Australia has for some time been a major net exporter of minerals, including rare earth metals, exporting the raw materials cheaply, and then buying finished products back at cost.

In a speech to the National Press Club, the Australian Minister for Industry, Science and Technology Karen Andrews indicated that she would like to see this change, and indicated some modest steps in the direction of a new industrial policy.

I’ve been part of discussions that have happened around me for many years, where there has been significant criticism of the fact that Australia is actually very good at digging things out of the ground, putting them on a ship and sending them overseas and paying a lot of money to buy them back as a finished good. And that that needs to change. And I have heard those discussions in many forms for many years, and we actually now have to start doing something a bit differently. So, let me talk about one of the examples, and what we’ve actually done so that this is not so much future-looking. We are looking at our rare earths, critical minerals and looking at battery manufacturing here in Australia. It won’t be to manufacture every single type of battery, but we’re looking at what those niches can be. So we’ve established a CRC. We’re looking at innovative batteries. We’re looking at how we’re going to develop that sector. So that is clearly one of the opportunities where we will do the value-add here. We’ll work with our resources sector. We will develop the technology that’s needed. We will move that into the production phase, the manufacturing phase, and then we will be looking to export so the value-add is done here in Australia.

The second very obvious one is in food. We are very good and well regarded food producers here. About 25 per cent of our manufacturing is food based. So we have enormous opportunities to value-add along the way with our food. Many of our nearest neighbours, in particular, are very interested in not only our meat, processed meat products, but also what we can do with our cropping to produce processed goods. So food creates a real opportunity for us to continue. Resources, I will of course continue to work with Keith Pitt and also on the energy front with Angus Taylor to look at what we can do in that space.

Finally, on steel. The steel industry is important to us. There has been, for a number of years, a global oversupply of steel. So around the world, there is excess steel capacity. What we need to do is make sure that our steel producers here are as competitive as they possibly can be. Energy is a critical input for them. I’m aware that some of them are looking at hydrogen as an energy source. I encourage them to look at how they are going to reduce the energy costs, but let’s be mindful that hydrogen is something that we are investigating, we’re looking at, we’re determining how and if we can build our capacity there. But hydrogen is still a number of years away, so it won’t be in place overnight.

In response to the COVID-19 pandemic, she stated that Australian businesses had experienced considerable supply chain disruption, and that they were experiencing considerable difficulties in sourcing raw materials from within Australia, despite the country’s extensive natural resources. In response, businesses are looking now to diversify their supply chains.

Andrews also indicated that the country would look to diversify its export markets, suggesting a move away from its primary customer, China.

Reflecting a growing economic nationalism in international political thought, she spoke of the need to have reserve manufacturing of goods essential for a crisis, such as PPE. But she indicated that Australia has no intention of becoming a major producer of high-end consumer technologies, such as smartphones, saying that the country should stop trying to be all things to all people, and should focus on its strengths.

Needless to say, diversification away from the primary sector is a common refrain from countries with extensive natural resources. With a more strategic export tariffs regime, it is possible that national producers will be able to turn the country’s resource base to their competitive advantage.

Picture, Handout, Karen Andrews website.