Australia and EU deepen cooperation on critical minerals amid new regulatory landscape

Over recent years, Australia and the European Union have actively developed an extensive framework of agreements and initiatives aimed at reinforcing cooperation in the critical minerals sector. Central to this effort is the EU’s Critical Raw Materials Act (CRMA), which came into force in May 2024. The legislation sets ambitious goals for the bloc to boost domestic production and processing of critical minerals necessary for the green and digital transitions, defence, and aerospace industries. It mandates that by 2030, the EU should source at least 10 percent of its critical minerals from extraction within its borders, 40 percent through processing, and achieve 25 percent recycling, while capping dependence on any third country’s supply at 65 percent at relevant processing stages.

Complementing the CRMA, the EU has rolled out additional policies such as the Competitiveness Compass, which drives innovation, decarbonisation and resilience, and a battery regulation that enforces sustainability, safety, and recycling standards for batteries placed on the European market. Digital and material traceability projects are also underway to ensure transparency and certification throughout complex supply chains, spanning extraction to recycling.

Against this regulatory backdrop, the EU has sought to diversify its sources of critical raw materials away from overreliance on China. European Commission President Ursula von der Leyen announced the RESourceEU scheme to deepen partnerships with countries including Australia, Canada, Chile, and others. This initiative aims to secure supply chains vital for clean energy and defence while reducing geopolitical vulnerabilities. Simultaneously, discussions among G7 countries about coordinated responses to Chinese export controls highlight the growing geopolitical dimension underpinning critical minerals policy.

Australia has emerged as a pivotal partner in this endeavor. Merely days after the CRMA was implemented, the EU and Australia signed a Memorandum of Understanding on sustainable and critical minerals. This agreement underscores shared priorities to build resilient, transparent, and ethically responsible supply chains. Since then, several Australian-linked projects have received European Commission backing under the CRMA’s Strategic Projects initiative. Notable examples include Vulcan Energy’s geothermal lithium extraction in Germany, Talga Group’s graphite mine in Sweden, and Jervois Finland’s cobalt refinery expansion, projects which signify a European emphasis on value-added, low-carbon processing rather than mere raw material export.

However, Australia’s role is nuanced. While some companies are branching into European processing operations, others, such as Arafura Rare Earths, focus on exporting raw neodymium-praseodymium oxide to Europe under long-term agreements. This distinction illustrates Australia’s dual function as both a supplier critical to Europe’s diversification and as a potential participant in value-chain development.

Broader multilateral cooperation is also intensifying. The European Investment Bank (EIB) and the Australian government signed a declaration of intent in November 2025 to enhance collaboration across the full critical minerals value chain, including exploration, extraction, processing, recycling, and green innovation. This partnership aims to finance projects that align with sustainability and responsible sourcing objectives, thereby bolstering economic security on both sides.

Australia’s engagement with European initiatives extends beyond the EU as a whole to individual member states. France and Australia inked a bilateral agreement in late 2023 focused on joint studies of critical mineral needs for clean energy, defence, and medical technology. Germany and Australia similarly committed to feasibility studies on sustainable supply chains earlier in 2023, examining raw materials, projects, and environmental, social, and governance (ESG) standards critical for joint investment opportunities.

Despite these promising advances, the partnership faces notable challenges. The structural costs of reconciling Europe’s stringent regulatory environment with Australia’s relatively high-cost operational context risk inflating production expenses and delaying project approvals. This tension threatens commercial viability in a fiercely competitive global market, underscoring the necessity for practical policy innovations and risk-sharing mechanisms beyond political declarations.

Moreover, while the EU advances projects aimed at transitioning from raw material extraction to processing within its borders, Australia’s natural comparative advantage remains in resource extraction. Bridging this divide requires concerted efforts to foster downstream processing capabilities in Australia, while maintaining the economic sustainability of supply chains.

In summary, Australia and the EU have laid a robust foundation for collaboration on critical minerals, anchored in mutual geopolitical and economic imperatives to reduce Chinese dominance and secure clean energy supply chains. Supported by flagship initiatives like the CRMA, the RESourceEU scheme, and EIB financing commitments, this partnership holds significant potential to underpin industrial decarbonisation efforts in both regions. Yet, its ultimate success will depend on overcoming regulatory and cost challenges to create a resilient, sustainable, and commercially attractive ecosystem for critical minerals investment and innovation.