Chapter 4: Resources
- Southeast Asia's energy demand has increased by an average of 3 per cent a year over the past two decades and is projected to double by 2050 from 2020 levels.
- Australia is committed to remaining a long-term energy security partner for Southeast Asia while taking ambitious climate action.
- Demand for critical minerals and mining equipment, technology and services needed to electrify and transition Southeast Asia's economies presents enormous opportunities for Australian exports to the region.
Southeast Asia's energy demand has increased by an average of 3 per cent a year over the past two decades and is projected to double by 2050 from the 2020 level.81 Conventional energy sources currently make up around 77 per cent of its energy mix.82 Southeast Asia's energy demand is expected to remain strong until 2050, with 70 per cent projected to be met by conventional energy sources.83
While the region transitions to cleaner energy solutions, oil, gas (pipeline and liquefied natural gas) and coal will continue to play an important role in Southeast Asia's energy security to support economic growth.
The International Energy Agency (IEA) expects global demand for minerals, including in Southeast Asia, will increase dramatically through to 2040, particularly for lithium, graphite, cobalt and nickel, underpinned by electric vehicle and battery demand.84 Other technologies like solar panels, wind turbines and smartphones will also drive the demand.85
The IEA anticipates Southeast Asia will play a major role in clean energy supply chains, both as a consumer of low-carbon technologies and as a key supplier of resources, including critical minerals and energy transition metals.86 Indonesia and the Philippines are already the two largest nickel producers in the world.87
Australia is committed to remaining a long-term energy security partner for Southeast Asia while taking ambitious climate action. Australia is a substantial supplier of Southeast Asia's resource needs, with over A$31 billion in exports to Southeast Asia in 2022 (Figure 4.1). Energy security is fundamental to Southeast Asia's economic and national security interests, as well as Australia's national interests.
Figure 4.1 Australia’s resources exports to Southeast Asia, 2018–2022
Note: Does not include exports of crude petroleum.
Source: DFAT, Standard International Trade Classification pivot table, May 2023.
All countries will determine their own decarbonisation pathways to meet their own individual circumstances aligned to Paris Agreement commitments, and conventional energy sources such as liquefied natural gas (LNG), along with renewables and energy storage technologies, will be a critical part of the energy transition. Australia is well positioned to continue supplying these essential resources.
Australia can play a major role in helping facilitate the region's energy transition as a major global exporter of critical minerals and energy transition metals.88 As outlined in the Australian Government's Critical Minerals Strategy 2023–2030, critical minerals are fundamental to the global transition to net zero emissions. Australia is a significant producer of critical minerals such as lithium, cobalt and rare earths, as well as energy transition metals including aluminium, nickel and copper.
Australia's rich geological reserves, expertise at extracting minerals, and track record as a reliable producer and exporter of resources are also key to our capacity to become a producer of raw and processed critical minerals for the region. Increased investment from, and collaboration with, partners in the region will help to build diverse, resilient and sustainable global supply chains, and provide opportunities to attract Southeast Asian FDI that supports increased downstream processing.89
The potential revenue from critical minerals and energy transition metals in Southeast Asia to 2050 is significant (Figure 4.2). Australian companies are already increasing their involvement in this sector. For example, Australia's Nickel Industries is unlocking opportunities in Indonesia, which has nearly a quarter of the world's nickel reserves and is expected to account for half of the global production increase in nickel between 2021 and 2025.90 The company has recently secured a A$943 million investment from Indonesian company United Tractors to finance its operations.91
Figure 4.2 Potential revenue from selected critical minerals and energy transition metals in Southeast Asia, 2020–2050
Source: IEA, Southeast Asia Energy Outlook 2022: Key findings, May 2022.
In Thailand, Australian company Alpha Fine Chemicals Limited is planning to construct and operate a nickel sulphate plant in Rayong province to produce 40,000 tonnes per annum of nickel sulphate crystals to supply the lithium-ion battery market.92
At the same time, companies from some Southeast Asian countries, including Indonesia and Thailand, have capitalised on opportunities to invest in Australian major resource projects. For example, Malaysian state-owned energy company Petronas has a 27.5 per cent stake in the Gladstone LNG project in Queensland,93 while several Indonesian companies have recently taken stakes in Australian mining operations. Australia welcomes investment in new resources and energy projects.
