The forces of demand driven by the global energy transition and supply limited by geopolitics are coalescing to make yet another mineral globally ‘critical’—uranium.

Australia’s rich economic geology has endowed it with the world’s biggest uranium resources. Yet we have a long-term aversion to uranium mining driven in no small part by fears among many people stemming from the Cold War era when nuclear Armageddon was a persistent worry, periodically reinforced by civil reactor accidents.

A full generation on, it’s time for a national conversation on consistent policies under which we could expand uranium production and help meet the global demand for materials that will help the world transition to a low carbon economy. This conversation must be underpinned by science and must acknowledge the negative global impacts of a ‘not in my back yard’ driven attitude.

After decades of changeable and inconsistent policy, state and federal governments need to marshal the collective will if we are to maximise the potential contribution of Australia’s uranium to global decarbonisation, and to take advantage of booming price projections and economic opportunity. This will take a coordinated overhaul of their approach, with the goal of nationally consistent policies based on science as well as Australia’s 60 years’ experience of safe uranium production.

In November 2023, 22 COP28 summit countries pledged to triple nuclear electricity production by 2050. Individually, China’s nuclear growth is expected to move faster, tripling by 2040. The global need for uranium is set to multiply as a result.

In early  2024, Japan added uranium to its list of critical minerals, responding to greater demand driven by the restarting of nuclear power generation suspended in the wake of the Fukushima accident in 2011, and potential restrictions on supply, especially from Russia.

In 2023, the United States Department of Energy also assessed uranium as meeting criteria for inclusion on the US critical materials list for the energy transition, but it is not currently included because legislation proscribes ‘fuel minerals’ from being added.

Fast-rising global demand and looming US restrictions on imports of Russian uranium have doubled uranium spot prices in the past year to exceed US$100 a pound, the highest level in 12 years. Multi-year price projections are bullish, ranging from close to or more than that level.

S&P Global Market Intelligence data shows Australian uranium exports to the United States more than doubled in the 12 months to September 2023 in response to the impending ban on uranium imports from Russia (the fourth largest supplier to the US) and a fall in imports from Canada, the largest supplier.

Uranium-focussed mine production has responded to demand and price expectations, with activities increased in Canada, the United States, Australia and elsewhere. Shuttered mines are being reopened and new mines being developed. In South Australia, the Four Mile uranium mine remains operating, while the reopened Honeymoon project is expected to produce its first drum of uranium oxide (U₃O₈ – yellowcake) in the first quarter of 2024. Meanwhile, BHP’s Olympic Dam continues to produce around 3,500 tonnes of U₃O₈ a year, alongside copper and precious metals. Ranger Mine in the Northern Territory ceased operations in 2021 after 40 years of production.

Several commercial uranium deposits in Western Australia have been delineated and have in-place approvals to allow mine development in the short to medium term. They are Mulga Rock, Wiluna, Yeelirrie and Kintyre. Another 59 uranium exploration prospects have been identified: 14 in Western Australia, 24 in the Northern Territory, 14 in South Australia and seven in Queensland.

Australian companies are very active in uranium mining and exploration overseas. Australia’s Paladin Energy is targeting production in the first quarter of 2024 from its reopened Langer Heinrich Mine in Namibia. Three other Australian-owned projects in Namibia and Tanzania have completed feasibility studies. There are another 40 Australian-operated uranium exploration projects across Africa, and in Canada, the US and Argentina. ASX-listed companies spend more than two-thirds of their uranium exploration budgets outside Australia. While Australian companies—and even the Australian aid program—engage with uranium abroad, domestic policy has stagnated.

Data from S&P Global Market Intelligence shows that annual global exploration budgets for uranium increased 17% to US$248 million between 2022 and 2023, though they are a long way behind the peak US$937 million of 2011.

The 2023 exploration budget in Australia was 54% higher than in 2022, at US$21.4 million, but this is a fraction of the high in 2011 of US$256 million in 2011, when a brief period of greater policy certainty attracted the largest share of global budgets. Nevertheless, the exploration efforts of the past 15 years have generated detailed knowledge of deposit geology, allowing for rapid reserves delineation, feasibility assessment and development should politics, policies and approval processes allow.

