Sunday 10 December 2023

Critical role for minerals in the transition

For NAB, working with a customer like Pilbara Minerals is an exciting opportunity to support and grow Australia’s critical minerals supply chain to allow the transition to a net zero emissions future.

Peter Williams is Sector Head for Metals and Mining at NAB Corporate and Institutional Banking and says demand for transition metals like lithium, nickel and cobalt means that supporting appropriate mining projects is core to NAB.

Since starting in 2013, Pilbara Minerals has grown to become an ASX50 company with full ownership of the world’s largest independent hard-rock lithium operation. The company’s Pilgangoora project is located in the resources-rich Pilbara region of Western Australia and produces spodumene and tantalite concentrates. These minerals provide commercial sources for lithium and tantalum respectively, which are used in a range of future-facing products, notably lithium batteries.

“NAB’s funding for Pilbara Minerals earlier this year was an important milestone in our journey to support the expansion of critical minerals in Australia,” Williams says. “We previously had lending exposures into lithium as part of a diversified portfolio of assets, but Pilbara Minerals was our first pure play lithium financing.”

Positioning for growth

He says Pilbara Minerals’ strong management and demonstrated operational capability showed great potential to position itself as a sustainable battery materials supplier, while pursuing a growth and diversification strategy to expand a range of downstream processing propositions for added value.

“Lithium and other critical minerals are fundamental to the world’s decarbonisation journey with the important role it plays in a variety of applications including energy generation and battery storage,” Williams says. “We’ve obviously seen enormous growth in the last couple of years as there’s been a real acceleration in demand for electric vehicles (EVs) in particular.”

Critical minerals such as lithium and rare earth elements – a collection of 17 elements on the periodic table – are essential components in many rapidly developing clean energy technologies, from wind turbines to EVs, as well as electricity networks.

Australia has a significant natural advantage as home to some of the world’s largest recoverable critical mineral deposits.

Transition opportunity

The recent climate research report All Systems Go: Powering Ahead produced by Deloitte Access Economics and commissioned by NAB found there is a $435 billion economic opportunity if Australia transforms its industrial base and establishes a clean energy platform to drive export growth in a rapidly decarbonising world.

First, however, the country will have to meet its 82 per cent renewable-energy target for the national electricity market by 2030, reach interim emissions reduction targets and net zero by 2050, and implement already-announced decarbonisation policy initiatives, the report finds.

An additional $120 billion of investment will also be required to secure a competitive edge for Australia in key sectors of the net-zero global economy, it says.

The identified sectors include green hydrogen to power vehicles, generate electricity and produce heat; renewable energy, and critical minerals such as lithium used in battery manufacturing.

Paradigm shift

The critical minerals sector was in the spotlight at a recent lunch hosted by the Australian British Chamber of Commerce in Sydney featuring Pilbara Minerals CEO Dale Henderson and Lynas Rare Earths CEO Amanda Lacaze.

In his address, Henderson told the room of industry and government guests how Pilbara Minerals had started in what was once a comparatively obscure part of the resources sector before catching the tailwinds of change sweeping the globe.

He said while this change had been tumultuous, it was an exciting place to be, with Australia needing to embrace three key qualities to take full advantage of the transition opportunity.

“It’s a whole new paradigm shift and one we need to grab,” Henderson said. “We have to be courageous, creative and have conviction. Courageous to take the plunge, creative around new solutions and new ways of doing things, and then having conviction to see it through despite the short-term volatility we see as this new industry establishes itself.”

NAB’s Williams says the work being done with Pilbara Minerals is an example of the bank’s strong experience in the resources sector and its capability across metal and energy commodities in providing solutions to meet the funding needs of customers.

“Critical minerals are the foundations of many new and emerging industries and clean energy technologies which have an important role to play in Australia’s economic future and the global outlook for climate change. We are proud to support the sector where we can, to help reduce Australia’s emissions and to develop this huge export potential for the rest of the world.”

NAB continues to support customers and communities though the transition to net zero and help fund the investments needed to create a strong and sustainable future.

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