The next chapter of Queensland's resources story—unlocking the next resources boom in critical minerals 6 min read
Critical minerals are essential in the development and manufacturing of modern technology and facilitating Australia's clean energy transition. Queensland's rich endowment of critical minerals makes it well-placed to seize this economic opportunity and service global demand.
The Australian Government's recent Critical Minerals Strategy 2023-2030 (see our earlier Insight for more information about the Federal Strategy), has now been followed by the release of the Queensland Critical Minerals Strategy (Strategy).
Queensland's critical minerals deposits for base metals such as copper, lead and zinc are well known, but the Strategy also looks to drive development of other critical minerals, including battery minerals and rare earths.
The Strategy contains $245 million of initiatives and builds on the Queensland Resources Industry Development Plan, along with other previous announcements to deliver a package specifically targeted at the critical minerals sector.
In this Insight, we outline the four key objectives of the Strategy and explore how the government intends to strengthen Queensland's position in the critical minerals global value chain.
Overview of the Strategy
The Strategy's ambition is to create 'sustainable economic prosperity' for Queensland's critical minerals sector. The four key objectives that underpin the Strategy, are:
- move faster, smarter
- maximise investment
- build value chains
- foster research and environmental, social and governance (ESG) excellence.
To accelerate the development of the Queensland critical minerals sector and the downstream value chain, whilst simultaneously seeking to reduce complexity, the Queensland Government will establish a dedicated office (Critical Minerals Queensland) with responsibility for driving the delivery of the Strategy. The Critical Mineral Office will serve as a centralised point for industry stakeholders and investors, facilitate investment in research and development, market Queensland internationally and lead government action in the sector to help achieve the Strategy's objectives.
The key objectives
Summary: capitalise on the economic and geopolitical benefits presented by the demand for critical minerals through improving government processes, maximising the potential of existing and abandoned mines, fostering strategic partnerships and domestic innovation and investing in infrastructure and exploration.
Key actions:
- Critical Minerals Zones: a place-based zoning approach where critical mining projects will be co-located in one regional area in an effort to leverage collaboration opportunities to increase time, resource and capital allocation efficiencies. In these zones, government action will be tailored and may include regional environmental and social impact baseline assessments, the coordinated assessment and development of critical minerals projects and the coordinated development of enabling and common-user infrastructure. The Queensland Government has allocated $75 million in funding to this initiative, and initially seeks to commence a coordinated approach in Julia Creek/ Richmond, focusing on vanadium; and Mt Isa, focusing on secondary prospectivity in mine waste.
- Explore remaining mineralisation in mine waste: through funding of $5 million, the Collaborative Exploration Initiative will be expanded to assist companies to undertake exploration of mine tailings and waste rock dumps on abandoned and operating mine sites which can hold substantial mineral deposits and value.
- Facilitate secondary prospectivity for critical minerals: the regulatory framework will be reviewed to facilitate reprocessing opportunities on previously disturbed land to ensure responsible use of Queensland's critical minerals. This review will include consideration of a new 'Residual Mineral Recovery Tenure' and investigation of the current risk assessment criteria used to determine risk allocation in the Financial Provisioning Scheme (see also the recent Summary Report for the Post Transition Review of the Financial Provisioning Scheme, which outlines the current proposed changes).
Summary: establish an appropriate market, regulatory environment and workforce to attract long-term investments to foster certainty and growth in mining, processing and advanced manufacturing industries.
Key actions:
- Going further on rent reduction for exploration permits: no rent for new and existing exploration permits for five years as a means of encouraging exploration to support new mineral discoveries. This initiative represents an estimated $55 million in forgone revenue.
- Profile and promote Queensland: seek to attract international investment and leverage bilateral trade agreements through the development of both a comprehensive promotion strategy and an investor-focused portal to provide up-to-date information about critical mineral investment opportunities in Queensland. Funding of $1 million has been allocated to this initiative.
Summary: beyond extraction, invest in value-adding industries and onshore processing and manufacturing capabilities to diversify the Queensland economy and boost competitiveness and business opportunities.
Key action: deliver, along with the Queensland Investment Corporation, the $100 million Queensland Critical Minerals and Battery Technology Fund (announced in December 2022), which seeks to accelerate the pit-to-product supply chain by supporting businesses across the critical minerals sector to build industry capability in metal refining, mineral processing and battery technologies in Queensland.
Summary: in an effort to set Queensland apart from its competitors whilst ensuring ESG outcomes are realised, the Queensland Government will partner with industry, universities and research organisations to help businesses reduces costs and maximise production values, while minimising the sector's footprint.
