Recently, a theory has been circulating in the market and online communities that Australia may be entering a new "national fortune cycle" driven by the surge in demand for computing power, electricity, and key minerals due to artificial intelligence (AI). Roland Wayne, a PhD in medicine and economics who has long lived and researched in Australia, recently published a lengthy analysis pointing out that AI is rewriting the profit distribution structure of global value chains, increasing the importance of physical resources, and that Australia, with its abundant key minerals, does indeed have an opportunity to gain an advantage in this industrial restructuring.
However, Roland also emphasized that having mineral resources doesn't guarantee success. The key to whether Australia can usher in a "new national destiny" lies in factors such as processing capacity, institutional design, talent pool, and geopolitical strategy. If it cannot upgrade in these areas, even with abundant resources, it may only remain at a low-value-added position in the global value chain.
AI is reshaping global value chains, and the importance of resources is rising again.
In his article, Roland points out that the global economy of the past thirty years has essentially been an era of knowledge premiums. In the so-called "smile curve," high value-added industries such as R&D, branding, and financial services are located at the two ends of the curve and can obtain the most profits, while manufacturing, assembly, and raw material supply in the middle have the thinnest profits.
Taking smartphones as an example, brands and software companies often take the lion's share of the value, while companies responsible for assembly and component production receive only a tiny fraction. Industries that involve programming, financial modeling, or brand management are more likely to yield high returns than mining or raw material production.
But the emergence of AI is shaking up this structure. Generative AI is rapidly reducing the cost of a large amount of "routine knowledge work," such as programming, translation, and writing analytical reports, which can increasingly be completed by AI. As the scarcity of knowledge decreases, the distribution of profits in the global value chain may be reshuffled. In Roland's view, when the cost of knowledge approaches zero, what will truly be scarce will become the physical infrastructure supporting AI operations, including computing power, data centers, electricity, and the mineral resources behind them.
AI is an energy-guzzling monster, requiring massive amounts of mineral resources.
The development of AI is not just a software issue, but is highly dependent on energy and hardware infrastructure. AI data centers require massive amounts of electricity and cooling systems, as well as copper for power grids and transmission equipment, lithium for energy storage batteries, and rare earth elements for high-efficiency motors and electronic components. In other words, the roots of AI are not in the cloud, but in mines and power grids. Therefore, Roland believes that when the demand for AI explodes, the global demand for key minerals such as copper, lithium, and rare earth elements may also increase simultaneously, which is precisely where Australia's strength lies.
Australia is currently one of the world's largest lithium producers, as well as a significant supplier of rare earth elements and cobalt, and also possesses substantial copper and natural gas resources. Roland points out that if AI drives a new wave of demand for minerals, Australia could indeed become a crucial node in the global supply chain.
Looking back at history, how can we avoid the "resource curse"?
Despite discussions about Australia's "new national destiny," abundant resources do not guarantee economic success. Roland points out that many resource-rich countries have historically fallen victim to the so-called "resource curse," such as Venezuela and some African nations. Short-term prosperity brought by resources can lead to over-reliance on a single industry, thereby weakening the development of manufacturing and other sectors.
He cited Norway and Saudi Arabia as examples, pointing out that both countries possess abundant oil resources, but their development paths have been drastically different. Norway, through sovereign wealth funds and institutional design, has transformed oil revenues into long-term national wealth, while Saudi Arabia has long relied on its oil economy, resulting in a relatively singular industrial structure. Roland believes that Australia now faces a similar problem to Norway in its past: the key lies in its ability to transform mineral resources into higher-value industrial capabilities.
Roland points out that Australia's role in the global mineral supply chain currently remains primarily at the "mining" stage. Taking lithium as an example, although Australia is the world's largest lithium producer, most of its lithium ore is still exported overseas for processing, particularly to China. This means that Australia's position in the value chain remains biased towards upstream raw material supply. If Australia wants to truly seize the opportunities brought by AI, it must upgrade from selling ore to selling processed materials, and even gain pricing power in the supply chain.
However, this path is not easy. Building a refinery requires substantial capital, a long construction period, and highly specialized engineering talent, and Australia lacks sufficient talent in the fields of metallurgy and chemical engineering. Furthermore, environmental regulations and labor costs generally make Australia's refining costs higher than those in Asian countries. These are all real problems that must be addressed in industrial upgrading.
Moreover, even if Australia successfully upgrades from mining to processing, the true value chain top of the AI era may still not be in Australia. Currently, the core of the global AI industry is still controlled by a few technology companies, such as in chip design, AI models, and cloud infrastructure. Australia lags far behind the US and China in AI R&D investment and industry scale, and lacks world-class AI companies. Therefore, even with increased demand for minerals, Australia may simply shift from selling iron ore to China to selling lithium and rare earths to US technology companies.
Is 2026 Australia's Year of National Fortune? A local economics PhD analyzes how AI is driving demand for lithium and rare earths. This article, which garnered millions of views, first appeared on ABMedia, a ABMedia .
