AFR Mining Summit
May 24, 2023
Perth, Western Australia
Consul General Siriana Nair
Good morning everyone. I would like to first start by acknowledging the traditional owners of the land we are meeting on today, the Whadjuk people of the Noongar nation, and pay my respects to their elders, past, present, and emerging.
I’m really happy to be here today. I’d like to thank especially the AustralianFinancial Review for inviting me because what we are discussing here, and what most of you do day-in and day-out is absolutely vital to both of our countries’ interests in a free, fair, and open Indo-Pacific region and for our global efforts to tackle climate change. And of course, with President Biden and Prime Minister Albanese having just met in Hiroshima, with a large focus on climate and critical minerals, this is a timely and relevant discussion.
Before I really get into it, I’d like to say I’ll be quoting a lot of financial figures. All of the figures will be in Australian dollars. They’re big but they sound even bigger in Australian dollars so that’s why I picked that [laughter]. And the second point I want to get right off the bat is that in case WA wants to build any new ports, I can categorically say the U.S. will not be providing any nuclear weapons.
Whether it’s ensuring regional stability, economic prosperity for future generations, or transitioning the world from fossil fuels to clean renewable energy; all of these aspirations rely on diversified, resilient, and secure supply chains able to adapt and respond to natural disasters, pandemics, economic coercion, and multiple other challenges. These critical mineral supply chains are key to defense, aerospace, semiconductors, clean energy, and our everyday life. They start as rocks in the ground, many here in Australia, and of course – many here in Western Australia. Australia plays a tremendous role in developing the secure supply chains that will transform these rocks into the technology that will allow future generations to flourish far beyond our imaginations.
I want to take a few minutes to highlight what the United States is doing, along with our trusted partners, to develop diversified, secure, and resilient critical mineral supply chains – from the minerals under our feet to the final manufactured goods all the way upstream. I hope you agree that what the United States is doing, and our partnership on climate and energy with Australia, is increasing investment in both our countries, and is a shining ex-ample of how we can work together to address global challenges.
In the United States, the Energy Act of 2020 defines a “critical mineral” as a mineral essential to economic or national security and which has a supply chain vulnerable to disruption. All of us carry critical minerals with us each day in our smart phones. They are also in our computers, home appliances, our medical equipment, and the vehicles we drive. Critical minerals are critical to our modern life. Australia – specifically Western Australia – has both significant deposits of these minerals and the technical know-how and high environmental and labor standards to bring these minerals to market in a sustainable way. All of you in this room and those watching virtually know that demand for these critical minerals is going to skyrocket. Estimates are demand will grow by four-hundred to six-hundred per cent in coming decades and, for minerals like lithium and graphite used in electric vehicle batteries, demand will increase by even more — as much as four-thousand percent. The global transition from fossil fuels to renewable energy and greater electrification has begun and will accelerate in coming decades.So the United States is making an unprecedented investment in technologies that will enable the world’s transition to a sustainable future.
In just two years, the U.S. Congress has passed the Inflation Reduction Act, the Infrastructure Investment and Jobs Act, better known as the Bipartisan Infrastructure law, and the CHIPS and Science Act. These three pieces of legislation will invest almost two trillion dollars – I’ll just repeat that number– two trillion dollars into research and development, adopting clean energy and clean vehicles, and infrastructure and supply chain security over the next decade and beyond. This will complement the substantial efforts from our global partners including Australia, the EU, the United Kingdom, Cana-da, and others. And we know that this energy transition won’t happen with-out the capital, innovation, skills, and hard work of the private sector companies and people that turn their expertise into results every day. Government policy and the tax incentives found in laws such as the Inflation Reduction Act can create an environment where private enterprise can flourish and create the solutions demanded by consumers around the world. And we recognize the hard work done by those of you on the ground digging and processing minerals and turning them into the products that will literally power our future.Just like Australia and many of our global partners, President Joe Biden set ambitious goals for the United States to reach net zero by 2050, and cut greenhouse gas emissions by 50 percent by 2030. Goals and national ambitions can unify our efforts, but they need to be matched by action. Government policy here is essential to create an environment where private enterprise can do what it does best – innovate and provide solutions for its customers. Government support can come through improved infrastructure, workforce training and education, and consistent, fair, and appropriate regulation that creates a level playing field that protects the environment and the communities where we live and work. The United States has taken significant steps to create a globally competitive environment.
