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Highlights
- Leading economies of the world are racing to secure futures supplies of critical minerals.
- The US is increasingly dependent on foreign sources for many of the processed versions of critical minerals.
- China's dominance in the critical mineral supply chain is a big worry for Washington.
Critical minerals have gained unprecedented attention recently. Leading economies of the world are racing to secure the futures supplies of these crucial minerals, necessary for the world’s transition from fossil fuels to low-carbon energy systems.
Critical minerals are essential for the development of the world's leading and developing economies. However, their supplies may be at risk due to geopolitical issues, geological scarcity, changes in trade policy, or any other factor.
The demand for critical minerals has been escalating due to their increased utilisation in renewable energy, transport, medical, defence, aerospace, automotive, and telecommunications.
Must Read: Critical minerals can strengthen global climate ambitions, says International Energy Agency
US turns to Australia for critical minerals
With an intention to secure its future supplies, US Commerce Secretary Gina Raimondo, on Thursday, met with Australian Trade Minister Dan Tehan in Washington along with chief executives from critical minerals producers. The meeting was aimed at resolving the regulatory hurdles that avert US financing agencies from investing in Australian critical mineral projects.
Source: © Poorisitchunpiam1995 | Megapixl.com
The US is significantly dependent on external sources for the supplies of critical minerals. Internationally, China is the leading producer and supplier of critical minerals and controls most of the market.
Must Watch: Is Australia set to emerge as the world’s leading critical minerals supplier?
China's dominance in the critical mineral supply chain is, of course, a big worry for the US. The ongoing tension between Russia and Ukraine has further worsened supply woes as Russia is a key supplier of various critical minerals, including platinum, and the Western sanctions on the nation have disrupted the global supply chain.
With the current war reshaping the dynamics of global energy market, countries across the globe are trying hard to secure their critical mineral supplies needed for renewable energy infrastructure that will eventually replace fossil fuels.
INTERESTING READ: Australia accelerates renewable energy shift- unveiling latest developments
Australia – a powerhouse for critical minerals
Australia is well known for its mineral-rich deposits, and the country is believed to grow into a powerhouse of critical minerals. Likewise, the country also holds a decent potential for significant resources of many critical minerals like lithium, zircon, and numerous rare earth elements.
The significant commitment by the US to clear the hurdles for investing in Australian critical mineral-related projects would certainly help the country to reduce its reliance on China and enhance the security of its supply chains.
As per the International Monetary Fund, Australia is in a strong position to benefit from a six-fold growth in critical mineral demand worth US$12.9 trillion over the next twenty years.
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ASX listed companies, including Iluka (ASX:ILU), Australian Strategic Minerals (ASX:ASM), Cobalt Blue (ASX:COB), Lynas (ASX:LYC), and VHM, might benefit from the projected commitment by the US to invest in Australian critical mineral-related projects.
Currently, Australia’s lithium player, Ioneer (ASX:INR), is seeking a funding of about US$500 million from the US Department of Energy and is currently in a due diligence process.
Must Read: Is Australia set to emerge as the world’s leading critical minerals supplier?
Bottom Line
Critical minerals are important for the growth of the world's major and developing economies. Australia has a huge deposit of these minerals, and the nation holds the potential to become one of the leading suppliers of critical minerals in the world amid their rising demand.
