Investment in "green" mining, including lithium and hydrogen projects, is on the up but analysts caution it is not yet the start of a new mining super cycle, with gas and coal projects still attracting the majority of funding.
Commonwealth Bank mining and energy analyst Vivek Dhar noted a 54 per cent increase in the value of committed mining and energy projects in the 12 months to October 2022.
However, at $83.1 billion, Mr Dhar said the scale of committed investment was still dwarfed by the $250 billion-plus peak of investment in 2012 during Australia's last major commodity boom.
These locked-in projects are also skewed heavily towards "old" commodities, with 55 per cent tied up in oil and gas, 9 per cent in coal and 12 per cent in iron ore.
"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," Mr Dhar noted.
"Around 64 per cent of committed investment is in gas and coal projects in Australia."
Lithium boom dominating 'green' commodities
By way of contrast, "new" or "green" commodities account for a small share, dominated by lithium where eight projects worth $4.6 billion make up a 6 per cent share of committed mining and energy projects.
"Australia will have a key role in supplying lithium to the global market in coming years," Mr Dhar continued.
"Australia accounted for 50-55 per cent of global lithium output in 2021."
Indeed, lithium exports are already playing a significant role in maintaining Australia's run of strong trade surpluses, as illustrated by the November ABS data released last week.
"Energy exports (coal and fuels, largely LNG) were weaker, down by a combined $1.6 billion, on lower prices," noted Westpac economist Andrew Hanlan.
"However, 'other' metal ores (dominated by lithium) rode to the rescue, more than doubling to a fresh high of $2.5 billion, up $1.3 billion."
A couple of copper projects worth $2.3 billion, a pair of nickel or cobalt projects worth $400 million, a hydrogen project valued at $100 million and an unspecified share of "other commodities" projects worth a total of $3.6 billion account for the other committed investments in the metals and minerals needed for renewables.
But this increase in demand is unlikely to be linear, with analysts at S&P Global Market Intelligence noting a recent softening in lithium and cobalt prices from record highs as growth in electric vehicle demand was slowed by a combination of changing subsidy policies and COVID outbreaks in China.
"The passenger PEV market is heading for slower but still steady growth in 2023, and we expect sales to increase by 3.3 million units year over year, compared with 3.6 million units in 2022," they noted in a December report.
"A subdued outlook for global growth and affordability challenges will weigh on consumer electronics sales and disproportionately affect PEV sales across Europe and the US where cobalt-containing batteries are more widely used."
Hydrogen needed for new 'super-cycle'
Mr Dhar said the possibility of Australia coming close to replicating its previous mining boom rests heavily on the future of 'green' hydrogen, produced via renewable energy.
Two dozen hydrogen projects worth $118.6 billion are classed as "feasible" by the Department of Industry, Energy and Resources.
A further 22 hydrogen projects worth $147.4 billion have been publicly announced, but with little or no work done to assess their economic viability.
"Hydrogen projects account for 40 per cent and 60 per cent of the value of feasible and publicly announced projects respectively," Mr Dhar observed.
"Two hydrogen mega-projects account for more than 50 per cent of the value of hydrogen projects at these stages."
Mr Dhar said that left hydrogen as Australia's only medium-term hope of another major mining boom.
"The outlook suggests Australia is unlikely to experience a mining boom anywhere near the scale of the China-led super-cycle in coming years from just the metals and minerals (i.e. lithium, copper, nickel, cobalt, graphite and rare earths) needed in the energy transition," he argued.
"If Australia is going to recreate the mining boom from the previous super-cycle sometime this decade, it will need to become a major hydrogen exporter."
Mr Dhar said there was also a chance that hydrogen could lead to some revival of heavy industry within Australia.
"The energy losses associated with moving hydrogen, particularly by ship, opens the door to more downstream processing being located locally," he noted.
Recent research from the Australian Industry Energy Transitions Initiative, cited by Mr Dhar, suggests the Pilbara in north-west WA and Gladstone in central Queensland have the largest opportunities, while the Hunter and Illawarra regions in New South Wales and Kwinana near Perth could also develop into decarbonised industrial hubs.
