The collapse of lithium and nickel prices is a rude awakening for Australia’s miners, but also reveals the challenges in the Albanese government’s ambition for greater domestic manufacturing.
The West Australian government’s budget is still flush with mining royalties thanks to iron ore. But although iron ore will continue to sustain the state’s finances, last year’s excited rhetoric about Australia instantly becoming home to a rich new resources boom in critical minerals is now looking distinctly threadbare.
In early 2023, WA politicians were marvelling that lithium royalties had suddenly grown to be worth $1 billion a year, for example, albeit a distant second to iron ore. Then minister for state development and now premier Roger Cook boasted of WA’s ambitions in critical minerals processing, extending from lithium hydroxide to nickel sulphate to battery manufacturing.
But the collapse in the prices of lithium and nickel is also exposing the federal government’s enthusiastic embrace of more downstream processing and value-adding manufacturing in Australia while also contributing to the green revolution.
Instead, the rapid closure of mines and the increased mothballing of existing or potential processing facilities in WA is dramatic evidence the traditional boom and bust record amid fluctuating prices in the resources industry won’t be eliminated in a decarbonising world.
For the rest of this column: https://www.afr.com/companies/mining/critical-minerals-boom-goes-bust-20240201-p5f1lr