Our Congress has made record investments in new infrastructure technologies such as electric vehicle charging stations, internet broadband connection, and cybersecurity in addition to traditional infrastructure such as water, electricity, railroads, ports, roads, and bridges and other tradition-al infrastructure that are the lifeline of commerce. The Unites States is also helping incentivize companies to create a skilled workforce for our future green industries, with tax incentives in the Inflation Reduction Act contingent on businesses creating apprenticeship programs and ensuring workers are paid a fair wage.
Although our Department of the Treasury is still finalizing implementation of the Inflation Reduction Act, we get new insights on how it will work almost every week. The early results, in less than a year, show it’ll be a game changer in driving investment into the sectors vital to tackling climate change and that those benefits will and are being felt here in Australia. I want to talk for just a minute about the economic side of the U.S.-Australia alliance. With discussions of AUKUS and our military cooperation making headlines lately, it may be tempting to think of the U.S.-Australia Alliance as simply a military partnership. Security and defense have always been an important part of what we do together, but our economic partnership has driven prosperity in both our countries for over a hundred years, and the United States is proud to be Australia’s top economic partner.Well before the Inflation Reduction Act, the United States has been the number one destination for Australian foreign investment – and the United States has long been – by orders of magnitude – the largest foreign investor in the Australian economy. At the end of 2022, this two-way investment reached more than two-trillion Australian dollars – that’s trillion with aT – contributing to hundreds of thousands of jobs in both our countries. Independent analysis of the Inflation Reduction Act found it will generate additional private investment in clean energy of up to four and a half trillion Australian dollars.
It’s true a large share of this investment will be in theUnited States, but not all of it. In fact, since the passage of the IRA, and other legislation, the United States and the U.S. private sector has invested 2.3 billion in Australia’s critical mineral sector and companies. There’s enormous opportunity to further grow our two-way investment to help meet our shared climate goals and strengthen our supply chains and market diversification. This past weekend, I think as you all know, President Biden and Prime Minister Albanese further committed to enhance bilateral cooperation under a Climate, Critical Minerals and Clean Energy Transformation Compact. As our leaders noted, the Compact affirms the position of climate and clean energy as the third pillar of the U.S.-Australia alliance, along with defense and economic cooperation. The intent here is for our private sectors, re-sources, and industrial strength to drive innovation and accelerate the development of a global clean energy economy. The newly-established Australia-U.S. Forum on Clean Energy and Industrial Transformation and the Taskforce on Critical Minerals will help us deepen cooperation in these areas and ensure U.S. and Australian industry has a seat at the table as we work together to secure vital supply chains. In addition, President Biden plans to ask Congress to consider Australia a “domestic source” under TitleThree of the Defense Production Act to support collaboration between our industrial bases and build new opportunities for U.S. investment in the production and purchase of Australian critical minerals and other defense industries.
We’ve already seen announcements of Australian companies taking advantage of U.S. policies, infrastructure investments, and the size and efficiencies of the U.S. market to bring Australian innovation to the United States. So just to mention a few examples:•Battery minerals mining company Syrah Resources, headquartered in Melbourne, received a $150 million Department of Energy loan and a further grant of $325 million from the Bipartisan Infrastructure Law to expand its Louisiana natural graphite facility. When completed Syrah will be the first large-scale natural graphite producer outside of China. Lynas Rare Earths, which Ambassador Kennedy and I had the opportunity to visit last year, was awarded $180 million by our Department of Defense to establish a Heavy Rare Earths separation facility in Texas;•Talon Metals, a joint venture partner of Rio Tinto, received 170 million from the Bipartisan Infrastructure Law to construct a nickel processing facility in North Dakota to supply U.S. battery manufacturers.Investments by Australian companies in the United States not only create value for Australian shareholders, but help share innovation and technology between our countries.
The economies of scale the United States can offer can help decrease costs and improve processes here in Australia. But we’ve also seen how incentives from U.S. legislation are encouraging sourcing from Australia and investment right here. An agreement between Arafura Resources and GE Renewable Re-sources allows GE to source the rare earth elements Neodymium and Praseodymium from Arafura’s Nolans project in the Northern Territory. I hope everybody’s impressed with my pronunciation of those because it was really hard [laughter]. These elements will go into magnets critical to GE’s clean energy technology such as wind turbines.
General Motors committed to 100 million AUD investment in Queens-land Pacific Metals, for its Townsville Energy Chemical Hub Project. GM highlighted that as a free trade agreement partner, under the Inflation Reduction Act, the material sourced from QPM in Australia will help manufacture EVs that are eligible for tax incentives under that legislation. Liontown Resources has secured 300 million in financing from Ford as part of an off take agreement to develop its Western Australia lithium project. Liontown also has an offtake agreement with Tesla; Both of those U.S. car manufacturers can qualify for IRA incentives by buying Australian.
