By Mike Foley
Australia and Europe must work together to break China’s dominance over the critical minerals needed for renewables, says the European Union’s energy commissioner.
European Energy Commissioner Kadri Simson said the political bloc had learnt the pitfalls of relying on one country for key commodities when Russia, the EU’s major gas supplier, invaded Ukraine in 2022. Subsequent sanctions and Russia cutting off supply created chaos in the EU.
European Energy Commissioner Kadri Simson met with Australia’s climate and resources ministers.Credit: Wolter Peeters.
The global supply chain of critical minerals must be diversified for jurisdictions like the EU to reach its ambitious climate targets, she said.
“We can only accelerate renewable deployment if we will diversify supply routes for critical minerals,” Simson said.
“It is no secret that we are both concerned about the monopolistic position of some actors in the critical minerals market.”
Critical minerals include rare earths that are needed for electric vehicles and wind turbines, with 80 per cent of the global supply of processed critical minerals coming from China. Lithium, to make rechargeable batteries, is also crucial for green technology but more than 95 per cent of supply is controlled by China.
Australia has some of the world’s biggest known reserves of critical minerals but does not have the capability to process them. It is one of the largest lithium producers and ranks among the top producers of nickel, cobalt, manganese ore and rare earths, but nearly all of it is shipped to Asia for processing before being made into products.
Simson committed to establishing a strategic partnership when she met with Climate Change and Energy Minister Chris Bowen and Resources Minister Madeleine King yesterday.
“[The EU and Australia] are committed to globally diversified, transparent and de-risked markets, to support sustainably and ethically sourced critical minerals, adhering to the highest environmental, social and governance standards,” the joint statement said.
Australian miners would need to secure billions of dollars to open more critical minerals mines and establish processing facilities to compete with China.
“Processing is really a good example where we need additional investments and that brings me to the benefits of an FTA [free trade agreement] because if we will reach an agreement, this helps us to remove excessive investment screening and to scale up the processing,” Simson said.
“The business environment here [in Australia] and the predictability of the legislation is a strong asset.”
“If we will triple the deployment of renewables by the end of this decade, it creates immense business opportunities and we have to make sure that we have access to the critical materials that allow us also to participate in the clean tech side of the green transition.”
Simson said the EU was willing to reopen negotiations on a fair trade agreement, but the deal hit an impasse in October. Both jurisdictions refused to budge on demands for farm exports. Australia wants to export more red meat but this is opposed by powerful agriculture lobby groups in member countries like France, Poland and Ireland.
Negotiations became more important for Australia in March, when the EU and US started work on a plan to kick-start European processing of critical minerals.
US President Joe Biden and EU President Ursula von der Leyen said in a joint statement that the deal would enable critical minerals either mined or processed in Europe and used in the US to make electric vehicles would qualify for the US’ generous tax credit scheme the Inflation Reduction Act, which analysts expect to deliver more than $1 trillion in subsidies for green technology.
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