Emerging Issues in Critical Minerals Development: Reflections from Australia and South Africa
As a pathway to mitigate climate change, transitioning to low-carbon energy systems has attracted significant policy attention worldwide. Critical minerals (CM) are important enablers of this transition, as they are indispensable to the development of low-carbon and digital technologies. From hydrogen fuel cells and electrolysers to battery storage systems, wind turbines, and electric vehicles, the demand for critical minerals, such as nickel, graphite, lithium, and cobalt, continues to rise. However, their availability is constrained by complex geo-technical processes as well as the current geographical concentration of extraction sites and processing facilities, thereby creating uncertainty in supply security and market conditions.
This article presents views on the development of critical minerals from two distinct national contexts: Australia and South Africa. Our choice of these countries stems from both nations having maintained a deep historical reliance on the traditional extractives sector (including coal and iron ore). The presence of a wide range of critical minerals in Australia and South Africa is an opportunity to diversify their economic growth prospects. By building on their strong social and economic resource identities, they are actively positioning themselves as secure and stable suppliers of critical minerals that will help strengthen existing and build new resource-led trade partnerships globally.
In light of commodity market uncertainties and past mining legacies, however, countries seeking to capitalize on growth opportunities based on critical minerals must consider several complex factors. Two issues that have emerged as the most pressing include onshore value addition and the role of geopolitics. Together, they influence macroeconomic trade and market conditions, unsettle old political alliances whilst creating new partnerships, and in complex ways, determine who benefits and who bears (unintended) harm.
These issues are also likely to influence how governments in Australia and South Africa harness their critical mineral wealth for long-term national social and economic well-being.
Value Addition Onshore
A critical enabler of onshore processing is infrastructure. It plays a pivotal role in mineral-rich countries’ ability to maximize benefits from their critical mineral reserves. However, the vast majority of nations lack the scale and pace of investment necessary to provide a stable and secure supply of critical minerals. Governments in mature commodity markets are expeditiously seeking investments with a twofold objective: first, to enhance the efficiency of mining processes, thereby reducing the sector’s carbon footprint at source, and second, to build infrastructure that supports the establishment of downstream industries essential for creating more value onshore. In turn, the latter is expected to create more jobs, yield greater economic returns, foster a culture of innovation and entrepreneurship, and, over the long term, diversify the mix of mineral-supplying regions and strengthen market competition.
As two of the world’s leading raw material exporters but with limited ability to add value through downstream refining, processing, and manufacturing, Australia and South Africa are prime examples of the challenge countries face in maximizing benefits from the presence of critical minerals. While the critical minerals strategies for both countries place significant emphasis on building these capabilities through infrastructure investments in the immediate future, dated infrastructure, weak economic viability, and market volatility remain serious impediments. South Africa’s CM and Metals Strategy lays out its vision to address these bottlenecks by clearly seeking to maximize value from critical mineral resources by forging regional partnerships to bring investment to Southern Africa, build regional mineral beneficiation hubs and strengthen the regional manufacturing capacity.
Australia, too, in its CM Strategy, has highlighted the leadership role it must take in establishing itself as a reliable partner in the development, supply, and use of critical minerals. With its long and successful history of mining, extensive geological reserves, and a strong track record of high Environmental, Social, and Governance (ESG) performance, national and regional governments across Australia are actively seeking partnerships to strengthen their downstream capabilities and unlock investment in infrastructure and services.
The Role of Geopolitics
Current levels of global concern about resource scarcity are unprecedented. The last time geopolitics over resources shifted and led to significant recalibrations in national alliances was during the oil crisis of the 1970s. The concentration of critical minerals extraction and processing in specific jurisdictions is actively bringing national security concerns to the forefront of contemporary conversations on mineral resource governance. On the one hand, this enables policies in resource-rich countries such as Australia and South Africa to seize the enormous economic opportunity, streamline development processes, and strengthen their position in global mineral supply chains. On the other hand, these demands may inadvertently push governments and industry to seek new mining frontiers, to extract from depths previously considered economically unviable, generating ever-greater piles of mining waste, and driving policy momentum towards expedited permitting processes that carry the risk of compromising environmental and social safeguards for frontline communities and landscapes.
Geopolitics intersecting with mineral security has the potential to create new and diverse opportunities, but also exacerbate inequity. Minerals are now at the center of bi- and multilateral partnership-making. They are offering to re-balance power inequities through new strategic relationships. Indonesia’s policy re-orientation to dominate the global nickel supply chain, the Democratic Republic of Congo’s (DRC) ambition to play more than the role of a raw material supplier, but influence the cobalt industry, and Mongolia's advancement of its “third neighbor” policies through mineral diplomacy, as a key uranium supplier to EU nations, are examples that demonstrate the role that minerals can play in repositioning Western interests in countries from the Global South.
Critical minerals offer the promise of local jobs, economic benefits, and potential advancements in development outcomes for many non-OECD resource-rich countries. However, across both mature and emerging resource markets, governance systems remain vulnerable, limiting internal capacity to minimize harm through safeguarding local social and environmental interests. These factors carry the risk of placing resource-rich jurisdictions under significant time and geopolitical pressures, potentially exacerbating local externalities in the name of the greater (global) climate good. As a global community, it is essential to recognize and acknowledge these tensions so that robust technical, financial, and governance support is made available for at-risk communities and jurisdictions. This is a necessary step to prevent efforts towards achieving mineral security from inadvertently compromising human security.
Looking Ahead
Australia and South Africa have an important role to play in shaping a globally stable, secure supply of critical minerals. Although these nations have rich critical mineral endowments, their ability to transform these resources into value-added commodities and maximize long-term returns is constrained by limited economic, technical or institutional capacities. These, in turn, restrict the scaling up of infrastructure and governance frameworks needed to establish downstream integrated industrial functions.
Addressing these challenges will require deliberate, context-relevant policies to transform traditional raw-material-exporting regions into mineral hubs that add value locally by processing and refining critical minerals. These policy interventions will also benefit from complementary geopolitical alliances to recalibrate old arrangements and open new, perhaps even unconventional avenues for collaboration. Countries seeking to add value from critical minerals require concerted efforts to streamline investments, foster local capacity, and build meaningful partnerships that are guided by the ethos of maximizing local benefits and minimizing harm to frontline communities and ecosystems.
Dr. Vigya Sharma is an Associate Professor at The University of Queensland, Australia. Dr. Peter Oviroh is a Researcher and Lecturer at the University of Johannesburg, South Africa.
About the Council of Engineers for the Energy Transition (CEET)
This article is part of the Energy Insights Series published by the Council of Engineers for the Energy Transition (CEET). The CEET is a global, high-level body of engineers and energy systems experts, created under the auspices of the United Nations Secretary-General, with the goal of building coalitions and energy pathways for comprehensive decarbonization.
It should be acknowledged that these materials are for discussion purposes only, given the rapidly changing landscape of the energy transition and the various contexts in which they are relevant. CEET members are participating in their individual capacity and expertise without remuneration. Their professional affiliations are for identification purposes only, and their views and perspectives, including any statements, publications, social media posts, etc., are not representative of the United Nations, SDSN, or UNIDO.