Despite Australia having a third of the world’s uranium resources, national and state governments have equivocated on uranium mining policy for many years. The infamous and illogical three-mine policy might be no more, but the remaining confusing tangle of policies inevitably leads to uranium-focussed companies to feel unwelcome. It’s little wonder that the decades of Australian policy incertitude and capriciousness have had a chilling effect on investment potential, despite undoubted geological prospectivity.

Uranium is the only mineral that is subject to different policies in different states. Currently, uranium exploration and mining is allowed only in South Australia, the Northern Territory and Tasmania. Exploration for uranium is allowed in Queensland and New South Wales, but not mining.

Western Australia, which opened up to uranium mining in 2008, has now implemented a ‘no uranium’ condition on future mining leases, permitting only the four previously approved projects to proceed.  Bizarrely, it states in a government-issued fact sheet ‘the State Government would prefer that no uranium is mined in the State’. Further, Western Australia prohibits U₃O₈ exports through its ports, preferring to have its future production shipped via Darwin or Adelaide.

Australia and its states enthusiastically embrace opportunities to grow critical minerals production and pursue a clean hydrogen industry to help the world decarbonise. But we remain oddly ambivalent and inconsistent about uranium, another critical mineral key to the energy transition. Not only is Australia selling itself short economically, but it could fail to meet its responsibility to use its abundant resources to supply allies with another of the minerals vital to a low carbon future. Further, whilst we restrain ourselves, far less reliable uranium suppliers do not.

The fact that residents of South Australia and the Northern Territory have been happy to accept uranium mining for decades and that a previous Western Australian government’s approvals for the four proposed mines raised barely a ripple in that state tells us that other Australians are likely to be open to discussions about expansion of uranium production. Regulatory systems are tried and tested, and uranium is being produced safely, but not enough of it to meet future needs of Australia’s strategic partners for their energy transitions.

What’s needed is for the Australian Government to lead the states to adopt nationally consistent, stable policies for uranium exploration and development that welcome investment while also setting out the conditions required for safe mining and supply chains to Australia’s energy partners.

At the upcoming UN Climate Change Conference (COP28) in Dubai, world leaders will, for the first time, officially take stock of global progress towards the goals set out in the Paris climate agreement in 2015. The growing frequency of extreme weather events makes this a decisive moment for climate action, and it’s no secret that countries are falling short of their Paris commitments. The question is whether the assembled leaders—whose ranks will include Pope Francis—will be able to navigate the myriad complex challenges impeding progress.

One particularly thorny challenge is the ‘energy trilemma’: the need to balance the reliability, affordability and sustainability of supplies. While sustainability is obviously critical—which means rapidly reducing emissions in order to limit global warming to 1.5°C above pre-industrial levels, as set out in the Paris agreement—it can’t come at the expense of access. On the contrary, the world must increase access to energy: 775 million people worldwide currently lack electricity.

The energy trilemma lies at the root of key controversies surrounding climate negotiations. The selection of Sultan Al Jaber, head of the Abu Dhabi National Oil Company, to serve as COP28 president was labelled a ‘scandal’, much like having the fox guard the hen house. But the United Arab Emirates has been using its position as one of the world’s biggest oil exporters to persuade its fellow oil-rich countries to accelerate their emissions-reduction efforts. The Global Decarbonization Alliance, an effort by Al Jaber to prod major state oil companies to reduce their greenhouse-gas emissions, is expected to be unveiled at COP28.

We know that effective climate action will require the engagement of a wide array of stakeholders. For example, in order to cover the massive costs of climate action—it’s estimated that Africa’s nationally determined contributions alone will cost nearly US$3 trillion—private finance is essential. That is why it bodes well that Wall Street heavyweights, led by BlackRock CEO Larry Fink, are flocking to COP28, after staying away from last year’s conference.

When it comes to climate action, engaging with big finance might seem less problematic than including big oil. But the energy trilemma implies otherwise. Though the International Energy Agency suggested last month that 2030 would mark the ‘beginning of the end of the fossil-fuel era’, OPEC rejected the IEA’s forecasts, arguing that they were based on ideology rather than facts.

