Federal Govt eyes EV growth, provides $2bn backing to Australian mining

The Australian Government has announced a $2 billion loan facility to help establish mining projects crucial to the battery industry.

The fund will help get critical minerals projects up and running, which mine materials like lithium – a key ingredient in battery technology used in electric vehicles.

“The lithium industry alone, which is essential to develop new battery technology, is forecast to be worth $400 billion globally by 2030 and initiatives like this will mean Australia is well placed to grab its share of the market,” Minister for Resources and Water Keith Pitt said at the announcement.

The $400 billion forecast is around eight times the revenue generated by Australia’s coal exports in 2020.

“Australia is already among the world’s top suppliers of some of the world’s most sought-after critical minerals and we know there is enormous potential through our untapped reserves,” Minister Pitt said.

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In July 2021, BHP Group announced it had signed a nickel supply agreement with Tesla, and was working with the US electric carmaker to lower its carbon emissions in the battery supply chain. The announcement came a month after a Tesla executive said the firm was spending $1 billion on Australia’s minerals supply to meet electric vehicle growth.

“Australia is the only country in the world with resources in all three of the critical battery metals, as well as other minerals required for the clean energy transition,” Tesla chairwoman Robyn Denholm said in June.

“In short, a values-led mining industry has greater value to Tesla and to an increasing portion of the global marketplace.”

Denholm said Australia has the potential to supply minerals and resources with some of the lowest emissions in the world.

“This is critically important over the next 30 years, because manufacturing as a whole has to decarbonise very quickly and this means that low-carbon minerals will be at a strong advantage in the new supply chains being created for renewable energy.”

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The new $2 billion fund is said to help fill “finance gaps” in mining projects, providing companies with loan facilities to establish critical supply chains.

“We want to ensure that Australia’s resources producers do get established [so] they can link up with others in our supply chains in a free and open Indo-Pacific [region],” Prime Minister Scott Morrison said at the announcement last week.

“Critical minerals are a strategic area for governments too because they are fundamental to the future energy economy.”

Australia has the fifth largest known reserves of lithium in the world (with the greatest mineable reserves) and is the largest exporter globally, shipping 42,000 tonnes overseas in 2019.

To put this new Federal Government program into perspective, Japan has set up a $24.7 billion trust to help fund the development of next-generation battery tech. Much of that war chest is being used to acquire the lithium required to put solid-state batteries into large scale production.

Toyota is one of the companies taking advantage of the extra Government funding in its native Japan, using the money to supercharge its solid-state battery technology.

Two Japanese mining and oil companies, Mitsui Kinzoku and Idemitsu Kosa are also using the Government money – building infrastructure to produce lithium metals for solid-state batteries.