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RUBY:

From Schwartz Media, I’m Ruby Jones, this is 7am

A new green energy agreement with the US, signed by President Biden and Prime Minister Albanese, will allow the Pentagon to fund mining projects in Australia. It’s part of a race to control the energy sources of the future, and associated technologies – everything from computer chips to electric vehicles to advanced weaponry. So what does this deal mean for our security, as the US tries to match China’s progress, using Australia’s resources? And, are we getting a good deal?

Today, National Correspondent at The Saturday Paper, Mike Seccombe, on the American military's plan to secure our minerals.

It’s Tuesday June 6

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RUBY:

Mike, it seems like we could be on the verge of another mining boom - though perhaps a very different kind. One that involves minerals that are needed for a transition to green energy, rather than fossil fuel's. So when we hear the federal government talking about this type of mining, what are they talking about exactly?

MIKE:

Well, that depends on who you're talking to, I guess. I mean, the Australian government unfortunately is still talking about more fossil fuel extraction, you know, particularly gas. But they're talking about that being as well as other minerals that will be required for the transition to the green economy.

Archival Tape – Madeleine King:

“Mr. Speaker, this Government recognises the role of critical minerals in our net zero ambitions and the role critical minerals will play in helping Australia and the world to decarbonise.”

MIKE:

So you will hear Anthony Albanese and the Resources Minister, Madeleine King pointing out quite correctly, that solar voltaic plants and wind farms and electric vehicles, all of those things that we're going to have to shift to to combat climate change generally require more minerals to build than the fossil fuel based counterparts.

Archival Tape – Madeleine King:

“I recently announced close to $50 million in grants to 13 projects across Australia as part of the second tranche of the Critical Minerals Development Program.”

MIKE:

And as a result, these new minerals, so-called ‘critical minerals’, there's a boom on a worldwide boom, a boom in this country, to which, as King points out, shows no sign of slowing.

Archival Tape – Madeleine King:

“These projects will produce critical minerals such as cobalt, graphite, high purity alumina, tungsten and rare earths and provide key inputs into strategic supply chains.”

MIKE:

That's why we're going to have more mining projects around Australia, because we're going to need more of these other things, you know, other than our traditional extractive industries of coal, gas, iron, that sort of thing. Something that will help drive this boom in critical minerals was an agreement signed just a couple of weeks ago in Hiroshima between Anthony Albanese and the US President, Joe Biden.

RUBY:

Okay, well let's talk a bit about that treaty. As you say, Anthony Albanese met with with Joe Biden in Japan and this agreement came out of that to allow new US funded projects in Australia with the aim of extracting minerals that the US critically needs. So tell me more about what the deal actually means.

Archival Tape – Joe Biden:

“This compact and statement of intent are testament to our close bilateral cooperation, and I mean that, close. We're going to establish climate and clean energy as a third pillar of the Australia-US Alliance.”

Archival Tape – Anthony Albanese:

“Yeah, well, thank you, Mr. President…”

MIKE:

Well, the deal signed by Albanese and Biden in Hiroshima goes by a rather unwieldy title The Australia United States Climate Critical Minerals and Clean Energy Transformation Compact, and it's been sold as a measure to accelerate the establishment of quoting again, “responsible, secure and inclusive global clean energy economy”. It is, you know, the experts all say, a pretty big deal for the climate and also for the Australian economy. It could see Australian mining, processing and energy companies benefiting from billions of dollars in subsidies under Biden's major climate policy, the Inflation Reduction Act. The other aspect of it is that also under this agreement, Biden affirmed a plan to ask the US Congress to add Australia as a, quote, domestic source unquote, for critical minerals under its Defence Production Act. Now, perhaps I should clarify, when we talk about critical minerals, what we're talking about is things that nations don't have big supplies of themselves, so they have to probably import them. So in the past, critical minerals have been things like coal for steelmaking and burning. But more and more, the minerals that are coming to be seen as critical are things that are essential to producing batteries, microchips, you know, all sorts of things for the clean energy economy, you know, electric vehicles, all of those things rely heavily on this. And security of supply is obviously vital given how reliant our economies are becoming on these technologies. So we're talking about things like lithium, cobalt, nickel, graphite, magnesium, manganese. And then there's about 17 minerals known collectively as rare earth elements, which are also vital to the transition. Anyway, as I said, that's what Biden's interested in, happens we have quite a number of these things. And so now he will be seeking congressional approval for the Pentagon to directly fund projects for those kinds of minerals here in this country. So if Congress approves this plan to designate a domestic source of these certain minerals, it opens the way for the Pentagon to directly invest in mining and potentially processing in this country. If you look at the world's cobalt supplies, almost all of it comes from one country, the Democratic Republic of Congo. And almost all the mines there are owned by guess who? China. In the case of rare earths, they've cornered the market to an even greater extent. And in the case of some of these rare earths, I'm told China produces 100% or did until recently. You know, so in some cases there is literally no one else to get them from.

RUBY:

Right. So China is ahead of the game when it comes to sourcing and processing critical minerals. The U.S. has realised this and has seen that here in Australia we have something to offer, which is, which is why Biden has turned up with this deal, which I suppose begs the question, I mean, how much does the US need us?

MIKE:

Yeah, well, hopefully quite a lot from the US government's perspective. It's part of a great race to control the energy sources of the future and associated technologies in the future. Everything from computer chips to wind turbines to electric vehicles to advanced weaponry. I think it's probably fair, I think, to say that the biggest geopolitical contest of the moment is not actually Russia versus Ukraine or China and Taiwan. It's about sourcing the minerals critical to winning the energy race. And Australia is one of the biggest players and has very much to gain because we are so exceptionally well endowed with critical minerals. And of course also the renewable energy to process them. So other countries are beating a path to our door. It's not just the United States, it's the Koreans. It's a bunch of other people. They would much rather be relying on us than relying on China.

