Australia’s resources sector will continue to play a key role in shaping Australia’s economy and lifestyle, according to the federal government’s 2023 Intergenerational Report.
Officially launched by Federal Treasurer Jim Chalmers the report highlights the big shifts that will shape the nation over the next 40 years.
The study dedicated significant space to the importance Australia’s resources riches can make to the nation obtaining the vast new opportunities on offer as the world continues to transition to net zero.
The report noted that while the net zero transformation will see global demand for some of Australia’s exports decline, critical minerals could become a key export.
The study said that while global demand shifts will cause some fossil fuel-intensive industries to decline, Australia is well positioned with renewable energy potential and abundant natural resources to capitalise on the net zero transformation and broaden and grow Australian industry.
Green energy opportunity
“The net zero transformation has the potential to support new green industries, such as hydrogen and other clean energy exports, critical minerals and green metals.”
“It is also likely to drive new, innovative ideas as businesses invest in and develop low emissions technologies, providing a source of future productivity growth in a more sustainable economy.”
“Australia’s potential to generate renewable energy more cheaply than many countries could also reduce costs for both new and traditional sectors, relative to the costs faced by other countries.”
350% jump in critical minerals demand
The report forecast that the global demand for critical minerals will require a massive increase of around 350% by 2040 for the world to reach net zero emissions by 2050.
It noted that Australia is already well placed to support that growth with known riches in lithium, cobalt, manganese and rare earth elements which are crucial to battery manufacturing.
“Australia is already the world’s largest producer of lithium (spodumene concentrate) and is well placed to meet future global demand of lithium.”
“Australia’s export volumes of spodumene concentrate are projected to double over the next five years from 2022 while nickel export volumes are projected to grow by 50%.”
Significant upside remaining
The report also noted that Australia has potential for more undiscovered minerals, with around 80% of its land mass largely underexplored.
It said that while Australia is already the world’s largest producer of lithium, supplying more than half of all global production, it will still need to lift its game with global demand tipped to be more than eight times higher in 40 years time.
The report also projected substantial growth in Australia’s developments of commodities such as nickel, copper, zinc and bauxite alongside critical minerals such as lithium.
The report noted that in the coming decades, demand for Australia’s commodities will be influenced by growth transitions in some of its key trading partners via the global transition to net zero and technological changes.
However, it forecast that demand for commodities from some of Australia’s key trading partners is expected to slow as their economies mature and shift from investment-led development models to consumption and services-based economies.
Not so good news for fossil fuels
The forecast found that while the transition to renewables will boost demand for many of the minerals mined in Australia, creating new growth opportunities, global demand for fossil fuels is projected to decrease over time as global trading partners act to reduce emissions.
Global demand for emissions-intensive commodities, and the reliance on them as a source of revenue, is also likely to decline, with decarbonisation of the transport industry expected to erode revenue from fuel excise.
Climate change and new energy creating change
The report suggested that Australia’s industrial response could harness mineral reserves and abundant sources of renewable energy to supply critical minerals, hydrogen and green metals needed for modern, sustainable economies and to materially affect global climate trajectories.
However, it also warned that actions taken by governments, businesses and individuals now and over the coming decades will affect Australia’s prosperity and place in the global economy.
“Inaction on climate also has significant economic costs. Better economic outcomes can be achieved through strong global action to limit temperature increases.”
