On 1 October 2020, the Australian Government announced $1.5 billion to be invested over the next 4 years in the Modern Manufacturing Strategy (MMS) to help Australian manufacturers become more competitive, resilient and build scale in the global market.
The centrepiece of the MMS is the $1.3 billion Modern Manufacturing Initiative which will allow government to invest in projects within 6 National Manufacturing Priority areas. The 6 National Manufacturing Priority areas are:
- Resources Technology & Critical Minerals Processing
- Food & Beverage
- Medical Products
- Recycling & Clean Energy
This road map outlines:
- a vision for building the scale and competitiveness of manufacturing in resources technology and critical minerals processing
- opportunities that Australian businesses could target, based on our competitive strengths, emerging industry trends and future market potential
- actions for how industry and government can work together to address barriers to scale and capture opportunities. This includes government support which improves the commercialisation pathways for companies that want to get their products and services to market and grow their manufacturing operations in Australia.
The road map development process
Road maps have been developed with industry to set out plans for both industry and government to strengthen Australia’s manufacturing capability. The road maps have been led by 6 industry taskforces to identify and set a future vision for priority areas with clear goals, opportunities and actions over the next 2, 5 and 10 years.
Members of the industry taskforces were selected based on their expertise across the priority areas and were supported by technical experts from the CSIRO, the Department of Industry, Science, Energy and Resources (the department) and Industry Innovation and Science Australia (IISA).
Taskforce deliberations focused on current and future issues, challenges and opportunities to grow Australian manufacturing and identifying actions that businesses and government can take to support scale, competitiveness and resilience in the sector in the next 10 years.
Government has also been working with industry beyond the taskforce to understand the manufacturing needs of the resources technology and critical minerals processing sector. A public consultation process was held between 23 October 2020 and 9 November 2020 which received 340 responses, including 88 focused on resources technology and critical minerals processing.
The road map was also informed by more detailed discussions held with industry representatives including Austmine and the Association of Mining and Exploration Companies (AMEC) as well as IISA, National Energy and Resources Australia (NERA) and METS Ignited, bilateral meetings with key stakeholders, and research conducted by the department.
Building on existing findings
Recognising the valuable work already completed in this area, development of the road map also drew upon relevant strategies including but not limited to:
- National Resources Statement which includes a 5 point action plan to deliver the most globally attractive and competitive investment destination for resources projects; open up new industries and resources regions; better focus the sector’s innovation, research and development on long-term sectoral growth; develop and retain the world’s best workforce; and deliver better outcomes for stronger and more engaged communities.
- Australia’s Critical Minerals Strategy which targets actions in 3 areas: promoting investment in Australia’s critical minerals sector and downstream processing; providing incentives for innovation to lower costs and increase competitiveness; and connecting critical minerals projects with infrastructure development.
- CSIRO’s METS Road Map which recommends an aligned, efficient and agile industry ecosystem for the METS sector with a high degree of collaboration, global leadership in innovation and a growing share of global markets.
- METS Ignited’s Sector Competitiveness Plan which identifies a number of key opportunities to boost the METS sector, including robotics, automation and analytics; environmental and energy innovations; and improving the sector’s ability to commercialise and sell into international supply chains.
- NERA’s Sector Competitiveness Plan which outlines priority areas of action to accelerate the commercialisation and adoption of digital and automation technologies across the energy resources sector; fast-track advanced and low-emissions technologies; develop more technology-driven SMEs; scale-up supply chain communities; and remove regulatory barriers to future growth.
Barriers to scale
This road map seeks to support the resources technology and critical minerals processing sector to achieve its full potential by overcoming barriers to scale. While it is a developed sector in some areas, government investment and support to improve overall value add will be key to achieving growth.
The resources technology and critical minerals processing taskforce sees the Government’s work to get the economic conditions right for all manufacturers as an important opportunity to improve competitiveness for the sector, particularly in:
- Talent and Skills: the resources technology and critical minerals processing sector is knowledge driven. While we have a skilled and capable workforce, the sector relies on STEM and vocational skills to support emerging technologies, such as robotics and automation. It also relies on the advanced manufacturing skills needed for downstream critical minerals processing, such as chemical engineering.
- Access to capital: as it can take years to get projects to full-scale production, de-risking projects and improving access to debt and equity finance are important. Policies which go to the investment environment, send signals to investors, or more actively provide risk tolerant finance will encourage greater investment.
- Standards development: ethical certification helps strengthen Australian manufacturers’ ability to boost their export markets. Active engagement in developing, applying and aligning standards is particularly important for businesses in this priority area.
- Investment attraction: capital is mobile in this sector, and Australia needs to continue competing with countries who are targeting this mobile private sector investment.
The key barrier the Australian resources technology sector faces in achieving scale is the translation and commercialisation of ideas into products and services that resource firms and critical minerals customers want to buy. The sector needs to demonstrate how their technologies are commercially viable and can drive productivity, improve sustainability across the resources value chain, and integrate with existing operating systems. Without this, many end-use customers are reluctant to disrupt their operations to adopt new technologies.
Another key barrier to scale is market design in the resources technology sector. It needs to continue evolving from a traditional structure of technology firms providing solutions ‘owned’ by tier one resource producers. Instead, technologies need to be developed and sold to multiple customers across a vibrant marketplace, which then supports greater collaboration between technology providers and smaller resource producers.
Resource and critical minerals technology companies need access to finance. Australia’s capital markets are often reluctant to lend to this sector and end users are slow to adopt new technologies. This means some companies struggle to commercialise or need to go offshore to raise capital and develop commercial opportunities. To attract capital, they need to broaden their customer base, reach global markets and adapt technologies for application in new industries. This will allow them to attract finance and build resilience to market fluctuations in resources and critical minerals.
While programs are available in the market, there is still a significant gap in support provided. Better pathways for commercialising technology are needed to help companies get products to market.
In critical minerals processing, the ability to move into manufacturing is dependent on the ability to process chemically complex raw materials competitively. There are very few established processing projects. Some companies have undertaken definitive feasibility studies and are at the stage of attracting offtake agreements and project finance, but they face technical and market barriers to scale operations. These include:
- substantial investment overheads to establish mineral processing facilities and build appropriate domestic capabilities in Australia
- the technical risk involved in highly complex and custom processing requirements
- commodity price volatility in markets that are lack transparency and supply chains that are highly concentrated with high product qualification thresholds.
These factors make it difficult to access finance without public funding and risk sharing. This road map, through continued government support and collaboration, seeks to overcome this barrier by building greater capability within the manufacturing sector to demonstrate a reliable processing capability and the ability to scale to meet the needs of different customers.
17 The minerals and energy resources value chains encompass the entire mining life cycle from feasibility, exploration, construction, operation, processing value-adding through to decommission and remediation. ↵