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A secure and sustainable supply of critical raw materials (CRMs) is at the core of the Union’s green and digital transitions and is vital for increased EU security and defence capabilities. While the EU is working to increase its capacities in extracting, processing and recycling of CRMs, it will continue to rely on imports in the foreseeable future. These imports are at risk of disruption by sudden economic or geopolitical shocks, such as Russia’s unprovoked invasion of Ukraine, export restrictions imposed by China, or the conflict in Iran.
Australia is a resource-rich country with significant production capacity and reserves of a number of CRMs, such as lithium, manganese, titanium, aluminium/bauxite and cobalt. The EU-Australia Free Trade Agreement is therefore instrumental in securing and diversifying CRM supplies and increasing EU CRM supply chain security and flexibility, as it will safeguard continued EU access to Australian-sourced CRMs. Moreover, it will also guarantee that these are sourced in a sustainable, socially responsible and safe manner, thanks to the agreement’s tailor-made sustainability provisions.
Until now, the EU and Australia have cooperated on CRMs through a 2024 Memorandum of Understanding, which promotes joint CRM projects and activities in the area of research and innovation as well as sustainability. The FTA will complement and reinforce these activities by ensuring a smoother flow of CRMs between the EU and Australia, with both strands of cooperation working in tandem to achieve more secure and integrated CRM supply chains.
Key critical raw materials and other resources in Australia
| CRM | Australia’s share of global production | EU Import Reliance1 | Use |
|---|---|---|---|
Aluminium/ bauxite | 28% of extraction | 55% | Bauxite: aluminium production Aluminium: transport, construction, packaging, engineering, consumer durables |
| Manganese | 16% of extraction | 96% | Steel-making Batteries |
| Copper | 4.4% of extraction | 48% | Electrical transmission Construction |
| Cobalt | 3.9% of extraction | 81% | |
| Tantalum | 2.1% of extraction | 99% | Capacitors for electronic devices Super alloys |
| Lithium | 53% of extraction | 100% | Batteries Glass and ceramics Steel and aluminium metallurgy |
| Nickel | 5% of processing | 75% | Batteries Steel making Automotive |
1 Annex 1, Critical Raw Materials Overview, p.47 -50, Study on the Critical Raw Materials for the EU, 2023
Source: Study on the Critical Raw Materials for the EU, 2023 unless indicated otherwise
A deal with mutual benefits on critical raw materials
Lower EU tariffs on critical raw materials means:
- More exports from Australia to the EU
- Cheaper imports = reduced costs = higher EU competitiveness
Lower EU tariffs on products made from critical raw materials means:
- Incentive for Australia to develop local production of value-added products
More security and predictability of supply chains:
- No export restrictions.
- No export monopolies.
- No export taxes.
- No requirement to transform the materials locally.
- No cartels or state-owned enterprises that can limit prices or access to exports.
- No discrimination in export licensing or in domestic price regulation.
- Enhanced market access.
- A rebalancing mechanism to protect the EU in case of dual pricing from Australia.
- Cooperation on critical and strategic raw materials and their supply chains, with a focus on supply chain integration, responsible mining practices, sustainability, and research and development.
- Cooperation on promoting the integration of Australia and EU raw materials value chains, including through potential future joint investment projects.
More opportunities for investment and greater cooperation in CRM
- EU firms will have a right of establishment and face no discrimination to invest in Australia’s industries.
- The agreement will facilitate EU investment in sustainable critical and strategic raw materials and the integration and development of their respective value chains.
- Australia and the EU have agreed to enhance cooperation on critical raw materials, including through the possibility of jointly developing projects.
Sustainability and social responsibility at the heart of critical raw materials trade
The EU-Australia agreement will ensure one of the highest sustainability standards in critical raw materials trade and investment, through:
- A dedicated trade and sustainable development chapter.
- A joint commitment to carry out environmental impact assessments for any CRM projects and to cooperate on responsible mining practices and resource value chain sustainability.
- Promoting corporate social responsibility in accordance with internationally recognised standards.
- Upholding the rights of indigenous people and facilitating their participation in the energy transition.
- No exemption from companies’ obligations to comply with relevant environmental and labour legislation in the country concerned.