Australia produces significant quantities of lithium, rare earths, cobalt, and other critical minerals. We export most of it as concentrate or raw ore. The value-add processing happens elsewhere—primarily China.

The federal government’s Critical Minerals Strategy aims to change this. Technology investment is central to that ambition. But what technology, and is Australia positioned to deploy it?

The Processing Gap

Australia’s critical minerals story illustrates a persistent pattern:

Mineral	Australian Share of Mining	Australian Share of Processing
Lithium	~55% of global	~5% of global
Rare Earths	~8% of global	<3% of global
Cobalt	~3% of global	Minimal

We dig it up. Someone else turns it into batteries, magnets, and electronics.

The economic value captured at each stage shows why this matters. Spodumene concentrate sells for roughly $1,000-1,500/tonne. Lithium hydroxide sells for $15,000-25,000/tonne. Battery-grade cathode material reaches $30,000+/tonne.

Moving up the value chain captures more of that differential. But it requires processing capability we largely don’t have.

Why Processing Is Hard

Building Australian processing capacity faces several challenges:

Energy Costs

Refining critical minerals is energy-intensive. Australian industrial electricity prices remain higher than competing locations like China, Malaysia, or Indonesia.

The National Critical Minerals Council acknowledges this, pointing to renewable energy as a potential long-term solution. But solar and wind projects take years to develop, and processing plants need reliable baseload supply.

Reagent Supply

Many processing routes require specialty chemicals not manufactured in Australia. Importing reagents adds cost and supply chain vulnerability—somewhat defeating the strategic resilience argument for domestic processing.

Some reagents can be produced locally with investment. Others would require developing entirely new chemical supply chains.

Technical Expertise

Mineral processing at commercial scale requires specialised engineering skills. Australia has some expertise, primarily in established commodities like gold, copper, and iron ore. Critical minerals processing—particularly rare earth separation—involves different techniques where local experience is thinner.

Permitting Timeline

Environmental approval for new processing facilities can take 3-5 years. International competitors face less rigorous processes (for better or worse). By the time Australian projects are permitted, market conditions may have shifted.

Where Technology Investment Matters

Several technology areas could address these challenges:

Direct Lithium Extraction (DLE)

Conventional lithium production from brine requires large evaporation ponds, years of development, and operates poorly in Australian conditions.

DLE technologies extract lithium directly from brine using selective sorbents or membranes. Benefits include:

• Faster production (weeks instead of years)
• Higher recovery rates
• Smaller footprint
• Potential use on lower-grade brines

Several Australian companies are piloting DLE approaches. Results so far are promising but not yet commercial at scale.

Hydrometallurgical Processing

Traditional pyrometallurgical processing (smelting) requires massive scale and energy. Hydrometallurgical approaches use chemical solutions at lower temperatures.

Australian research institutions, including CSIRO, are developing hydromet processes specifically suited to Australian ore types. These may be more economical at the smaller scales appropriate for Australian production.

Energy-Efficient Refining

Membrane electrolysis, microwave heating, and other emerging technologies could reduce the energy intensity of critical minerals processing. If Australian facilities can operate with 30-40% less energy than conventional plants, the electricity cost disadvantage shrinks.

Automation and Control

Advanced process control using AI and digital twins can optimise recovery rates and reduce reagent consumption. When processing smaller volumes than Chinese mega-facilities, efficiency gains from automation become more important to competitiveness.

Investment Landscape

Funding is flowing toward critical minerals processing, from multiple sources:

Government:

• Critical Minerals Facility fund ($2 billion)
• Northern Australia Infrastructure Facility
• Export Finance Australia concessional lending
• Research and development tax incentives

Private:

• Offtake agreements with battery manufacturers (sometimes including processing investment)
• Joint ventures with technology providers
• Equity investment from strategic partners (auto manufacturers, battery companies)

The challenge isn’t lack of available capital. It’s proving project economics that justify the investment.

The China Question

Any honest discussion of Australian critical minerals processing must address China’s dominance.

China controls most global processing capacity through decades of investment, often supported by industrial policy and less stringent environmental standards. Competing head-to-head on cost is difficult.

Australian processing makes strategic sense for buyers wanting supply chain diversification. But strategic value needs to translate into commercial premium—buyers willing to pay more for non-Chinese material.

Some battery manufacturers are making such commitments. Whether those commitments persist through commodity price cycles remains to be seen.

Realistic Outlook

Australia probably won’t become a dominant critical minerals processor. The infrastructure, energy, and scale disadvantages are real.

But selective processing investments—focused on specific minerals, specific value-chain positions, and specific customers valuing provenance—can succeed.

The most promising approaches combine:

• Australian ore advantages (grade, quality, ESG credentials)
• Technology reducing cost disadvantages
• Strategic partnerships with end-users
• Government support for early projects

Critical minerals processing in Australia is possible. It’s not automatic, and it requires sustained commitment through commodity cycles and policy changes.

The technology investments happening now will determine whether Australia captures more value from its critical minerals endowment in the decades ahead—or continues shipping concentrate overseas.