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Size of the Prize

In 2023, Australia exported AUD 214.5 billion of metallic ores and concentrates dominated by iron ore (AUD 133 billion), gold (AUD 25 billion), bauxite and alumina (AUD 15 billion), lithium (AUD 18 billion), copper (AUD 12 billion), nickel (AUD 5 billion), zinc/lead (AUD 4 billion), and rare earths (AUD 2.5 billion). Only small proportion of mine output goes to domestic metals manucture, with the finished metals sector contributing only AUD 18 billion. This imbalance underscores both an economic and strategic opportunity for Australia. From a technical standpoint, converting raw ores into higher-value products such as aluminum, copper cathode, lithium hydroxide, nickel sulphate, and rare earth oxides delivers substantial margin uplift relative to unprocessed exports. Our econometric modelling demonstrates that these uplifts can be forecast and stress-tested using dynamic panel error-correction models and factor-based demand forecasting, which link metals demand to macroeconomic drivers such as EV adoption, renewable deployment, and industrial output. Financial econometrics further refines this analysis through stochastic NPV/IRR simulations and real options modelling, capturing volatility in energy costs, carbon prices, FX, and financing conditions. These tools provide not just central estimates but full distributions of risk-adjusted outcomes, which are essential for capital-intensive projects with long payback periods. From a policy perspective, expanding domestic processing not only increases export revenues and GDP, but also lowers sovereign exposure to offshore high-emission jurisdictions and strengthens Australia’s standing as a reliable supplier of certified low-carbon critical minerals. This dual outcome of greater value capture underpinned by rigorous financial and econometric validation, combined with enhanced strategic credibility in global clean energy and technology supply chains ensures alignment between economic gains, climate transition imperatives, and national security priorities.

Business insight

Our integrated econometric–financial modelling framework for the metals value chain links global demand, processing technologies, energy systems, and macroeconomic outcomes. The framework consists of five components. First, commodity demand forecasting is undertaken using dynamic panel error-correction and factor-augmented models that capture both long-run equilibrium relationships and short-run adjustments between metals demand, electric vehicle adoption, renewable deployment, and industrial production (Engle & Granger, 1987; Johansen, 1991; Stock & Watson, 2016). Second, process yields, and cost parameters are calibrated against peer-reviewed benchmarks and industry data (IAI, IEA, Wu et al., 2019), ensuring engineering realism. Third, energy and carbon pricing trajectories are integrated from AEMO’s Integrated System Plan, ARENA’s Ultra-Low-Cost Solar program, and EU CBAM regulations, with stochastic processes applied to capture volatility and policy shocks. Fourth, financial evaluation applies stochastic NPV and IRR analysis alongside real options techniques, enabling assessment of the full distribution of returns under uncertainty in energy, carbon, and foreign exchange markets (Bingler & Colesanti Senni, 2020). Finally, macroeconomic spillovers are quantified using the latest ABS Input–Output multipliers, translating sectoral investments into GDP contributions and employment impacts. ��By integrating scenario-consistent econometric forecasting with stochastic financial evaluation and engineering-based process parameters, the econometric team, led by Dr Rachida Ousyse, produces risk-adjusted estimates of the “size of the prize” that are both technically robust and directly relevant for policy and investment decision-making in Australia’s metals sector.

Australia's Metals Value Uplift Pathway

Figure 1: Value Uplift Pathway: illustrates the incremental increase in sector value from AUD 214B ores and AUD 18B current finished metals, to AUD 265–285B under moderate/high processing scenarios by 2035.

Table 1 summarises one-way sensitivity tests around the central estimate of AUD 60 B annual uplift (2035, 20% diversion). The results show that outcomes are most sensitive to the processing share of ores diverted to domestic refining, followed by electricity prices and refined–ore price spreads. Financial assumptions (WACC, FX) also materially influence the range. This approach mirrors standard practice in project finance (real options analysis; stochastic NPV modelling) and ensures robustness of the business case under uncertainty.²

Table 1: Sensitivity analysis of the 2035 uplift estimate, showing ranges under alternative assumptions.��

Critical minerals and rare earths

Growth in the critical mineral and rare earth sector is being driven by digitization, electrification and advances in technology that depend in highly specialized, high-value-density materials. ��Critical minerals can be found mixed in with complex ore bodies (eg BHP’s Olympic Dam) or at low densities in mineral sands.

