Australian Election Won by Labor Party... "Korean Companies Should Focus on Carbon Neutrality, Minerals, and Defense Industry"

KOTRA Publishes Report on '2022 Australian Federal Election Results and Implications' on the 30th

[Asia Economy Reporter Park Sun-mi] With the Australian federal election resulting in the Labor Party's successful change of government after more than eight years, advice has emerged that Korean companies should pay close attention to the carbon neutrality, critical minerals, defense, and infrastructure sectors.

According to KOTRA's ‘2022 Australian Federal Election Results and Implications’ report released on the 29th, a key factor in the Labor Party's victory was its proactive carbon neutrality policies, which differentiated it from the Liberal-National Coalition. The Labor Party pledged to raise its carbon emission reduction target to 43% by 2030, a more ambitious goal compared to the 26-28% target set by the previous Liberal-National government. Furthermore, an investment of AUD 76 billion (KRW 68.4091 trillion) is expected for affordable eco-friendly energy production, creating opportunities for Korean companies to enter renewable energy infrastructure projects.

The Labor Party also promised to support scientific and technological development in the mining sector to increase the added value of critical minerals. In particular, it plans to actively support the development of special battery manufacturing technologies by moving away from traditional mining focused on extraction and introducing processing technologies for rare earths and critical minerals. Given recent global supply chain risks, GVC cooperation between Korean and Australian companies is anticipated in mining development, joint projects, and technology exchange to create added value in critical minerals.

Meanwhile, the Labor Party announced plans to continuously invest more than 2% of Australia's total GDP in the defense industry to expand support for defense industry investments. Through defense industry development plans, AUD 3 billion (KRW 2.694 trillion) will be invested in defense innovation sectors to build an autonomous defense system and enhance national security. This is also a field where cooperation with Korea’s ‘K-Defense’?ranked 9th globally in defense exports?is expected to be significant.

Additionally, the Labor Party pledged to maintain the ‘10-year infrastructure plan’ with an investment of AUD 100 billion (KRW 90.012 trillion) to revive the construction sector and stimulate the economy, which was contracted due to COVID-19, and introduced the ‘National Rail Manufacturing Plan’ as a campaign promise. Exports of equipment and materials by Korean companies related to infrastructure construction such as roads, railways, freight vehicles, and hydrogen charging stations are promising.

As a result, business opportunities for Korean companies are expected to expand beyond traditional trade sectors such as automobiles, home appliances, and consumer goods to include carbon neutrality, critical minerals, defense, and infrastructure.

Australia is Korea’s sixth-largest trading partner, with trade volume reaching a record high of USD 42.7 billion in 2021. Australia is Korea’s 10th FTA partner, and the Korea-Australia FTA will mark its 8th anniversary this December.

Kim Byung-ho, Head of KOTRA Sydney Trade Center, stated, “It is important to note that the victorious Labor Party plans to actively support the carbon neutrality, critical minerals, defense, and infrastructure sectors. Especially since the bilateral relationship was elevated to a ‘Comprehensive Strategic Partnership’ last December, cooperation is accelerating, and we will strive to further expand Korean companies’ entry into the Australian market.”