The hydrocarbons exporters may well have a point. The IEA report paints an optimistic picture, predicting that global demand for coal, oil and natural gas will peak by 2030, as electric-vehicle adoption accelerates and renewables gain a larger role in the global electricity mix. But as energy experts were quick to point out, these projections depend on several factors.

For starters, the IEA is betting that economic growth in China—the world’s largest polluter—will slow enough to bring about a significant reduction in energy demand. It also assumes that governments will fulfill their climate policy pledges, despite strong evidence to the contrary. In the United Kingdom and Germany, green measures have been rolled back, and in the United States, Republicans are working hard to dilute the clean-energy provisions contained in the Inflation Reduction Act.

There’s another problem. The IEA focuses on when fossil-fuel demand will peak but fails to consider adequately the shape of the consumption curve before and after. Energy demand may well plateau at its highest-ever level for some time, rather than quickly beginning to fall. That demand will have to be met, and the extent to which renewables will be able to cover it is not yet clear. OPEC’s warning against underinvesting in energy security thus should not be dismissed out of hand.

Allowing idealism and ideology to dominate discussion of the energy transition will lead only to incomplete or unrealistic solutions. Though use of renewables is growing, fossil fuels continue to account for a large share of the global energy mix. And there’s no guarantee that energy demand will fall in the short or even medium term, not least because the developed world’s burgeoning middle class has shown a strong and growing appetite for affordable energy.

Big oil is well aware of this. Last month, US oil-and-gas giant Chevron announced its purchase of rival Hess for some US$53 billion, and ExxonMobil acquired Pioneer Natural Resources for nearly US$60 billion. While these acquisitions may have been partly motivated by the desire to evade buyback pressure from shareholders, they also represent a bet that firms will benefit from the ability to produce more oil and gas in the coming decades.

Phasing out fossil fuels is, as Al Jaber himself has put it, inevitable. But, as enticing as the IEA’s projections might be, the precise trajectory and timeline are far from certain. If COP28 is to be a success, participants must recognise this and work together to find pragmatic and realistic solutions to the energy trilemma that enable real progress towards a global economy that is dynamic, sustainable and inclusive.

Climate breakdown is becoming more apparent with frequent extreme weather events around the world. To reduce greenhouse gas emissions, there’s been a dramatic uptake of renewable energy, primarily solar and wind, with a transition to lithium-ion batteries for electric vehicles and energy storage. The transition relies on increasing the extraction of critical minerals for their production. Frequently described as a race for renewables with calls for ‘smarter’ and ‘more responsible’ mining, the demand for minerals is now also being viewed through a resource nationalism lens that could disrupt renewable energy global value chains that are vulnerable to great-power geoeconomic rivalry.

Global supply of critical minerals and rare-earth elements is currently centered on China, which in 2010 limited Japan’s access to materials due to tensions over the Senkaku Islands. Beijing might well repeat this in the future.  In transitioning to renewables using critical minerals and rare earths, we need to be attendant to energy security, the greening of global mineral value chains, and geopolitical concerns.

Energy security is a fundamental aim of all states. The 1970s oil crises contributed to the creation of the International Energy Agency to help states secure oil supplies reasonably and equitably—although it proved unable to stabilise oil prices. States like Australia have rarely met the IEA’s 90-day minimum stock requirement to ensure supply in times of severe disruptions. Australia’s dependence on imported transport fuel has increased since 2019 when the government released its interim report on liquid fuel security.

Generally, states have remained reluctant to institutionalise international cooperation on energy despite attempts through the United Nations, preferring specific international organisations for oil and gas (the IEA) and nuclear energy (the International Atomic Energy Agency). The International Renewable Energy Agency, established in 2009 with German backing, was only given a mandate to promote renewable energy through policy advice, technical support, technology transfer and stimulating research. As the lead energy agency, the IEA has underpredicted the rapid uptake of renewables. There is no global forum for regulating renewables although energy remains on the G20 agenda. Further consideration of the need for international cooperation for energy security and access to renewable energy is needed.