The national critical mineral strategy projects that building downstream refining/processing and a larger share of the value chain could generate ~A$139.7 b in GDP and ~262,600 jobs over 2022–2040 (CSIRO, 2024).��

Despite weak prices now, lithium exports are forecast to rise in real terms from ~A$5.2 b in FY2025 to ~A$8.2 b by FY2030, driven by volumes (Export Finance Australia, 2025).

Global demand pull: The critical-minerals market doubled over the past five years and demand for key inputs is set to 2–4× by 2030 under energy-transition scenarios (Austrade, 2024; IEA, 2024). Australia is prioritised in the Critical Minerals Strategy 2023–2030 to capture this (DISR, 2023; Austrade, 2025).��

Policy drivers: Parliament passed processing tax incentives (10% of eligible refining/processing costs for 31 minerals, from 2028–2040) and hydrogen credits—measures intended to anchor more on-shore value-add (Reuters, 2025).

In practice this means:

• Near term (2024–26): Lower prices keep current export values subdued relative to 2022–23 peaks; lithium remains the main earner among criticals (OCE, 2024; IEA, 2024).����
• Medium term (to 2030): Volume growth plus policy-led midstream build-out (processing/tax incentives, project finance facilities) underpins higher, more diversified earnings—especially if Australia captures processing margins (DISR, 2023; Austrade, 2024; Reuters, 2025).����
• Longer term (to 2040): Achieving strategy goals could unlock ~A$140 b in cumulative GDP from value-added activities across the chain—well above raw export receipts alone (CSIRO, 2024).��

The distribution of Australian critical minerals and mines is shown in Figure 2. NSW has substantial rare earth resources.��

Figure 2: Australia critical mineral resources and mines (Geoscience Australia 2024)

Finished metals

Australia’s current domestic smelting and foundry sector is declining, with a market value of AUD 18 billion in 2023. Facilities include Alcoa of Australia (AUD 5.2B), Rio Tinto (AUD 2.6B), South32 (AUD 1.8B), BHP Olympic Dam (AUD 3.9B), Nyrstar Port Pirie (AUD 1.1B), Iluka Narngulu (AUD 1.2B), and Glencore (AUD 2.5B). ��Approximately 900 million tons (Mt) of iron ore is exported annually, with less than 2% transformed domestically into steel or advanced alloys.

Government subsidies have propped up the ��domest metal sector, but root causes of decline have not been addressed (primarily the cost of energy, but also ageing, inefficient plant, labour productivity and competition from imported metal goods). ��Under netzero industry safeguard mechanism, ��facilities are covered by mandated targets, making the economics yet more difficult. ��

The upshot is that there has not been a clear business case to invest in next generation plant with higher levels of automation, carbon efficiency and ESG compliance. �� Current production volumes and approximate market values for major operators are shown in Table 2.

Table 2: Australia metal production by major facility, 2023

Financial simulations indicate clear expansion pathways. Replacing 25% of alumina exports with low-carbon aluminium smelting could add AUD 12B to 15B per year by 2035. Processing 50% of spodumene into lithium hydroxide and nickel sulphide into nickel sulphate could add approximately AUD 10B to 12B per year, and scaling rare earth refining fivefold could capture AUD 5B to 7B per year. Together these would expand the sector to an estimated AUD 50B to 60B by 2035.

Barriers remain substantial: energy intensity (13–15 MWh/t Al), multi-billion-dollar CAPEX with long paybacks, and exposure to Chinese overcapacity. ESG risk premia continue to elevate WACC for Australian projects. Nonetheless, enabling policies can shift feasibility. CBAM penalises raw exports, tilting economics toward clean domestic processing. Future Made in Australia incentives, ARENA and CEFC support, and contracts-for-difference could bridge cost gaps. Sovereign-backed blended finance could reduce WACC by 30–60 basis points, mobilising superannuation capital.

The business case for expanding Australia’s finished metals sector rests not only on the incremental revenues generated, but also on systemic risk reduction and broad multiplier effects across the economy. Input–Output analysis from the ABS indicates that every AUD 1 billion invested in refining generates between AUD 1.3 and 1.5 billion in GDP and supports 3,000 to 5,000 jobs. With the right enabling ecosystem, Australia can move decisively from being a raw ore exporter to becoming a global hub for clean metals, securing both economic and strategic dividends by 2035.

