Australian Government’s Plan Makes Mining Pivotal to COVID-19 Recovery

Prime Minister Scott Morrison.

Prime Minister Scott Morrison has been dealing with attacks on all fronts lately, with tense diplomatic relations with China, a standoff with tech companies over privacy and news data, and even domestic issues like the economy and social conflict. With everything going a little haywire for the island nation, there is still a spot of calm in the storm when it comes to the mining industry.

The government has a world-leading critical mineral and resources sector that has buoyed the economy for decades. Jobs and economic opportunities are the two things Morrison needs to balance the scales of minor chaos in Australia, and the mining industry is prepared to deliver both. 

Proclamations

On March 4th, the Prime Minister’s office announced a 10-year plan to capitalise on Australia’s access to resources, particularly metals like lithium, which will be needed to manufacture many new technologies. Battery manufacturers, electric vehicles, and every device being made around the world require these metals to be mined and processed for use in their products. 

The countries and companies that best take advantage of this opportunity are the ones that will see revenues from mining activities soar over the coming decades as demand only continues to accelerate. With this plan, Morrison is planning to make humble and often unassuming, but ever-important Australia a key player in the fight for resource dominance in the industry. 

The Plan

It’s called The Resources Technology and Critical Minerals Processing road map, which probably could have been shortened for a cool acronym (Americans do that best: CARES Act). The plan lays out how businesses will be an important piece in rebuilding the economy post-pandemic, and that manufacturing should play a key role in that process. 

Making Things

This plan is important because it will create jobs, and make things. Countries the world over are trying to figure out how they might jumpstart their economies the right way, and quickly, pumping stimulus into the economy and even handing out cash. That works for some time, but at some point, someone has to make something. 

One of the misconceptions about the modern economy in the developed world is that everything runs smoothly even if we just make software and consult. Services are important, but in the words of Elon Musk: “If you don’t make stuff, there is no stuff.” The mining industry makes a LOT of stuff, and it is extremely valuable for all of the key products shaping the future of the world, particularly the technologies enabling us to work from home, drive around without emitting greenhouse gases, and storing the energy needed to power our homes, offices, and everything else. 

Central Tenets

The plan highlights that manufacturing businesses and jobs will be central to Australia’s National Economic Recovery Plan as the country builds it back from the COVID-19 recession. Australia wants to make a lot of lithium and other technology metals, and they’re prepared to back any miner willing to step up to the plate. 

The government is making it clear that the mining industry is a particular priority: Minister for Resources, Water and Northern Australia Keith Pitt said it also complements the Government’s Critical Minerals Strategy.

“The Government is committed to bringing on new supplies of critical minerals and developing this emerging sector to meet growing global demand,” he said.

“Developing our critical minerals processing capability will ensure Australian companies can move down the value chain, getting greater value out of the products they produce.”

The Roadmap also identifies how we can develop our resources technology to maximize efficiencies in our high-performing resources sector.

“Our focus on resource technology will also support the development of new ideas to improve mine productivity, process efficiency, and safety. As the sector’s productivity grows so does the Australian economy, benefiting all Australians,” Minister Pitt said.

Two-Pronged Approach

On top of this 10-year roadmap for resources that will boost the mining industry, the $1.3 billion Modern Manufacturing Initiative will be providing funding for manufacturers to scale up production, commercialise products, and tap into global supply chains. Lithium miners like Galaxy Resources will be able to tap into the funding if needed, and with the taps turned on in this way, the important mineral will be available for export and use in the high-technology and electrification industries.

Changing Tides

With the electrification of the global economy picking up, lithium is of particular interest for its use in batteries (lithium-ion), and other electricity-conducting needs. Companies like Tesla have called for increased clean and socially responsible mining of nickel, copper, and lithium, putting Australia and the companies operating in the country in a great position. All of the lithium mining companies preparing or ramping up their operations will surely see the benefits trickle down to every part of their company for stakeholders at every level. Now they just have to start. 

 

The above references an opinion and is for information purposes only. It is not intended to be investment advice. Seek a licensed professional for investment advice. The author is not an insider or shareholder of any of the companies mentioned above. 

By Matthew Evanoff

I cover the mining industry and the best mining stocks around the world. I write about industry news, individual companies, projects, management, and profiles on industry leaders.

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