Exceptional Lithium Intercept Extends Red Mountain Discovery Further to the North

Tariffs reshaping Australian minerals trade

The current uncertainty around trade policy is causing inconsistencies in investment confidence globally.

Major miners such as BHP (ASX:BHP,NYSE:BHP,LSE:BHP)are already flagging concerns, with CEO Mike Henry recently expressing worry about slower growth and the consequences of disrupted trade.

"Despite the limited direct impact of tariffs on BHP, the implication of slower economic growth and a fragmented trading environment could be more significant. China's ability to shift toward a consumption-led economy and for trade flows to adapt to the new environment will be key to sustaining the global outlook," he said.

Gilbert + Tobin states in its report that Australian lithium and rare earths companies are facing "significant" questions.

While the US Inflation Reduction Act had boosted demand prospects, the outlook is now less certain. At the same time, China is increasing its own output and may need to buy less from Australia.

The firm notes that companies may have to find new or additional trading partners for these reasons.

A potential bright spot for Australia is China's critical minerals export restrictions to the US. Australia has a chance to prove its capacity as a minerals supplier, especially for countries seeking alternatives to Chinese supply.

The report cites Lynas Rare Earths (ASX:LYC,OTC Pink:LYSCF) and Iluka Resources (ASX:ILU,OTC Pink:ILKAF) as “well-positioned” companies, with the former recognised as the world's largest non-Chinese producer of separated rare earth materials, and the latter currently developing Australia's first fully integrated rare earths refinery.

“Despite these headwinds, Australia is benefiting from new strategic alliances,” Gilbert + Tobin wrote.

“The Australian Government’s partnerships with the EU and Japan on critical minerals are opening doors for investment and export growth. However, miners must carefully navigate regulatory challenges and shifting trade policies to secure long-term stability.”

Miners facing low metals prices

While the gold price remains high, other metals have sloped downward in 2025.

Copper prices have faced weakness this year, as have nickel prices, prompting asset pauses and shutdowns.

WIN Metals (ASX:WIN) pivoted from nickel to gold this year, and in 2024 BHP shut down its Nickel West operations in Western Australia following increased capital costs and uncertain price recovery.

Gilbert + Tobin recommends that Australia use its strong regulatory framework to maintain its position as a country worth investing in, saying miners should focus on production costs, leverage and hedging strategies.

Is ESG still important to Australian mining?

Looking at ESG, Gilbert + Tobin notes that it shifted away from being just a buzzword in 2020, becoming key to business as the country pushed nationwide ESG goals in a bid to decarbonise by 2050.

Major diversified miner Rio Tinto (ASX:RIO,NYSE:RIO,LSE:RIO), for example, is aiming for net-zero greenhouse gas emissions by 2050, and plans to invest US$5 billion to US$6 billion in decarbonisation projects.

For its part, BHP has reduced its Scope 1 and 2 emissions by 24.1 percent since December 2022, and is progressing towards a 30 percent reduction by 2030. Fortescue (ASX:FMG,OTCQX:FSUMF) is targeting net-zero emissions by 2040, with initiatives like the development of a zero-emissions Infinity Train.

Other miners, such as AngloGold Ashanti (NYSE:AU,JSE:ANG), have had a more complicated time with ESG.

In September 2024, Financial Times reported that the company was restructuring its portfolio to align with ESG goals, including plans to divest from coal assets, when a fire broke out at its Grosvenor mine in Queensland.

This event could reduce the valuation of its coal assets by up to $1 billion, highlighting the financial risks companies may encounter when ESG objectives intersect with operational challenges.

But what is the state of ESG in Australia's mining industry as global turmoil takes centre stage?

Gilbert + Tobin believes it still remains relevant, but could lose some traction.

“In our view, it is too early to call the end of ESG as a major driver of activity in the metals and mining sector. Carbon emissions remain a focal point, with mining companies under pressure to reduce their carbon footprints through renewable energy adoption and electrification of fleets," the report reads.

"However, we may begin to see a reduction in some initiatives on the edge of the ESG equation for miners, including Diversity, Equity and Inclusion, preservation and enhancement of biodiversity and responsible procurement, particularly if these become a focus of retaliatory trade action in the United States," it continues.

The firm believes if ESG progress stalls Australia could face major setbacks, and notes that the mining industry will likely need to boost spending and effort in order to maintain momentum.

Australia's next steps

For Gilbert + Tobin, Australia's mining companies will have to be more open than ever to change.

“One thing is clear: the mining companies that thrive will be those that balance profitability with sustainability, efficiency with responsibility and innovation with adaptability," it states in its report, adding that while the road ahead may be uncertain, opportunities remain vast, especially for those who are willing to evolve.

The Minerals Council of Australia makes its own recommendations in a recent statement on tariffs.

It breaks down its suggestions into three parts: strengthen global competitiveness, accelerate free trade deals and secure supply chain partnerships with like-minded economies.

“Australia has long been a reliable and trusted global supplier of minerals and critical materials, with our enduring trade and defence partnership with the United States forming the backbone of decades of economic and strategic collaboration,” the council notes. “These trade tariffs undermine this crucial alliance, destabilising supply chains and increasing costs to consumers. It is a race to the bottom.”