Ecosystem Enablers Map: Pathway to Value Uplift

Figure 3: Ecosystem Enablers Map: Energy (renewable PPAs, AEMO ISP build-out, ARENA ULCS), Finance (CEFC/NAIF blending, sovereign guarantees), Policy (CBAM alignment, CfDs, ISSB/SASB disclosure), Workforce (STEM skills, CRC-style hubs), and International (critical minerals partnerships, certified low-carbon metals) are the ecosystem domains that collectively enable realisation of the AUD 50–70B prize.

The primary metal value chain (excluding manufacture of goods from metal) includes a series of interlinked stages, involving many specialized disciplines and technologies:

1. Mining: Excavation, drilling, blasting, and hauling of ores from open-pit or underground mines.
2. Beneficiation: Involves crushing, grinding, flotation, and other separations to concentrate valuable minerals.
3. Smelting and Refining: High-temperature (pyrometallurgy) or aqueous-based (hydrometallurgy) processes produce crude and refined metal
4. Foundry and Casting: Melting and shaping into ingots, bars, or intermediate products.
5. Metal Manufacturing: Final product formation by rolling, alloying, heat treating, and finishing processes.
6. Recovery: extraction of minerals from mine tailings and by recycling metals from waste streams is an important emerging field

Systems and specific techniques depend on many factors including on the type of mineral, the ore body, the degree to which companies are vertically integrated and the regulatory regime for environmental impact. ��The technical processes for value adding iron ore, copper or bauxite, or rare earth elements, are different but also have elements in common.

Reflecting this diversity, there is no single, established term in academic literature that covers the whole value chain from mine to finished metal. Portmanteau terms used to describe processing include ‘extractive metallurgy’, and ‘mineral processing metallurgy’. ��At high level, the main academic fields are outlined below.

2.1 Precision mining

This spans remote sensing and modelling of ore bodies, robotic extraction to target desired minerals, and improve mineral-to-spoil ratios and recovery of minerals from historic and future tailings.�� The ���������¼� School of Mineral and Energy Resource Engineering (MERE) is a global leader in this field and increases ore grade, reduces disturbance and improves energy efficiency

2.2 Beneficiation

This step typically occurs at the mine site. It involves comminution (crushing and grinding), classification, and separation to concentrate valuable minerals. Key techniques include:

• Froth Flotation: Separates minerals based on surface chemistry using reagents and air bubbles.
• Gravity Separation: Exploits density differences (e.g., shaking tables, spirals).
• Magnetic and Electrostatic Separation: For ferrous and conductive minerals.
• Increases ore grade and reduces downstream energy use.

2.3 Hydrometallurgy

Uses aqueous chemistry to extract metals. Involves:

• Leaching (e.g., acid, alkaline, or cyanide leach)
• Solution purification (e.g., solvent extraction, ion exchange)
• Metal recovery (e.g., electrowinning, precipitation)
• Widely used for copper, uranium, gold and rare earths.

2.4 Pyrometallurgy

Uses high temperatures to reduce ores and separate metal. Key steps:

• Roasting: Removes volatile components or oxidises sulfides.
• Smelting: Reduces oxides using carbon or other reductants.
• Converting and Fire Refining: Further impurity removal.
• Used in iron, nickel, copper, and lead production.

2.5 Electrometallurgy

Applies electrical energy for extraction/refining. Includes:

• Electrowinning: Metal deposition from leach solutions.
• Electrorefining: Purification of metals (e.g., copper, nickel).
• Molten salt electrolysis: Used in aluminium and magnesium production.

2.6 Physical Metallurgy

Focuses on structure-property relationships. Techniques include:

• Heat Treatment: Alters phase and grain structure.
• Alloying: Combines elements for strength, corrosion resistance.
• Mechanical Processing: Rolling, forging, extrusion.

Industrially, there is not clear division of steps in the value chain, with some mining companies operating vertical mine-to-finished metal operations.�� Other actors, for example smelting and foundry companies, purchase inputs from mines.��

Some ore bodies or mineral sands contain multiple different minerals, which adds complexity and also potential for innovation with advances in precision extraction, sensing and sorting technologies

2.7 Technology convergence and different thinking

���������¼� is very strong in industrial transformations fields that are vital to building ESG and carbon compliant value chains for metal products. These include:

• Energy innovation – solutions for renewable generation, storage, efficiency
• Industrial process optimization
• Sensing, machine learning, AI and robotics
• Traceability and provenance
• Integrated carbon accounting
• Nature positive solutions
• Marketing in the context of carbon border control mechanisms and other direct economic penalties arising from the energy costs of processing minerals in end markets. To illustrate, low-grade Australian iron ore is more energy intensive to process than ore from South America and is penalized on price.�� This creates an incentive to increase levels of domestic refinery and smelting – for example shipping ‘green’ pig iron, created using green hydrogen as reductant, ��and arc furnaces powered by renewable electricity.