U.S. company Albemarle has just announced it’ll be doubling the out-put of lithium hydroxide from its processing plant here in Western Australia. This will create hundreds of jobs in WA and make Australia one of the largest producers of lithium hydroxide for advanced batteries. Australia’s status as a free trade agreement partner means that, again, qualified electric vehicles that use Albemarle’s Australian lithium hydroxide in their batteries will be eligible for increased – enhanced tax incentives. Just yesterday I saw Albemarle and Ford announced a deal to supply lithium to power Ford electric vehicles. The lessons learned, technology developed, and innovations made by Australian companies in the U.S., and American companies investing in Australia, are diversifying and building up those secure and resilient supply chains that we’re always talking about. Investment between the UnitedStates, Australia, and our allies and partners isn’t just about sharing capital, but leads to the sharing of knowledge, culture, innovation, and technology critical to competing in global markets. The provisions in this new Compact, along with the IRA, and other legislation ensures that we are working together to coordinate our supply chains and accelerate market development and investment in clean energy technologies.Federal Resources Minister Madeleine King and Prime Minister Anthony Albanese have said many times that the world’s energy transition can’t happen without Australia’s resources sector, and I absolutely agree with them. The solar panels, wind turbines, energy efficient appliances, EVs, and other clean technologies that will power our future rely on the nickel, cobalt, lithium, rare earths, and other critical minerals found throughout Australia. Just as important as having the resources is extracting and processing them in a responsible manner. Australia’s commitment to high environmental, social and governance standards has already attracted interest from American and other global manufacturers.
The U.S. shares this focus on upholding and enhancing environmental standards, community engagement and First Nations consultation.More and more, global consumers are learning about supply chains. And as they learn about many of the environmental and social damages from some critical minerals and clean energy suppliers, there’ll be a demand for products that are sustainable and ethically-sourced. As a trusted free trade agreement partner with a robust mining industry run by a highly skilled and innovative workforce, Australia is uniquely positioned to be a supplier of choice for U.S. and global manufacturers. These strengths can go beyond extracting minerals to position Australia further along the value chain to create more value domestically by processing critical minerals into the materials and components that are the building blocks of our clean energy future. I’ve spent the last several minutes trumpeting the benefits of the Australia-United States Climate, Critical Minerals and Clean Energy Transformation Compact – for which we desperately need an acronym [laughter] ; the Inflation Reduction Act and the United States’ leadership on climate, but the truth is U.S. policies, legislation, and leadership aren’t enough.
This is why American leaders from President Biden to cabinet secretaries to Ambassador Caroline Kennedy have said categorically on numerous occasions that the United States welcomes, and needs, our international partners to join us with their own investments and policies that will promote green technology and secure supply chains. Beyond the Inflation Reduction Act, Australia and the United States – I just want to talk for a second beyond our two countries – are actively working around the world through international fora such as the Partnership for Global Infrastructure that offers developing countries a credible alternative for financing and securing clean energy supply chains. Both of our countries are founding members of the Mineral Security Partnership. The Mineral Security Partnership aims to catalyze government and private sector investment, information sharing, and promoting high ESG standards for strategic critical mineral projects around the world, including here in Australia. The work Australia and all the partners are doing will have a long-term impact on securing supply chains and bringing world class ESG standards to global communities that often haven’t been able to access the benefits of their resources without exploitation. Although government officials and diplomats, like myself, are working around the world to secure clean energy supply chains, the real heroes of combatting climate change will be people like many of you in the room who make the business case to invest your time, effort, and resources into extracting and processing the components needed to power our clean energy future. Our global drive to fight climate change combined with Australia’s natural resources and the ingenuity of Australia’s resources sector is an enormous opportunity to not just expand economic prosperity but have a real impact on the world we’re shaping.
This opportunity won’t be handed to us, it will take investment and hard work. But the energy transition is happening with or without us and if countries committed to high environ-mental, social and governance standards don’t act, others out there will.We all need to ensure that like-minded countries dedicated to developing environmentally and socially responsible clean energy technology are the destination of choice for private investment, and that private investment that will make clean energy readily available to citizens around the globe. Your decisions today and efforts today and into the future will help make Australia a clean technology supplier of choice throughout our global energy transition and America stands with you.