Unlocking Australia's critical minerals potential

As part of AusIMM’s 2025 Thought Leadership Series, we spoke with Lucy O’Connor, Manager, Australian Critical Minerals Research and Development (R&D) Hub, and one of our expert panellists on the topic of Critical Minerals.

In this Q&A, Lucy shares her expert insights on opportunities for the Australian critical minerals sector, growing capability across the value chain, as well as the current state of policy and investment.

What are the biggest opportunities for Australia in the critical minerals sector?

Critical minerals are essential to the energy transition and modern technologies, and Australia is well-positioned to take advantage of anticipated increased demand. We have proven geological potential, mining expertise, supportive institutions and a history of innovation. Industry is bringing all these strengths to bear on the critical minerals challenge.

We are the number one global producer of lithium, with potential to be a top five producer of vanadium and gallium. However, the critical minerals sector is dominated by junior miners – many with just one project, who are struggling to get investment.

"Critical minerals projects present challenges in terms of scale, risk and return that is not typical of Australia’s experience in mining bulk commodities. We cannot be complacent and new approaches are needed."

How should industry and government approach the task of growing capability across the value chain?

There is a range of options – tax incentives, grants etc. I am coming at this from the R&D perspective, so see the contribution innovation can make – by solving technical challenges, developing Australian IP and know-how that will have widespread benefits for industry.

Moving downstream in the value chain is essential – the economics of many of these projects will not add up if we cannot do more processing and beneficiation on shore. The Australian Critical Minerals R&D Hub is funding research and investing in infrastructure that will reduce the bar to entry for Australian projects in some of these value chains. There is value in the Government funding these types of projects – rather than leaving each individual company to solve similar problems. These activities build a sector – not just a company – which should be the goal.

There are also some challenges that will not be solved by the market that will need Government intervention. For example, production of minerals that are not commercially viable due to small trading volumes and concentrated supply chains, such as gallium, germanium and indium. This is relevant to the Government's strategic reserve proposal.

Solving the technical challenges to extracting and processing critical minerals helps de-risk projects and makes them more attractive to potential investors. We need to be thinking of this in terms of producing high-purity materials – not just minerals – and building new supply chains with our trusted trading partners. Building international links and technical collaboration should be part of our approach.

Australia is well-known for its mining expertise and we produce a lot of precompetitive geological data to support investment attraction (for example the Critical Minerals Prospectus). Processing is the most significant bottleneck for many of these projects - I think Australia could do more to showcase our critical minerals processing and manufacturing downstream capabilities, in addition to our geological assets. 

What role do you think innovation and investment will play in advancing Australia’s position in critical minerals? Are there any standout examples already pointing the way?

I have been working in the critical minerals innovation area for the past two years and was previously with Austrade – so I am a firm believer in the role innovation and investment can play in advancing Australia’s interests.

Having a proven capacity to extract and process these minerals should be part of our value proposition when promoting Australia with investors.

Australia’s science agencies are a real strength and there are many standout examples of the role innovation can play. The three hub agencies (ANSTO, CSIRO and Geoscience Australia) are using value chain science cooperation to solve these challenges.

Many existing incumbent critical minerals technologies were developed many years ago and have poor ESG outcomes.

"Our goal should not be to replicate what others are doing, but to disrupt the industry with a paradigm shift by seeking new innovative approaches that deliver cost efficiencies and better outcomes for the environment."  

Some standout examples include a supersonic quenching technique that CSIRO is demonstrating, which will producer cheaper and cleaner sources of lithium metal than prevailing electrolysis technology that will be needed for the next generation of solid-state lithium rechargeable batteries. CSIRO has also produced rare earth metals used in magnets and tungsten metals at room temperature – much less toxic and energy intensive than other methods.

We are also conducting research and investing in infrastructure needed to produce high purity materials, including a high temperature chlorination processing facility to support the development of a high purity quartz (HPQ) industry in Australia. This will be one of the few facilities outside of Germany and China and will enable Australia to supply HPQ to high-tech global markets.

The Hub is also investigating clay hosted sources of rare earths, which can provide cost effective and sustainable new sources of heavy rare earth elements needed in magnet industries.

What are the big policy shifts taking place at the international, national and state levels that are impacting the critical minerals landscape?

Mineral security nationalism is on the rise and we can expect to see more trade restrictions on materials and technologies. There is a risk our strategic partners compete with each other and try to secure sovereign capability, when we should be working together to connect our supply chains. For Australia, that means connecting with countries that have not traditionally invested in our mining projects. So, we have to find ways to bridge the gaps. Technical cooperation can play a significant role in that task.

Policies and commentary does not always distinguish where criticality exists. Having access to raw materials does not make a country less vulnerable to supply chain risks for end products.

Many countries have critical materials lists – rather than minerals. Australia needs to move in that direction too; this would help us prioritise mineral value chains. There is not much point in increasing production of rare earths ores, for example, if we are just providing more feedstock for a handful of existing magnet makers.

What unique insights or experiences are you bringing to this panel that you think could challenge or inspire your peers?

I mentioned I worked with Austrade previously and actually helped prepare Australia’s first critical minerals strategy in March 2019, which was a joint exercise with the then Minister for Trade and Investment (Simon Birmingham) and Minister for Resources. I have therefore been dealing with these issues for some time from different angles. 

At Austrade I saw firsthand the challenges companies face when competing for international investment. The politicisation of this issue in the past few years has compounded those challenges. I joined CSIRO in May 2023 to establish the Australian Critical Minerals Hub. In that role it has been great working with scientists and seeing firsthand the potential R&D can play in de-risking projects and attracting investors. 

I really enjoy being able to connect the policy makers and industry with the technical people – to hopefully deliver better outcomes for the sector. 

Panel Topic 2: Critical Minerals is now available to watch online. Subscribe to our TLS mailing list to receive the link today.