Of course, states with an abundance of coal and gas like Australia have not been critically dependent on international supplies. However, demand is changing, as we cross planetary boundaries and enter a new era of climatic instability. Australia is increasingly vulnerable to changing policy preferences of export partners in their shift to green their economies and achieve net-zero emissions by 2050 or earlier. The transition to renewable energy requires critical minerals and rare earths that are more site specific than has historically been the case for coal, oil and natural gas. They also require more processing—as in producing wind turbines or lithium-ion batteries—than conventional power systems. However, China dominates processing for copper, lithium, nickel, cobalt and rare earths leading to supply-chain vulnerabilities for renewable energy. China, for example, was found to have engaged in non-competitive behaviour in restricting the export of various forms of rare earths, tungsten and molybdenum in a case settled at the World Trade Organization in 2014. The abundance of critical minerals for export by Australia is therefore welcome, although as many have noted, Australia’s dependence on exporting raw materials for its economic wealth does not take full advantage of the opportunity the sustainable transition offers to ensure its energy security.

A government discussion paper on critical minerals identifies the need to develop downstream processing capability. To date, government investment includes a $200 million commitment to the Critical Minerals Accelerator Initiative, $50 million for a virtual Critical Minerals Research and Development Centre, and a $2 billion Critical Minerals Facility announced in 2021. To coordinate these efforts to develop Australia’s critical minerals sector, the government established the Critical Minerals Facilitation Office in January 2020 to provide strategic and policy advice, develop the national critical minerals development roadmap, and position Australia as a key player in the global supply chain. To this effect, and has been noted elsewhere, Australia needs to not only ramp up investment in research and development (which sits well below the OECD average) but to better manage its long-term contribution to rapidly changing technologies.

This provides a unique opportunity for Australia not only to export its 26 critical minerals with moderate or high geological potential but to also think through the high-value impact we can produce and reproduce, and keep producing. For example, the shift to renewables comes with evaluations of how wind and solar energy is produced and the volume of emissions from the production process. We can and do assess how green energy is. Emissions vary across states and regions, where some high-volume manufacturers depend on fossil fuels to make wind turbines and solar panels. By shifting to processing, Australia could contribute to green energy not just in replacing fossil fuel exports, but in producing renewable energy with the least emissions. More than 40 transnational initiatives for critical minerals extraction promote limiting ecological harm and human rights in the extraction and processing of critical minerals—mostly the ‘3TG’ minerals, tin, tungsten, tantalum and gold. But even attempts by states like the US and Canada to engage in friend-shoring and onshoring are not quieting demands for the regulation of the extraction of critical minerals for global value chains.

But let’s aim higher. Not only is the renewable energy transition underway, there’s also a looming waste crisis. First-generation wind turbines will need to be disposed of, while Australia expects over 100,000 solar panels to be dumped by 2030 as they end their life. Efforts are underway to figure out how to dispose of lithium-ion batteries safely, and if and how to reuse the mineral. By investing in solutions, we can further efforts at integrating minerals into a circular economy, which will help offset vulnerabilities in energy security and global value chains.

Critical minerals present a unique opportunity for Australia in which our economic, environmental and security interests converge. Investment in critical mineral and rare-earth refinement, environmentally regulated mining and mineral recycling could add value to the Australian economy and create more resilient global supply chains for the raw materials that underpin both the renewable energy and defence industries.

The latest United Nations scientific synthesis report on climate change, released yesterday, warns that significant additional global warming is already locked in and catastrophic climate impacts are rapidly becoming more likely. What will this mean for Australia? The government has already produced Australia’s first climate and security risk assessment to help answer that question. It was considered by cabinet late last year. While the assessment is classified, ministers’ public comments since then suggest that its findings are deeply worrying.

Home Affairs Minister Clare O’Neil warned at the National Press Club in December that we need to prepare for a future in which climate disasters occur simultaneously in Australia, in the region and across the planet, potentially leading to ‘unmanageable’ cascading impacts on our national security. Such warnings are not to be taken lightly.

The risk assessment has provided ministers with a shared understanding of the enormous challenges Australia faces from global and regional climate disruptions. Senior bureaucrats in government departments are working to elaborate the threats and responses, including at the Department of Defence in parallel with the defence strategic review; at the Department of Foreign Affairs and Trade, which is revising Australia’s international development policy; and at the Department of Home Affairs in the newly established National Resilience Taskforce. This work will do more to position Australia to meet the enormous climate-related challenges ahead than has been achieved under any other government.