RUBY:

We’ll be back in a moment.

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RUBY:

So, Mike, you were talking about why countries like the US are so desperate to source critical minerals from us instead of from China. And that's because presumably at the moment, if tensions with China were to to rise any further than China could cut supply of these critical minerals to the US market if that were to happen in that kind of scenario, Mike, what would happen to the US economy?

MIKE:

You're right, it's a big deal and it's a big concern. The US Council on Foreign Relations just a couple of weeks ago noted and I'm quoting here, China dominates the critical minerals supply chain and continuing the quote, regardless of where mines might be located. China owns or finances many of them.

And it went on to point out that, you know, China dominates the processing of 65% of cobalt, 60$ of lithium, as much as 95% of manganese. And as I mentioned a minute ago, in the case of some of those rare earth elements, China controls effectively 100%. So a lot of people are concerned about it. And the Australian Financial Review's resources writer Peter Ker put it quite succinctly. As things stand, the world can decarbonise only if China permits it to do so. You know, it's a matter of civil infrastructure. It's also a matter of military infrastructure. Tim Buckley, who's a resources analyst and director of Clean Energy Finance, he told me ‘You cannot run an Abrams tank, you can't run the Air Force, you can't do satellites, you can't do your semi-conductor chips, wind turbines, batteries, electric vehicles. You can't do any of those things without rare earths’. So, you know, it's a pretty big deal.

RUBY:

Okay. So it's clear why the US government would want these minerals. But what about us, Mike? Should we be thinking more critically about what might be in this deal for us with the US? I mean, is it a good deal? Or perhaps should we be thinking about taking on a bigger role ourselves in terms of mining and processing these minerals here in Australia? Are we – are we missing an opportunity?

MIKE:

You're absolutely right. This is certainly a concern. Of course, we need to carefully assess whether it makes economic sense to move up the supply chain. You know, just because you've got lithium, for example, doesn't mean you have to do the whole thing of making batteries. Just because you've got iron ore doesn't mean you have to go all the way to making, you know, high end steel products. Leave some of it to be done elsewhere. You have to understand the economics of the supply chain for that. And in general, when I talk to the experts about this, they say that Australia would be wise to focus on the energy and capital intensive parts of the process and leave other countries where labour is cheaper to do the labour intensive parts. So, having said that, though, we are exceedingly well placed. I mean, I was looking at the data from Geoscience Australia and this country has 29% of the world's proven lithium resources and of course lithium is absolutely crucial for batteries. We currently mined more than half the global total of lithium, but as of now we send almost all of it – I think it's like 97% we send off to China in its raw state for processing. And certainly I would suggest the Americans would want us to do more than just send it off to China. Apart from lithium, though, we have 23%, almost a quarter of the world's proven nickel resources, 20% of the cobalt and we're rushing to export it. The value of lithium exports from Australia, I should point out, was estimated at $16.3 billion last year, and almost all of that, of course, went to China for processing. So a lot more of the value accrued to them. So that points to the two big concerns. I think the first is that we're effectively helping China entrench its dominance and the second is of course, that we could wind up yet again as simply the quarry for resources to which other countries add value.

RUBY:

Yeah, I suppose the danger there is that we might just see a repeat of the mining boom where big corporations - and some individuals - benefited the most from our resources, and various governments - while they did gain some of the benefits - perhaps didn’t necessarily make the most of the immense windfall of those years?

MIKE:

Yeah, well that is the danger I would say though I think the government is alert to this now and I won't go through the budget now, but if you look, there's not huge money, but there's significant, you know, billions of dollars that are being devoted towards more renewables, towards more exploration of value, adding to our our raw materials. So done right, the lucky country could be lucky again. The world might stop taking our fossil fuel resources, but we might suddenly find ourselves with even more lucrative sources of revenue. You know, that we can dig out of the ground.

RUBY:

Mm. I suppose the big difference here, though, is that this is all tied to the US military and its capability. So do you think that given that Australia should be thinking more critically and having more of a public conversation about what that might mean for our own security, if we're seen by other countries in the region, by places like China as being the supplier of the American military?

MIKE:

It's a point and I suppose it's a worry. On the other hand, I do think that there's kind of a global realisation that it's not just the United States, it's the Koreans, the Japanese. America has been signing agreements with all sorts of people to try and guarantee critical minerals supplies. I don't think we would find ourselves, as it were, singled out by the Chinese and obviously it has the capacity to impact on our relationships. But the fact remains that everyone needs us. The Chinese need us. The US needs us, the Koreans, the Japanese. What we have to do is to make sure that we undertake the deals on our own terms and that we actually get our fair share of the benefits from the exploitation of our own resources.

RUBY:

Mike, thank you for your time.

MIKE:

Thank you for yours. Cheers.

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RUBY:

Also in the news today…

Justice Anthony Besanko has released his full judgement after dismissing Ben Roberts-Smith’s defamation suit last Thursday. Justice Besanko found Ben Roberts-Smith was "not an honest and reliable witness," in many areas. And that he had sent threatening letters to witnesses who gave evidence in the trial.

The full judgement is 736 pages long and can now be read online.

And…

After 20 years in jail … Kathleen Folbigg has been pardoned and released over the deaths of her four children.

Folbigg, who has always maintained her innocence, was given a 25 year sentence after being convicted in 2003 of the murder of three of her children, and the manslaughter of one.

Her release comes after an inquiry into the conviction heard that Folbigg’s two daughters had a rare genetic mutation that may have caused their deaths … and her son may have had an underlying genetic disorder that predisposed him to epilepsy.

I'm Ruby Jones. This is 7am. See you tomorrow.

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