Nearing Net Zero: Can we really mine our way to net zero?

Elena Lambros
Hello and welcome to ESG Matters by Ashurst Perkins Coie.

My name is Elena Lambros and I’m a risk advisory partner based in Brisbane.

You’re listening to a special audio podcast taken from our regular Nearing Net Zero video mini-series.

In this episode, we explore a topic that, at first glance, might seem unlikely – and that’s the role that the mining and resources sector can play in the race to net zero. As always, I was joined for this episode by my regular co-host for Nearing Net Zero – Dan Brown, who is Global Leader for the Energy & Infrastructure Industry here at Ashurst Perkins Coie.

And we also invited one of my other favourite Brisbane colleagues onto the show, Ratha Nabanidham, who is a partner specialising in M&A in the energy, mining and infrastructure sectors.
I began the episode with a somewhat provocative question: Are we really going to mine our way to net zero?

Let’s hear what Ratha had to say…

Ratha Nabanidham
Thanks, Elena. So it's true. Most people don't associate mining with net zero. In fact, most people would see them in direct conflict. It sounds counter-intuitive, really. But the reality is there is no energy transition without materials. Every battery, solar farm, transmission network, electric vehicle needs critical minerals. And so, you know, in that sense, we do have to mine our way to net zero.

The real question for me is not whether we might need mining to get to net zero, but how do we secure the right minerals and produce and process them responsibly, sustainably, reliably, and at the scale that we need to achieve the transition?

Elena Lambros
Yeah. Really good point. And then I guess when you're starting to think about the right minerals and the scale, how much more mining are we really talking about?

Ratha Nabanidham
We’re talking about a lot, to be honest!

And you know, when people think about the energy transition, they think like, “yep, one solar farm, one electric vehicle”. But what they probably don't see is the enormous amount of material required to build the technology and infrastructure to deliver and support the various solar farms, electric vehicles, energy transmission. We're not just building one of each of these things. We’re building a whole energy storage system. We're building multiple, numerous electric vehicles. So it's an enormous task.

And so that's why governments and industry are really focusing on the critical minerals sector. And look, the conversations really shifted away from, “do we need critical minerals?” rather to “can we quickly develop and mobilise to build the supply chains quickly enough to support the transition?”

Dan Brown
When I just do what Dan Brown does and go up to 100,000ft, the mining industry plays a fundamental role in our global and local economies. Full stop. You know, particularly on this journey to net zero, which might, as you say, initially seen counterintuitive. And I really love the way that the mining industry is helping communities to understand the absolute importance of the commodities that they are mining and making available.

And because it goes into everything we touch and see around us. Right? And I feel like they've done a really good job of beginning to help grow that fact base. And when we look at like even for instance, at the moment, like the hottest thing at the moment is data centres – critical minerals are fundamental to so many parts of that value chain that we have to unlock in order to do that.

Given the current geopolitical arrangements and now the refocusing of percentage of GDP spending on defence, critical minerals are fundamental for defence.

When we look at Elon Musk and others are doing with aerospace and interplanetary travel, critical minerals are fundamental to that next kind of layer of intergalactic space travel and those sorts of things.

So it just feels like, the mining industry is fundamental to our existence. Full stop. And then the mining your way to net zero – it's a massive piece of us being able to do that, right? I mean, it's in everything that we're going to need for the transition. So without the critical minerals, we don't have the raw material and the resources needed for what we need to build to deliver the energy transition.

Yeah, I think that's right. And then when you're talking about all of those things and putting it in context, but then you think about the impact of mining and the fact that you're trying to move to cleaner environment. How do those things kind of come together then?

Ratha Nabanidham
Yeah. I think that's really the key challenge. And that's the key tension that we're talking about isn't it. Like, when we talk about the energy transition and the mining, in people's minds they don't go together. And I think most people are supportive of clean energy and the transition, but far fewer people want a mine being built near to their homes. And so that's the challenge that we face.
And people have really high expectations in terms of, you know, environmental and social standards, in terms of delivering these projects. And when we talk about social licence, like even around the First Nations engagement and making sure we've got the social licence to do what's needed. And so I think, you know, reconciling these competing expectations is really a huge challenge.

Elena Lambros
I think so. And I also would say, though, what I always comment on with mining: I think [the] mining [sector has] dealt with a lot of these challenges for many, many years – those social licence challenges, those First Nations challenges, those environmental challenges. So actually, they're probably quite prepared for this kind of scale of what is to come and how they're going to win those communities’ trust.

Ratha Nabanidham
Absolutely right. And I think, you know, in some respects it goes to why Australia can be a leader in critical minerals, because we've got this deep understanding of mining and that social licence piece and the First Nations engagement. So it's not new to Australia. It's something that [the mining] industry here has been grappling with for a long time.

And the way I see it is actually where enhancing from all the learnings that we've had over all the years around, mining coal, iron ore and all those other investments. And now we can kind of take best learnings into the critical minerals space.

Elena Lambros
Which actually moves us slightly from, not just a climate story, but also thinking about the geopolitical issue around that. So how do we take the trust and experience that Australia has in this and make that turn it kind of into an economic story as well?

Ratha Nabanidham
The geopolitical issue that you raised is really interesting, right? Because it's really moved away from a resource mining story to really about national security. You know, we're looking at national energy security, industrial policy, like it's become a fundamental issue in that sense.