While the previous government’s climate denialism had a chilling effect on public servants, Prime Minister Anthony Albanese and his cabinet now face the opposite problem of ensuring coordination and coherence across government. Departments are each developing their own methodologies and underlying assumptions to identify and formulate responses to the risks that concern their organisational mandates, even though the same risks often cut across multiple agencies. This approach is inefficient and risks policy incoherence.

The government must promote greater coordination across bureaucracies, agreeing on shared methodologies and criteria for prioritising modelling requests and identifying the threats to Australia’s interests that require joined-up responses. Given that many climate risks have both domestic and international dimensions and cut across multiple departmental portfolios, the Department of the Prime Minister and Cabinet, conveying the direct authority of the prime minister, should play the major governance role in this coordination, with Home Affairs leading on efforts to strengthen Australia’s resilience to the emerging threats.

Releasing a declassified version of the risk assessment will fill an important gap in the public’s awareness of climate risks originating offshore, which may ultimately be as damaging as the domestic impacts. They include disruptions to Australian exports, biosecurity threats and regional instability. Some of Australia’s closest allies, such as the US and UK, have already produced declassified versions of their own climate risk assessments and have engaged their publics in discussing the implications. Australia must do the same.

Delivering the risk assessment’s uncomfortable messages to Australians won’t be easy for the government, but it will not be starting from scratch. The catastrophic 2019–20 bushfires—which directly affected 60% of Australians—and recent floods have given the public a strong sense of what to expect as the climate continues to warm: increasing national-scale disasters resulting from simultaneous record-setting events that have cascading impacts across society. The vast majority of Australians are now concerned about climate change and want government action to limit the impacts.

The Albanese government has been committed to honesty about the challenges we face as the climate continues to warm. This must now extend beyond the domestic consequences to include the international impacts, and it must leverage Australian creativity, enthusiasm and practical know-how to build a more resilient nation. The government has a fundamental responsibility to inform and educate the Australian public about these rapidly emerging regional risks. It’s also a pragmatic way to build public support for the initiatives and investments that will be needed in the years ahead.

The UN report does hold out hope that even if temperatures rise to dangerous thresholds, it’s still possible with rapid and deep emissions cuts and deployment of techniques to capture and store carbon, such as reforestation, to bring temperatures back down below the thresholds over time. Nevertheless, it’s clear that we need to start preparing now for the inevitable impacts of climate change.

The release of a declassified version of the climate and security risk assessment is not just a matter of transparency and accountability; it is a critical step in helping Australians understand the gravity of the climate crisis and the potential impacts on their communities.

While the challenges posed by climate change are significant, it’s important to remember that we have the technology, knowledge and resources to address them. By working together, governments, businesses and individuals can reduce greenhouse gas emissions, adapt to the changing climate and build more resilient communities. Australia is well positioned to take a leadership role in this effort, with its highly skilled workforce, abundant natural resources and long history of innovation. By confronting the risks of climate change head-on and taking bold action to address them, we can create a more secure future for ourselves and future generations.

In New York during United Nations climate week, Energy and Climate Change Minister Chris Bowen described the ‘enormous’ task Australia faced in moving industry towards decarbonisation. The new government’s proposed National Reconstruction Fund (NRF) is intended to push industry towards decarbonisation, strategic autonomy and resilience. The hard task will be to shift the economy from its heavy reliance on ideas and technologies from overseas, to building local capacity in industries of the future. While that might challenge some who suggest the fund is ‘picking winners’, in many respects it is the harbinger of an emerging global industrial policy paradigm.

Industrial policy has returned to the spotlight internationally as advanced economies respond to successive crises from Covid-19, climate change and autocratic belligerence. With large-scale economic support packages in key technological areas—particularly semiconductors—grabbing headlines, Australia will find it tough to compete globally given its thin industrial structure.

The contours of Australia’s next forays into industry policy are not yet fixed in place. The proposed $15 billion NRF may help push Australian capital and government towards more ‘risky’ endeavours. However, treading the line between ‘buy Australian’ and building sovereign capability will hit a wall somewhere between the nation’s natural endowments and the lack of a history of assertive policy addressing industrial reconstruction.

