Australia needs a simple and practical strategy that sets targets and roadmaps for the development of our critical minerals industry as the world transition’s to a net zero economy, JANA’s Suzy Yoon writes in this Op-ed.
In the ever-evolving landscape of sustainable investing, the need for systemic approaches to address pressing social and environmental challenges has become increasingly evident. As countries across the world grapple with the effects of climate change on their environment and their economies, the imperative to harness the power of green technology to assist the transition to net zero becomes even clearer.
A World Bank report, Minerals for Climate Action, found that the production of minerals, such as graphite, lithium and cobalt, all key components of sustainable technologies, could increase by nearly 500 per cent by 2050, to meet the growing demand for clean energy technologies. With the commencement of COP28 last week, a crucial moment where global leaders have converged in Dubai to re-chart and accelerate the course to net zero, the urgency to fortify our stance on critical minerals cannot be overstated.
The accelerated growth of the critical minerals industry, fuelled by market demand, poses significant challenges to investors and Australia's natural resources. However, the absence of robust standards and approaches exposes investors and the environment to unacceptable levels of risk
The decisions made in the corridors of COP28 will echo far beyond, impacting industries and economies worldwide. A simple, practical, approach that focuses on systems-level aspirational targets and roadmaps could be implemented for Australia’s critical minerals – an industry that is essential to a global transition to net zero, and one that offers immeasurable opportunities for Australian domestic growth, employment, and investment returns.
As Australia asserts its influence in this vital industry, the need for a comprehensive and forward-thinking approach becomes increasingly clear. The critical minerals industry is not just a key player; it is the cornerstone of our journey towards a sustainable, net zero future.
Australia has a global competitive advantage with an abundant reserve of critical minerals – we are the world’s leading producer of unprocessed lithium (46 per cent in 2021), and we produce 79 per cent of the world’s hard rock lithium, with exports forecast to reach $16 billion in 2023, up 15x in two years.
Furthermore, we are the world’s third largest cobalt exporter, and the fourth largest exporter of mined copper, nickel, and rare earths. Yet these resources are often located alongside fragile ecosystems, critical water resources, regional communities, and First Nations’ heritage and land.
The accelerated growth of the critical minerals industry, fuelled by market demand, poses significant challenges to investors and Australia’s natural resources. However, the absence of robust standards and approaches exposes investors and the environment to unacceptable levels of risk. We stand at a crossroads. Decisions made today will either propel us towards a sustainable future or leave us grappling with the repercussions of shortsighted choices.
Financial stability relies on robust societal, environmental, and financial systems. Unstable systems, threatened by climate change, biodiversity loss, and social inequities, jeopardise market performance and long-term portfolios.
So what is the solution?
Enter systems-level stewardship – a strategy that recognises the intricate interplay between environmental and societal factors in business, and is capable of yielding tangible sustainability outcomes while safeguarding long-term investment value. Systems- level stewardship is unique in that systems stewards focus on results they want to achieve and work backwards from there.
They recognise that outcomes for climate cannot be achieved in isolation from outcomes from nature-related ecosystems and communities. They recognise that meaningful outcomes can only be achieved through collaboration, interaction and input from all people and stakeholders that have an influence over the process.
The coming decade unveils a window of opportunity for Australian asset owners to showcase leadership by stewarding the critical minerals industry towards a prosperous and sustainable future.
Stewardship should be driven by aspirational targets and transition roadmaps related to all aspects of sustainable mineral extraction, in a similar way that net zero aspirational targets have been implemented and mandated across industrial sectors.
The coming decade unveils a window of opportunity for Australian asset owners to showcase leadership by stewarding the critical minerals industry towards a prosperous and sustainable future. This strategy is future-focused and aims to drive strong, sustainable long-term financial returns whilst solidifying Australia’s global position in a market with exponential growth potential, securing vital jobs and strengthening the economy as we transition to net zero.
COP28 serves as an important backdrop to the critical minerals conversation and the Australian investment community has an opportunity to unlock leadership in the industry. It is a call for leadership, responsibility, and a future where the critical minerals industry exemplifies collective action for systemic change and a sustainable legacy, serving as a blueprint for future generations.
Suzy Yoon is Acting Head of Sustainability at asset consultant JANA.
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