And that's affecting how governments are thinking about critical minerals. You know, it is about, not just access to the resource, but it's the security of the supply chain. And so, you can see that's driving competition between countries. We're seeing Australia, Japan, the US teaming up together to make sure that it's not just about securing the resource, but then obviously the supply chain that then goes with that.

You know, in Australia, obviously we've got investors and they navigate the regime. And it's not that there's a critical minerals category that you need approval for. But most mining investments have actually always needed further evidence. And what we're seeing is now probably greater scrutiny around the investments that might affect the energy security piece.

Dan Brown
So Ratha, if our land abounds in nature's gifts, we've got plenty of resource. Why is everyone talking about processing? Like, what's the what's the importance of processing?

Ratha Nabanidham
So obviously, Australia has a massive geological advantage. We've got the resources. But the reality is resources are just a small part of the story. Yes. You've got to have the right resources. But you know, what you want is how do we develop critical minerals to become the end product needed for the energy transition? And that's where the value now lies, rather than just digging up the minerals from the ground and selling it. The value really is in processing it to develop and developing the supply chain so that you can then deliver the end product. And that's the big opportunity.

Dan Brown
Yeah, yeah. It's almost like history repeating itself isn't it? If we just keep digging up these commodities and then shipping them somewhere else, where another country can apply the intellectual capital to process them and create that critical mineral at a grade that's appropriate for the end use then we're kind of missing out on an opportunity aren’t we?

Ratha Nabanidham
That's right. I mean, then we're just really a supplier of raw materials effectively and all that capability in terms of developing the supply chains and all the benefits that go with that – we're effectively passing up on that.

Dan Brown
Yeah and I know that one of your absolute superpowers is working with a bunch of international investors into the Australian market. What's their thoughts and appetite around that next stage of treating the commodity and processing it?

Ratha Nabanidham
Everyone is – and especially overseas investors – are turning their minds to that because what they're effectively buying when they invest in these projects is not just the raw material, they’re investing in a route to market. And so around doing that due diligence piece, when people are looking at the projects, it's about looking at the approvals, permits, you know, do they have all of that needed? And then what's the process in terms of getting funding in terms of that delivery to market and that whole piece? You know, how can we process supply? And so when you look at the projects, evaluating the whole project to the point where you get it to market, not just digging it and selling it.

Dan Brown
And what role do you think governments have to play to support that? Because I feel like the governments have a massive role around the permitting, approvals and many other aspects, but really helping us unlock that value and moving up the value chain. What are your thoughts on that?

Ratha Nabanidham
I mean, there are just challenges with developing these projects at the market can't solve themselves. So we absolutely need government involvement. And government has a huge role to play. And one of the biggest issues is time. So, these projects take a long time to discover, to move through that permitting phase, get financing, get to production, develop all the infrastructure that supports it. So, you know, government has a big role to play in terms of regulatory policy settings that they can set to enable these projects to proceed as quickly as possible.

Australia is a really good example. So we've recently seen at the Commonwealth level, the EPBC Act reforms that look to streamline the federal and state approval processes to try and make that quicker and easier.

In Queensland, you know, we've just seen legislation recently passed where the government's introduced a critical minerals fast track pathway, which gives the coordinator general additional powers to facilitate strategically significant projects.

in WA, we've seen certain low impact mining activities trial a different model, which hopefully means faster approvals. So I think the common theme across all of these is governments are recognising that critical minerals are important, and looking at what they can do to ensure that projects can be assessed and developed as efficiently as possible.

You know, ultimately what we come back to is government can create the right policies for success, and we absolutely need that. The projects will have to be successful in their own right. But government's got a huge role to play.

Dan Brown
And I guess we're seeing that play out in the US, aren't we, where the US administration at the moment is pumping hundreds and hundreds of millions of dollars into supporting critical minerals projects be developed and commercialised in the US, aren't they.

Ratha Nabanidham
And I think that comes back to that point that we were discussing earlier about how competitive it is and governments all over the world seeing critical minerals as being absolutely strategically important. And so there is this competition between countries about who can attract the capital needed as well to develop these projects, to discover and develop them.

And it's great to see, us in Australia, working with our longstanding partners like the US and Japan and working together to develop policies. Not just on a singular country level but across borders and working together.

Elena Lambros
Thanks, Ratha. And so there's been a whole heap that you've covered there, particularly around the role of critical minerals and how Australia can start to create more strategic advantage and economic wealth out of that, plus alongside some close ties with the US and Japan.

To round out the episode, what are a few things you can leave viewers with? What would you like the key takeaway to be?

Ratha Nabanidham
I think net zero begins with what comes out of the ground. But hopefully what our viewers are going to pick up from the discussion today is that's just the starting point. The real challenge for Australia, and I think all other countries, is how do we turn the minerals then into the products that we need to deliver the energy transition? How do we create the supporting infrastructure and the supply chain needed to achieve that?

And that needs governments, industry, investors and communities to all come together.

Dan Brown
Yeah I am I really love that Ratha. And look, I admit that I'm biased because as you know, I grew up in a little mining town in central Queensland. I spent five years in the coal mines. I worked underground before I went to law school. And I must admit, I had a blind spot around thinking about the role that mining truly plays in our journey to net zero.

And I think it's really easy for a lot of people to get caught up and going “net zero is electrification and decarbonisation.” And it really is – but mining is [also] fundamental for that journey. Also, as we mentioned at the top, [mining is] absolutely fundamental for our global and local economies. And the opportunity for us as a nation, as you say, Ratha, is immense.

Elena Lambros
Thank you for listening to this episode of ESG Matters by Ashurst Perkins Coie.

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