Australia’s critical minerals are in huge demand, but new analysis reveals while finding the resources has been relatively straightforward, there are still major hurdles in developing the projects to the production phase.
However, the head of Perth-based Association of Mining and Exploration Companies believes WA is probably in the best shape to take advantage of its rich source of critical minerals and get the resources out of the ground as demand cranks up.
Recent analysis from PwC found only around one in 10 of Australia’s critical minerals projects were ready for investment.
According to the report, of a total 907 critical minerals projects nationwide, the country’s investible universe sits at just 117 projects.
“Drill down further, and only 11 per cent, or 13 projects, are at definitive feasibility study stage,” the report states.
“These 13 projects could be two to four years away from reaching financial investment decision.
“A significant disconnect remains between policy announcements and actual investment decisions being made by project proponents.
“Energy costs, permitting timelines, workforce constraints, commodity price volatility, and the gap between government incentives and project economics all contribute to this disconnect.”
Report author and PwC Energy, Utilities and Resources partner Lachy Haynes said while the country had vast experience delivering resource projects like coal and iron ore, critical minerals operations are a different game.
“We’ve got a group of allies now who are moving with an urgency and intent that we perhaps haven’t seen in the past, and we have to match that,” he said.
“Otherwise they start looking elsewhere, despite our relative good status as a partner of choice and resources.
“We don’t want to put that at risk by you know not keeping pace.”
AMEC chief executive Warren Pearce said the report shines a light on one of the substantial problems that exists for critical minerals companies in particular, but also the broader mineral exploration-to-project development industry in Australia.
“The exploration pathway is challenging but reasonably well known and supported by a collection of retail investors and funds and brokers that understand what they’re investing and why they’re doing so,” he said.
“When you get to feasibilities and those stages through to the definitive feasibility study, you’re in a pretty difficult situation because you really haven’t got an ability to utilise the same process to raise money, keep visibility and grow support that you do in exploration.
“Once you get into the feasibility studies, you’re moving out of that exploration phase to where the value creation event’s already happened, and you’re trying to figure out if you’ve got a real project or a commercially viable deposit, and de-risk that as much as possible for the market at the end of that to come in and invest.”
However, Pearce said WA could move quickly if a project receives a financial investment decision.
“Our government agencies can work to ensure they get their approvals in quick time, and we can get into project development and produce a product usually within 18 months of that,” he said.
“That’s pretty quick moving in the mining industry, and WA still has the ability to do that in a way that perhaps other states would struggle with here in Australia, and can still be competitive with some of the places in the world like Africa and South America where we’re competing with.”
Pearce said there were some projects that have been highlighted for filling the critical minerals market, including Larvotto Resources’ Hillgrove project in NSW that recently began production on its antimony resource.
Another example is Alcoa’s gallium project in WA’s South West that recently officially kicked off when Resources Minister Madeleine King turned the first sod at the operation last month.
Pearce said these projects are examples of where the Australian government has filled a critical need once a potential partner was identified.
“American interest changed overnight with the Iran War,” he said.
“The Australian government responded really quickly by working with the US government to get antimony projects up and gallium projects up in quick order.
“In Western Australia, if you find a commercial deposit, chances are very strong that you will get a chance to mine it.
“The West Australian environment still supports that. That’s not the case in other places. That sovereign environment here in WA is still very, very good.”
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