- Lithium is a key standout receiving committed capital amongst ‘green’ commodities.
- If Australia is going to recreate a mining boom super-cycle this decade, it will need to become a major hydrogen exporter.
Hopes that Australia is on the verge of another mining boom are premature despite a 54% increase in the value of committed mining and energy projects in the year ending October 2022. The evidence does not yet point to the start of a ‘green’ mining super-cycle whereby significant investment is taking place in the commodities needed in the energy transition. Around 64% of committed investment is in gas and coal projects in Australia.
Lithium is worth highlighting amongst the committed projects in Australia. While only accounting for ~6% of the value of committed projects in the year to October 2022, Australia will have a key role in supplying lithium to the global market in coming years. Australia accounted for 50-55% of global lithium output in 2021.
Hydrogen projects account for 40% and 60% of the value of feasible and publicly announced projects respectively. Two hydrogen megaprojects account for more than 50% of the value of hydrogen projects at these stages. Government support is still necessary to support the supply and demand of hydrogen in Australia. The outlook for project investment (excluding hydrogen) looks subdued in coming years. If Australia is going to recreate the mining boom from the China-led super-cycle sometime this decade, it will need to become a major hydrogen exporter.
The mining and energy project pipeline shows limited growth in downstream processing. Lithium chemicals, which is produced from processing lithium spodumene, is a key highlight. State and federal governments would need to provide support policies in line with or in excess of governments in Europe and the US for Australia to develop significant downstream processing. The most likely trajectory for Australia is growth in select downstream sectors.
CBA’s Global Economic and Markets Research (GEMR) team publishes a wide range of economic and financial research each week covering the latest data, trends, policy developments and topical issues in Australia and other major economies. To access these publications please visit the GEMR website.
Our Economic Expert
Vivek Dhar has worked as Commonwealth Bank’s lead mining and energy commodities strategist since late 2014 after working as a junior analyst for 4 years. Prior to working at Commonwealth Bank, Vivek interned at Deutsche Bank and Siemens. He holds a Bachelor of Engineering (Electrical) and a Bachelor of Commerce (Finance and Economics) from the University of Melbourne.