Key actions:
- Partner with industry: work with industry to improve ESG performance and develop a network to enhance ESG capability within mining companies and to encourage collaboration and sharing of research and methods for improving ESG practices. Funding of $1 million has been allocated to this initiative.
- Research and development in circular economy and mining: to realise greater efficiencies in the critical minerals value chain, the Queensland Government will utilise $8 million in funding to undertake research and development in circular economy and mineral discovery, extraction, processing and recycling, and develop a research institute/government minerals alliance.
Deep dive into aspects of the Strategy
Residual Mineral Recovery Tenure
As many critical minerals have only more recently come into focus, it is thought that a significant amount of such minerals might be extracted from reprocessing of tailings and other by-product/waste materials produced from previous mining operations.
The newly proposed Residual Mineral Recovery Tenure is a novel concept that does not exist in Queensland's current mining and tenure legislation. It would presumably authorise such reprocessing opportunities, but not necessarily new, more invasive mining activities.
While that could theoretically be achieved under the current regulatory framework through granting a mining lease with appropriate conditions, a customised tenure of this nature may allow different treatment of matters like rehabilitation and financial provisioning. That will be particularly important to the extent the tenure is seen as an avenue for recovery of critical minerals from abandoned mines.
Rental holiday on exploration tenure
A key action which aims to encourage investment is reducing rent for new and existing exploration permits to $0 for five years. This initiative goes further than the previously announced financial support in the form of rent deferrals for new critical mineral projects in their first year (see our earlier Insight for more information on this previous initiative). Details of how the rent reduction will operate—and particularly whether there will be other eligibility criteria, including minimum work commitments—are not yet available.
Rental is not normally a significant cost for resources projects. However, this initiative is a recognition that modest cost reductions at this early stage of the project lifecycle when there is no revenue from production can have an important impact on the extent of exploration that occurs.
Queensland Critical Minerals and Battery Technology Fund
There will be two alternative streams of financial assistance available under the fund:
- Government grants of up to $2 million delivered and administered by Queensland Treasury
- Government equity and/or debt investment of up to $30 million for growth-stage businesses looking to scale-up activity—providing venture/growth capital for such projects (delivered and administered by QIC).
Through the combination of the two streams it will be possible for the fund to provide more customised support for smaller investments in feasibility studies and pilot programs (through the more traditional government grants process), while also supporting larger investments for scaling up of critical minerals extraction projects with a JORC compliance resources and/or investment in commercial-scale critical minerals process facilities. The venture/growth capital stream is likely to be particularly important given some of the challenges involved in obtaining funding for greenfield projects in the current economic environment.
Further details of the fund and the application process for each potential stream of financial assistance are available on QIC's website, including the guidelines for the grant assistance stream.
While obviously of a lesser scale than the United States Inflation Reduction Act funding, there is nothing stopping projects obtaining funding from both arrangements, and a localised fund will create better opportunities for funding access for Queensland projects that would be unlikely to be available through such international funding programs.
Interaction with Australia's foreign investment regime
The Strategy has identified that attracting international investment and leveraging bilateral trade agreements will be necessary to position Queensland as a key global supplier of critical minerals.
With any international investment, foreign investment review board approval is always a key consideration. In our Insight from earlier this year, we flagged that the then-forthcoming Federal Strategy may bring adjustments to the Foreign Investment Review Board's (FIRB) regulation of foreign investment in critical minerals. The Federal Strategy did not expressly contemplate changes to the FIRB regime, and instead focused on initiatives to encourage investment from 'likeminded' partners (and that regime lies outside the remit of the Queensland Government). However, while not a direct feature of the federal or Queensland strategies, the foreign investment regulation overlay should be kept in mind for potential investors in the Australian critical minerals sector.
What to expect next
Queensland has the mineral deposits, skilled labour force, infrastructure and stable regulatory framework for mining activities to play an important part in Australia's developing critical minerals industry.
The Strategy is certainly a step in the right direction, and the alignment with the Federal Strategy (and international initiatives) will likely assist in positioning Queensland critical minerals projects to participate in meeting the growing demand for critical minerals. The government is also highly focused on this area, given the importance of mining to the state's economy and the recognised need (over the longer term) to transition and retain that importance as demand for traditional minerals potentially changes.
The key to making the Strategy a success will be follow-through from the government, including tenure reforms to enable reprocessing projects to proceed, empowering the proposed Critical Minerals Office to drive further required initiatives and reforms, and putting the Critical Minerals and Technology Battery Fund to work in supporting new projects.
We will keep you updated on the anticipated flurry of activity in this space.