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Based on consultation with industry partners, focus areas include:

• Green chemistry to underpin ESG compliant methods for separation and refinery. For example, biodegradable polymers for use in hydrometalurgy
• Innovation in electro metallurgy
• Novel approaches to mineral differentiation, segregation and sorting - eg recovery from tailings, mineral sand processing using sensing, automation, and AI.��
• Extraction of minerals from historic tailings
• Metal and rare earth element recovery from waste streams
• Regional portfolio solutions for firm supply of cheap industrial electricity
• Integrated carbon accounting and green certification across the value chain
• Business intelligence.��

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Precision mining:�� The ���������¼� school of Mineral and Energy Resource Engineering (MERE), is ranking 2nd globally and is leader in next generation mining methods. ����MERE leads the peak national research program for future mining methods (Next Gen Min ITRP Hub) and is developing precision technologies for mining and beneficiation. ��

Energy innovation: Given that the affordability of clean electricity is the primary limiting factor for CAPEX in new domestic mineral processing plant, ���������¼� Electrical Engineering and SPREE�� provide work clase expertise across renewable generation, storage and distribution.��

Advanced Metalurgy: The Chem Eng School��and Materials Science Schools have��extensive relevant capability across emerging fields of metallurgical processing such as sustainable pyrometallurgy, polymer science for selective extraction, computational process modelling, and advanced sensing. Notably, the Shen Lab leads national programs in green iron and steel, and mineral recovery from waste streams.��

Digital solutions:��The Computer Science and Engineering School (CSE) brings expertise across sensing, machine learning, robotic and AI.��

Finance and risk:��Australia can potentially attract billions in JV capital for advanced processing plant and regional industrial hubs. The Business and Engineering faculties are combining expertise to support the business case for both public and private investment.��

Research leaders

���������¼� research leaders in the field include:

Partnerships

Laboratories and test bed facilities

���������¼� has world class labs, test bed and prototyping facilities available for research in the domain. These include:

Precision mining

• NMR Low-Field Laboratory – relaxometry/diffusion for fluids in porous media (multiphase flow, wettability, reservoir performance).��
• Tyree X-Ray (micro-CT) – high-resolution 3D imaging of porous media, ores and composites for process design and QA.
• ViMINE (virtual mine planning) & Immersive Technology Lab (VR/AR) – integrated digital mine simulation, training and planning environments.

Mineral Processing

• Mineral Processing – flotation, size reduction, magnetic separation & dewatering; includes Denver and custom flotation cells, mills, furnaces and specialised bubble/foam rigs for three-phase (gas–liquid–solid) phenomena.
• Advanced Geochemistry Laboratory – electrochemical extraction & recovery of precious/critical metals from low-grade ores and wastes (hydrometallurgy focus).��

Metallurgy, Smelting & High-Temperature Processing

• Shen Lab / SCoPE (Computational Process Engineering) — modelling & simulation of reactive multiphase flows in metallurgical reactors; green ironmaking and metal recovery testbeds.
• Pyrometallurgy Group (School of Materials Science & Engineering) – research on smelting/thermal routes for iron & steel, aluminium, metallurgical silicon and non-ferrous metals; efficiency and emissions reduction in carbothermal processes.��
• High-Temperature Materials Group – oxidation/corrosion behaviour and materials performance in mineral & metallurgical processing conditions.��
• Frontier Alloys & Processes Group – alloy design and advanced processing (incl. casting/thermomechanical routes; links to additive manufacturing of metallic systems).

Recycling Test-beds (Industrial Pilots & Micro-factories)

• – – modular, high-temperature micro-recycling lines that transform e-waste, glass, plastics and textiles into metal alloys and engineered “green ceramics”��

Digital & Manufacturing Adjacent (useful for prototyping/tooling)

• Mechanical & Manufacturing Engineering test facilities – advanced manufacturing labs (machining, water/air-jet, laser-hybrid, additive manufacturing), mechanics-of-solids test frames (incl. high-temperature tribometry to 1000 °C).��
• Materials & Manufacturing Futures Institute (MMFI) – shared research/manufacturing facilities and metrology for materials innovation and scale-up.

