got a job like this – because community is as much a part of it as the technical aspects.

Fitz: And what sort of money are you claiming your mine will bring?

MW: We think we can contribute about $100 million a year to the local economy over 22 years, and that’s just from that one mine. Victoria is filled with projects like ours.

Fitz: This is the other thing. I did a book on the Eureka Stockade, and I remember a line from a miner from the 1850s, who said, “In the Sierra Nevada, we measured gold in ounces. At Ballarat, we measured in pounds.” And as we go on, it is becoming apparent that Victoria – the most debt-ridden state in Australia – is actually sitting on something much more valuable than a gold mine, which might be dozens, if not hundreds, of critical mineral mines?

MW: Exactly. They’re sitting on critical minerals all through the Murray Basin and in Gippsland. And I was in the room when the government just approved a new mine for the critical mineral, antimony, at Sunday Creek, an hour north of Melbourne. It will bring in billions of dollars to the Australian economy.

Fitz: And your own chances of such approval?

MW: We are going well. And we are one of only two projects in Victoria with no Chinese offtake or ownership.

Fitz: Offtake?

MW: We’re one of only two to be majority Australian-owned, and if we get approval, we are totally free to sell to whoever – we are not committed to sell a portion to China.

Fitz: All right, on the assumption the Chinese are listening to our phone call, I should just like to place on the record that I love the Chinese, and the horse they rode in on. But, thank you, Michelle, for helping me to understand the complexities of this. Still, if your project gets up, the next lunch is on you.

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