A cavalcade of global issues has driven increased calls for a more diverse Australian industrial base and expanding niche capabilities. To get a sense of the challenges, Canberra is conducting reviews into areas including defence, critical technologies, the technology workforce and climate security risks. The danger here is that new ministers will be served up lists of current programs rather than ambitious plans for what should happen next. Some departments are used to thinking in terms of electoral cycles and are ill-equipped to articulate plans in the medium-term, let alone the longer term.

The government needs to move quickly from review stage to ambitious action. Globally, revived industrial policy objectives have been framed in terms of economic resilience, strategic autonomy and decarbonisation. In industry policy work, these are sometimes referred to as mission-based policy. The normal measure of success isn’t just increased economic growth in and for itself, but that growth balances national security risks and carbon concerns.

Addressing these challenges is much more difficult for Australia given our thin industrial structure. If increased economic diversification is an aim of the current government, then this will entail pioneering a different risk profile for government-directed investment. It will mean practically managing new economic risks that didn’t previously exist.

Australia’s economy lacks both diversification and sophistication. The lack of diversification in products isn’t necessarily a bad thing when economic strength is measured in terms of total GDP—where Australia is currently ranked 13th.

However, economists explain: ‘countries tend to converge to the level of income dictated by the complexity of their productive structures, indicating that development efforts should focus on generating the conditions that would allow complexity to emerge in order to generate sustained growth and prosperity.’

Australia’s dependence on China for up to 40% of exports and 20% of imports means there’s been a reluctance to engage with the comprehensive industry policy reform needed to ensure that the country can weather the rising tide of geopolitical risks.

The government presumably has these issues in mind with the NRF intended to unlock a further $30 billion in private finance. The fund aims to drive investments across key sectors including resources, manufacturing, agriculture and forestry, transport, medical science and green energy.

It’s likely that the governance structure of the NRF will be similar to that of the Clean Energy Finance Corporation. In this, the government is falling into line with best international practice for innovation policy.

There is, for example, only weak international evidence on the effectiveness of targeted grants—the favoured approach of the previous government to modernise manufacturing—which is now the subject of another extensive review.

Financial instruments such as loans, guarantees and public venture capital, alongside demand-side instruments such as carbon pricing) are more effective at building the innovation ecosystem. But each of these instruments carries political risks as Australia witnessed with the ill-fated Carbon Pollution Reduction Scheme under the previous Labor government.

Some might claim that the reconstruction fund will crowd out private investment, but we’re witnessing a paradigm shift in the way governments and industry collaborate.

The Productivity Commission has released a report promoting passive diffusion of innovation across the economy. In the context of the large-scale economic support packages now taking shape globally with heightened investments in key areas, the report looks like a policy formulation from a starkly different era.

Governments are enhancing investments in semiconductors and forming new public-investment vehicles to fund the technology ecosystem in Europe, the United Kingdom and Japan.

In terms of decarbonisation, global investment is driving green energy technology and infrastructure.

Renewable energy infrastructure projects dominate global private investment funding in the sector, increasing from 21% in 2010 to 47% in 2020 according to data from the G20’s Global Infrastructure Hub. To date, these projects have been concentrated in Western Europe and North America. The market really is untapped in Asia, and the race is on to ensure that Australian finance and infrastructure capabilities jump on this bandwagon. The ‘Build Back Better World’ partnership and ‘Blue Dot Network’ are designed to ensure that various Indo-Pacific countries are brought into the mix.

In Australia, strategic investments have seen renewables grow from 17% to nearly 33% of all electricity generation over the last six years, including more than 12% from solar.

Projects such as Sun Cable’s Australia-Asia PowerLink are intended to instigate a new energy export market. However, key parts of the photovoltaic value chain also need to be developed if the true value of export of solar energy is to be realised.

Few countries have the resources to be competitive in all technologies that might be critical to their national interest. Aligning overall ambitions alongside the structural interdependencies that have emerged with China is difficult. But there has never been a more important time for Australia to take calculated big leaps forward.