While not on the Kensington campus, ���������¼� researchers contribute to national decarbonised ironmaking efforts such as Project NeoSmelt (DRI + Electric Smelting Furnace pilot). The ESF pilot is progressing in Kwinana, WA, led by a consortium (BlueScope, BHP, Rio Tinto; with Woodside & Mitsui).��

• Austrade (2024) Australian Critical Minerals Prospectus. Canberra: Australian Trade and Investment Commission. Available at: Austrade (pdf), January 2024.�� ��
• Austrade (2025) Critical minerals. (accessed September 2025).�� ��
• CSIRO (2024) ‘From ground to growth: Australia’s strategic stake in the world’s critical minerals’, CSIRO News (March). Summarises strategy scenario of A$139.7 b GDP and 262,600 jobs (2022–2040).
• Department of Industry, Science and Resources (DISR) (2023) Critical Minerals Strategy 2023–2030. Canberra: Australian Government. Available at: industry.gov.au.�� ��
• Geoscience Australia (2024) Australia’s Identified Mineral Resources 2024 (AIMR 2024). Canberra: Australian Government. �� ��
• International Energy Agency (IEA) (2024) Global Critical Minerals Outlook 2024. Paris: IEA. �� ��
• International Energy Agency (IEA) (2024) ‘Market review – Global Critical Minerals Outlook 2024’, IEA web briefing. Notes 2023 price falls across battery minerals. ����
• International Energy Agency (IEA) (2025) Global Critical Minerals Outlook 2025 – Executive summary. Paris: IEA. �� ��
• Office of the Chief Economist (OCE) (2024) Resources and Energy Quarterly: September 2024. Canberra: DISR. Lithium earnings A$9.9 b (FY2023–24), outlook to 2025–26. �� ��
• Office of the Chief Economist (OCE) (2025) Resources and Energy Quarterly: March 2025. Canberra: DISR. (Report landing page). ��
• Argus Media (2025) ‘Australian rare earth oxide output to rise in 2025: OCE’, Argus Metals (1 April). Summarises OCE view on REO output and price headwinds for cobalt/manganese.����
• Export Finance Australia (EFA) (2025) ‘Australia—Higher lithium exports supported by strong mine output’, World Risk Developments (May). Forecasts lithium exports ~A$5.2 b (FY2025) → ~A$8.2 b (FY2030) and notes concentration risks. ����
• Reuters (2025) ‘Australia passes tax incentives law for critical minerals’, 11 February. Details 10% processing/refining incentive (2028–2040).����
• Engle, R. F., & Granger, C. W. J. (1987). Co-integration and error correction: Representation, estimation, and testing. Econometrica, 55(2), 251–276.
• Johansen, S. (1991). Estimation and hypothesis testing of cointegration vectors in Gaussian vector autoregressive models. Econometrica, 59(6), 1551–1580.
• Stock, J. H., & Watson, M. W. (2016). Dynamic factor models, factor-augmented vector autoregressions, and structural vector autoregressions in macroeconomics. In Handbook of Macroeconomics, Vol. 2.
• Dixit, A. K., & Pindyck, R. S. (1994). Investment under Uncertainty. Princeton University Press.
• Battiston, S., Mandel, A., Monasterolo, I., Schütze, F., & Visentin, G. (2017). A climate stress-test of the financial system. Nature Climate Change, 7, 283–288.
• Bingler, J. A., & Colesanti Senni, C. (2020). Taming the Green Swan: How to improve climate-related financial risk assessments. Economics Working Paper Series, ETH Zurich.
• Berg, F., Kölbel, J., & Rigobon, R. (2022). Aggregate Confusion: The Divergence of ESG Ratings. Review of Finance, 26(6), 1315–1344.
• ABS (Australian Bureau of Statistics). (2023). Input–Output Tables, 2022–23.
• AEMO (Australian Energy Market Operator). (2024). Integrated System Plan.
• ARENA (Australian Renewable Energy Agency). Ultra-Low-Cost Solar Roadmap.
• European Commission. (2021–2026). Carbon Border Adjustment Mechanism (CBAM) regulation.
• IEA (International Energy Agency). (2023). Global Critical Minerals Outlook; World Energy Outlook.
• International Aluminium Institute (IAI). (2023). Aluminium sector energy statistics.