Australia's global mining equipment, technology and services (METS) exports were worth A$17 billion in 2020, with 51 per cent of total value destined for Southeast Asia.94 METS trade and investment opportunities for Australian companies are likely to continue to grow,95 especially given limited in‑market capability in mining technology and services in the region. Australia's mining sector is a world leader in efficiency, harnessing new technology and innovation to maximise returns. Australia has pioneered automation and remote operations through autonomous machinery, emerging software, sensors and data analytics, and connected worker technologies – 60 per cent of the world's mining computer software is developed in Australia.96 Over 100 Australian METS companies are active in the Indonesian market,97 and this could act as a springboard to launch into Southeast Asian mining markets. METS companies could also look for opportunities to partner with Australian and other international investors in the region to maximise potential opportunities.
For example, Australian company GroundProbe has an international service centre in Kalimantan and provides a range of technological services. GroundProbe's trade has accelerated with the lower tariffs and improved investment rules under the Indonesia–Australia Comprehensive Economic Partnership Agreement. The experience of Truflo Pumping Systems highlights the demand for high-quality equipment. Truflo builds industrial-strength pump systems that remove water build-up that negatively affects mining operations. With increasing export sales to the region, Truflo is now expanding its operations to Vietnam and Indonesia.
There are opportunities for further government-to-government cooperation in the resources sector to promote sustainable, safe and efficient mining. This support is crucial to strengthening policy regimes and setting the regulatory conditions that will encourage investment. Government-to-government cooperation is key to building up technical skills in Southeast Asia to develop professional expertise and support the workforces of the future. An example of such cooperation in building workforce capability is set out in the Timor-Leste – Australia LNG Partnership case study.
A major skills deficit and lack of gender equality in the industry workforce is a significant challenge. Increasing the participation of women in the resources sector in both Australia and the region will be critical to improving productivity and economic growth, boosting private and public sector performance and meeting the Sustainable Development Goals. An example of Australia's efforts to tackle this challenge is set out in Box 4.1.
“Our strong relationships with the Timorese Government and with industry colleagues have been key to maximising the impact of our collaboration ...” (DISR)
Box 4.1 Aiming for gender equality in Australia's resources sector
Diversity and gender inclusion can boost innovation and productivity in the clean energy sector. The number of women in full-time mining employment in Australia has increased fivefold in the past 20 years – from 8,700 in 2002 to 45,000 in 2022 – with skills shortages driving increased vocational education and training enrolments. Examples of industry-led initiatives to improve gender equality in the sector include the Australasian Institute of Mining and Metallurgy (AusIMM) annual surveys of women in mining, the Queensland Resources Council's 'Women in Mining and Resources Queensland' mentoring program, and BHP's target for gender balance by 2025 that has lifted its global female workforce to 33 per cent in 2022. In boosting gender equality across these sectors, Australia can help set an example for the region, including as a platform for further dialogue.
Case study: Timor-Leste – Australia LNG Partnership: Forging the path for the next generation of oil and gas professionals
Building workforce capability is a cornerstone of the Timor-Leste – Australia Liquefied Natural Gas (LNG) Partnership, a collaboration between Australia's Department of Industry, Science and Resources (DISR) and Timor-Leste's National Petroleum and Minerals Authority.
The partnership is developing highly skilled professionals in a sector that provides a critical revenue source for Timor-Leste and supports the country's ambitions to build a resilient, diversified economy. The partnership supports collaboration and mentoring to share expertise and build industry connections. Seven small business delegates attended the Australian Petroleum Production and Exploration Association Conference in Adelaide in May 2023. Delegates built relationships with Australian industry specialists, suppliers and potential future clients. After returning home, the group formed an association to support the local business community and strengthen government engagement and Timor-Leste's socio-economic development.
Emerging Timor-Leste industry leaders are also being mentored under the pilot LNG Fellowship Program. Professor Eric May, CEO of Future Energy Exports Cooperative Research Centre, said mentoring 'was a way to contribute to Timor-Leste's emerging LNG industry, which has the potential to significantly improve living standards and outcomes for many Timorese people.'
The partnership is providing two-way benefits for Australia and Timor-Leste, strengthening private sector development in Timor-Leste and deepening bilateral trade and investment links. 'Our strong relationships with the Timorese Government and with industry colleagues have been key to maximising the impact of our collaboration, building capability and sharing valuable expertise. We look forward to continuing this important relationship,' said Dan Glover, Manager of the Timor Sea team at DISR.
