The new agreement between Australia and the European Union (EU) to boost the supply of critical minerals and technology marks a significant step toward comprehensive free trade negotiations. Signed by Australian Trade Minister Don Farrell and Resources Minister Madeleine King, along with EU Trade Commissioner Valdis Dombrovskis and Internal Market Commissioner Thierry Breton, the memorandum of understanding (MoU) focuses on several key areas of collaboration.
Key aspects of the agreement:
- Establishment of talks and information sharing:
- The MoU stipulates the establishment of talks between officials from both sides and enhanced information sharing. A roadmap outlining specific actions and areas of cooperation will be developed within six months.
- Encouragement of European investment:
- The agreement aims to attract European investment into Australian renewable energy projects. Senator Farrell emphasized the importance of international capital for Australia to extract, process, and add value to its mineral resources.
- Main objectives:
- Identifying and developing projects together.
- Enhancing business links in the critical minerals sector.
- Closer cooperation on research.
- Boosting Australia’s domestic critical mineral sector:
- The partnership is designed to strengthen Australia’s critical mineral sector and help the EU diversify its suppliers for materials necessary for the green and digital transition.
- Reducing over-reliance on China:
- The agreement aligns with broader efforts by the United States, Australia, and Europe to increase domestic manufacturing and reduce dependency on China, which currently dominates the critical minerals supply chain.
- Importance of critical minerals:
- Critical minerals like lithium, nickel, and cobalt are vital for producing batteries and renewable energy technologies essential for achieving net-zero emissions by 2050. These minerals are also crucial for manufacturing microchips and advanced technologies, including defense capabilities.
- Australia’s critical minerals deposits:
- Australia holds significant deposits of critical minerals, including 52% of global lithium production, making it a key player in the global supply chain for low-emission technologies.
Impact and future prospects:
- Positive step towards free trade negotiations:
- The MoU is seen as a positive development towards resuming free trade agreement negotiations, which had stalled over agricultural product discussions. Senator Farrell noted that this agreement reflects the EU’s understanding of the importance of the Australia-Europe relationship, particularly concerning the decarbonization of economies.
- Role in clean energy transition:
- The agreement underscores the pivotal role of Australia’s critical minerals in the clean energy transition, helping both Australia and its export partners meet climate commitments.
