Can Australia move from raw materials to real advantage?

Australia’s critical minerals future depends less on geology, and more on building distributed partnerships for processing and refining capability to support supply chain resilience.

In brief:

• Demand for critical minerals is rising rapidly across clean energy and artificial intelligence, placing pressure on highly-concentrated supply chains.
• Australia holds vast mineral reserves, but converting raw ore into usable industrial inputs depends on targeted investment and new coalitions.
• For Australia, capturing the opportunity demands early, deliberate decisions and a willingness to pay for reliability.

The clean energy transition is converging with the rapid expansion of artificial intelligence(AI), driving a step-change in demand for critical materials. Demand is expected to quadruple by 2040.

The technologies underpinning both – and shaping the next phase of Australia’s economic growth – draw on the same concentrated set of minerals and metals. Batteries, renewable energy systems, electric vehicles, transmission networks, semiconductors, data centres and AI infrastructure all rely on a shared material base, often sourced through highly-concentrated supply chains.

At the same time, geopolitical fragmentation is making critical material supply chains less predictable.

Governments and businesses are being challenged to think deeper about our resources. Cost alone is no longer the only deciding factor. Reliability, processing capability and strategic alignment now matter just as much.

These dynamics are explored in the EY Net Zero Centre’s latest report, Risk and Resilience: Rethinking Australia’s critical materials advantage in a disorderly world.

Demand pressures from two directions

Clean energy technologies require up to seven times more mineral inputs than fossil-fuel alternatives. Electrification, battery storage and grid expansion all depend on large volumes of copper, lithium, nickel, cobalt and rare earths.

Capital investment in data centres by major technology companies exceeded US$400 billion  in 2025, and is now larger than global investment in oil and gas production.¹ Data centres require extensive electrical infrastructure, cooling systems, semiconductors and network upgrades, all requiring inputs of critical materials.

Advantages beyond the resource

Australia enters this moment with significant advantages. We hold 26% of global lithium reserves, 22% of nickel, 18% of cobalt and manganese, 11% of copper, and 28% of iron ore, alongside strong institutions, deep mining capability, and abundant renewable energy potential.

But geology alone does not guarantee resilience or competitive advantage. Supply chains remain vulnerable even when raw materials are abundant. Disruption occurs beyond raw material shortages. Export controls, licensing restrictions, pricing pressure and processing bottlenecks can still delay downstream industries. This creates a new form of supply chain exposure.

The most important leverage points in today’s critical material supply chains sit in processing and refining – the stages that convert raw ore into usable industrial inputs. Mining is relatively geographically dispersed. Processing is not.

China is currently the dominant global refiner for most strategically important transition materials, including rare earths, graphite and lithium chemicals. This concentration has intensified, even as mining has diversified globally.

The scale and speed of demand growth is not just a pressure point. It is a huge opportunity for processing. To meet projected demand will require significant expansion of processing capacity, far beyond what most markets prospectively encounter. This creates a rare window to reconfigure the processing landscape, as significant new capacity must be built rather than expanded incrementally.

Critically, Australia and other middle powers should seek to ensure this expansion is used to dilute the current global concentration of processing. New capacity should be increasingly distributed and structured around trusted partnerships. In this context, demand-driven investment becomes a primary mechanism to rebalance global processing and reduce supply chain risks.

From least cost to secure access

Traditional supply chain models were designed around efficiency and cost optimisation. But highly-concentrated systems create different risks, particularly when geopolitical relationships become more uncertain and industrial policy becomes more interventionist.

The number of trade-related interventions globally has risen sharply in recent years, reflecting a broader shift away from assumptions of frictionless globalisation. Critical materials are increasingly being treated as strategic assets rather than purely commercial commodities.

Security, redundancy, traceability and trusted partnerships now carry economic value of their own. The opportunity is shifting from least cost to best value – including the value of resilience itself.

That does not mean abandoning global trade or attempting full self-sufficiency. No middle power can secure critical material supply chains alone. Instead, resilience is more likely to emerge through coalitions of countries and businesses that link complementary strengths across extraction, processing, manufacturing and end-use demand.

For Australia, this creates both an opportunity and a strategic choice.