Pathways to 2040
In addition to the cross-cutting recommendations outlined in Chapter 2, which will have a broad economic impact, this chapter has additional specific recommendations on resources.
Australia should continue to emphasise to the region the key attributes of its resources sector. This includes its investor-friendly business environment, transparent regulatory frameworks, resource potential, highly skilled workforce and advanced technology, and commitment to free trade. These principles and standards can be shared with regional partners, enabling the lessons learned from Australia's experiences to drive private sector development across Southeast Asia.
Bilateral, regional and multilateral forums and regional architecture, including the APEC Energy Working Group, are opportunities for Australia to engage with regional partners, strengthen value chains in the region, and support the clean energy transition. The Indo-Pacific Economic Framework, for example, aims to ensure access to key raw and processed materials, semiconductors, critical minerals, and clean energy technology. METS is a key area of Australian expertise, with opportunities for Australian firms to enter into partnerships to operate in multiple markets in Southeast Asia and promote Australian standards.
- Promote Australia's capabilities in mining, energy, and METS to support sustainable development in the resources sector in the region.
Availability of skilled labour poses challenges to the expansion of both the Australian and Southeast Asian resources sectors. In Australia, there is a growing shortage of engineers as staff retire and new graduate numbers decrease. A lack of technical capability in some Southeast Asian countries, coupled with limited geological information, impedes new exploration and investment. Opportunities for women's participation in these sectors are still limited. In Australia, only 36 per cent of students enrolled in science, technology, engineering and mathematics (STEM) courses are women. In Southeast Asia, female students number one in six. Tackling this gender gap, including through scholarships, in both Australia and Southeast Asia will increase the skills supply and deliver stronger outcomes for the resources sector.
- Offer two-way tertiary scholarships in the resources sector to address skills shortages and gender equality, and enhance Southeast Asia's technical capacity.
Consultations undertaken to inform this strategy demonstrated a clear appetite in the region for the Australian Government to share its world-class expertise. Australian government officials can use their institutional knowledge and skills with regional counterparts, including through undertaking geological surveys and supporting the decarbonisation agenda. Ensuring high environmental, social and governance standards is crucial for the region as consumers and investors increasingly demand that manufacturers use minerals that are sustainably and responsibly produced.
There are already opportunities to do this – Geoscience Australia noted its capability to support the transfer of resource data, and to build Timor-Leste's capability to establish its own data and sample repository. This would support the delivery of the implementation agreements established as part of maritime boundary transitional arrangements between Australia and Timor-Leste.
Southeast Asia is a major market for mining services.98 In its submission to the strategy, Australian mining services company Macmahon stated the value of encouraging more Australian mining expertise in the region, as it could help 'enable the development of underexplored areas and facilitate future critical minerals supply' in a way compatible with environmental, social and governance goals in partner countries.99
- Geoscience Australia to work with counterparts on geological surveys, geological storage, hydrogen and geothermal energy, and resource data in Southeast Asia to enhance transparency and support exploration and investment in mineral deposits.
- Provide institutional capacity building through government-to-government engagement to promote the sustainable development of Southeast Asia's resources sector.
84 International Energy Agency (IEA), Southeast Asia Energy Outlook 2022, IEA, 2022, p. 18; IEA, The Role of Critical Minerals in Clean Energy Transitions, World Energy Outlook Special Report, IEA, 2022, p. 8.
88 Department of Industry, Science and Resources (DISR), Resources and Energy Quarterly March 2023, DISR, Australian Government, 2023, p. 148; Austrade, The Lithium-Ion Battery Value Chain, New Economy Opportunities for Australia, Austrade, Australian Government, 2018, p. 5.
90 I Huber, 'Indonesia's Nickel Industrial Strategy', Center for Strategic and International Studies , 8 December 2021, accessed 4 July 2023. NS Energy, Profiling the top six countries with the largest nickel resources in the world, 11 February 2021, accessed 6 July 2023,
91 J Chiat, 'Ground Breakers: Nickel Industries gets $943 million to continue its Indonickel growth, but is it giving up too much?', Stockhead, 9 June 2023, accessed 15 June 2023.
93 Santos, 'GLNG project sanctioned, final investment decision on US$16 billion 2-train 7.8 mtpa project' [ASX/Media release], Santos, 13 January 2011, accessed 4 July 2023.
99 Submission from Macmahon.