The European Union is increasingly focusing on Australia to secure access to critical raw materials and reduce its dependence on China. This comes against the backdrop of this year’s supply chain issues, where China, as a dominant producer, has used export restrictions as leverage in its trade conflict with the USA. Against this backdrop, EU Commission Vice-President Maroš Šefčovič outlined how Europe intends to invest more heavily in Australian critical raw material projects in the future – ranging from equity participations and long-term off-take agreements to joint infrastructure initiatives.
Šefčovič made it clear that the EU’s focus is no longer solely on trade in the classical sense. Instead, targeted capital commitments and binding supply agreements are intended to secure the supply of critical raw materials in the long term. For Brussels, Australia is a key partner, possessing large reserves and stable political frameworks, and aiming to expand its role as a supplier of strategically important raw materials.
Critical Raw Materials: Europe Seeks Way out of Old Dependencies
The discussion surrounding critical raw materials has intensified significantly in Europe. Initially, the focus was primarily on energy supply: the strong dependence on Russian oil and gas led to a costly and hasty restructuring of energy flows following the outbreak of war in Ukraine and the subsequent sanctions. Šefčovič recalled how expensive this unilateral dependence ultimately proved for Europe when alternative suppliers had to be found in a short period.
Today, the pattern is repeating in other sectors. For semiconductors, battery materials, and a range of rare metals, Europe is once again heavily reliant on imports from a few countries. China plays a central role in this, whether for rare earths, individual battery raw materials, or in further processing. If Beijing tightens export controls or introduces new licensing requirements, this affects not only the USA but also European industries indirectly.
Critical raw materials are more than just a buzzword. They are materials indispensable for key technologies such as electromobility, renewable energies, digital infrastructure, or defense. Their availability is a decisive factor in whether industrial value chains remain stable or falter. The EU is therefore trying to learn from the experiences of recent years and limit new dependencies early on.
Australia as a Strategic Partner for Critical Raw Materials
In this strategy, Australia is moving into the spotlight as a reliable supplier of critical raw materials. The country possesses significant deposits, for example of lithium, rare earths,
Šefčovič outlined several possible financing avenues. Firstly, equity participations in raw material projects, through which European partners directly contribute to the expansion of mines and processing facilities in Australia. Additionally, long-term off-take agreements are being discussed, where European companies or public institutions secure supply volumes for many years and, in return, provide capital early on. Joint investments are also conceivable, where European and Australian partners jointly finance and utilize infrastructure or facilities.
The European Investment Bank could play a central role in this. The EIB has just agreed to deepen its cooperation with Australia in the field of critical raw materials. It could, along with national promotional banks and development institutions, provide capital to kickstart projects in mining and processing. Additionally, industrial companies that wish to secure their supply of critical raw materials long-term through advance payments or participations are also being considered.
Japan as a Role Model and the Opportunity for an EU-Australia Free Trade Agreement
For Šefčovič, Japan serves as a reference model for what such a raw materials strategy could look like. For years, Tokyo has been strategically investing in mines and refineries in partner countries to ensure its own industry can be supplied with critical raw materials even in times of crisis. The EU is now pursuing a similar approach: moving away from a purely market-based procurement policy towards strategic participations along the value chain.
Against this backdrop, the planned free trade agreement between the EU and Australia is also gaining new significance. An initial attempt failed in 2023, primarily due to differences in agricultural policy, as Canberra demanded greater access for agricultural products to the European market. However, Šefčovič now sees renewed “momentum” for new talks. He expects negotiations to resume early next year.
A trade agreement could reduce tariffs, improve investment protection, and more clearly define the framework for long-term partnerships in critical raw materials. It would be easier for European companies to direct capital into Australian projects, while Australia, in return, would gain preferential access to the EU market. Political signals indicate that both sides have a strategic interest in rapprochement, not least with regard to China’s role in the global raw material system.
Critical Raw Materials as a Touchstone for Europe’s Industrial Policy
The debate surrounding critical raw materials is also a test case for the EU’s future industrial and trade policy. Šefčovič made it clear that Europe does not want to find itself in a situation again where it has to organize costly replacement solutions within a very short time, as was the case with oil and gas. The pressure from export restrictions, supply chain risks, and geopolitical tensions is forcing the EU to rethink its previous role as a predominantly passive market participant.
