The European Union is preparing to take direct equity stakes in Australian critical minerals projects as part of a strategy to secure long-term supplies of key materials for manufacturing and defence industries.
Speaking in Melbourne on Friday, European Commissioner for Trade and Economic Security Maros Sefcovic said Brussels had completed an initial selection of Australian projects in which it plans to declare “official interest”, with the list due to be released shortly. He said the aim was to guarantee access to minerals such as lithium and rare earth elements, which are essential for batteries, artificial intelligence hardware and military technologies.
The announcement comes after several years in which Europe has faced price spikes and shortages in energy and technology supply chains. Sefcovic referred in particular to the EU’s rapid move away from Russian oil and gas after the full-scale invasion of Ukraine, and to more recent strains in semiconductor supply and export restrictions on some raw materials imposed by China. These developments, he said, had shown the costs of relying on a small number of external suppliers.
Under the approach now being developed, EU involvement in Australian projects could take several forms. Options under discussion include equity stakes in mining and processing ventures, long-term off-take agreements securing volumes for European buyers, and joint investments combining public finance with industrial capital. Sefcovic said a mix of European institutions and private companies was expected to participate in the financing.
The European Investment Bank (EIB) is expected to be one of the main financiers. Earlier this week, the EIB’s development arm, EIB Global, signed a declaration of intent with the Australian government to deepen cooperation on critical raw materials, the first step towards enabling EIB funding for projects along the value chain from exploration and extraction to processing and recycling. That agreement builds on an existing EU–Australia framework on raw materials and is intended to support more resilient supply links between the two partners.
National development banks in EU member states are also expected to be involved, alongside European industrial companies that may provide advance payments or long-term purchase commitments to secure Australian supply. According to Sefcovic, the combination of public and private finance is intended to make capital-intensive mining and processing projects more bankable from an early stage.
Sefcovic said EU policymakers were looking closely at Japan’s long-standing practice of taking strategic stakes in overseas mines and processing plants to guarantee supplies of critical inputs. He linked the current initiative to the EU’s Critical Raw Materials Act and wider economic security agenda, which seek to limit dependence on any single supplier or country for materials considered essential to European industry.
For Australia, the prospective investments fit into a broader effort to attract allied capital into projects producing lithium, rare earths, nickel and other battery and magnet materials. Canberra has set out a critical minerals strategy and is engaging with partners on financing tools and reserve arrangements, at a time when China, the United States and other economies are also seeking long-term contracts with Australian producers.
The new investment push is unfolding alongside attempts to revive negotiations on an EU–Australia free trade agreement, after talks collapsed in 2023 over disagreements on agricultural market access and protection for European geographical indications such as Prosecco and certain cheeses. Sefcovic said “momentum” now existed on both sides to return to the table, with another negotiating round envisaged early next year. The EU is seeking better access to Australian critical minerals and lower tariffs on manufactured goods, while Australia is pressing for improved terms for beef and other farm exports into the European market.
Critical minerals have become a central element of those discussions. Australian officials argue that the country’s position as a major supplier of inputs for batteries and permanent magnets should support a more extensive trade relationship, while EU officials view predictable access to these materials as important for industrial plans in areas such as electric vehicles and renewable energy technologies. Some of the proposed investments may ultimately be linked to, or conditioned on, progress in the trade talks.
Sefcovic did not identify specific projects being considered for support, but said the forthcoming list would be based on commercial viability and compliance with EU environmental and social standards. European institutions are expected to prioritise projects that can deliver processed materials suitable for European industry rather than exports of unprocessed ore, in line with efforts to diversify both supply sources and processing capacity.
Further details of the selected projects and financing structures are expected once the list is published and developers begin detailed discussions with European lenders and prospective off-takers. For the EU, the planned move into equity and long-term contracting in Australia marks a shift towards a more direct role in upstream resource investment as it seeks to manage supply risks in critical raw materials.
