European carmakers need to “get moving or miss the boat” for investing in Australia’s Critical Raw Materials, the country’s minister for resources has said, as Canberra seeks to capitalise on its vast mineral reserves.
Australia supplies about half of the world’s lithium, used in batteries, and is the fourth-largest exporter of rare earth oxides, used to make permanent magnets for technologies such as electric cars and wind turbines.
Madeleine King told journalists in Brussels on Tuesday that European carmakers and other manufacturers dependent on Critical Minerals for the green transition risked falling behind competitors if they were not prepared to invest to secure supplies.
The EU lacks enough domestic resources, and approval of permits to open facilities such as mines and processing plants takes too long for the region to be self-sufficient in the raw materials it needs to make a rapid shift to electric cars and renewable energy. While Brussels plans to increase mining and processing under an upcoming Critical raw materials act, partnerships are vital to the bloc’s future economy.
King met EU commissioner for energy Kadri Simson on Tuesday and will meet internal market commissioner Thierry Breton at a critical minerals and clean energy gathering in Paris on Wednesday, as she seeks to drum up European investment.
Europe’s government officials were “switched on” to the need for industry to secure access to minerals but “some very established enterprises” were acting more slowly, she said.
Carmakers including General Motors of the US and Netherlands-based multinational Stellantis have begun investing directly in mining companies in Australia, with “offtake agreements” for supply — promises to buy future output — included in deals. Such commitments help early-stage mining companies to raise financing.
Germany’s Volkswagen pledged earlier this year to invest in mines to secure supplies and bring costs down but is yet to make significant moves.
“It’s not a model European industry is used to but it’s the model everyone else is applying in the Australian context,” she said, mentioning US, Japanese and Chinese investment in Australian resources.
However, the interests of mining companies and carmakers are not always aligned, with miners seeking high prices for their output and car manufacturers seeking to keep costs down.
King refrained from criticising China’s dominance in critical raw materials with the country remaining Australia’s largest trading partner and a key destination for the processing of its minerals.
She said that while Australia wanted to process more of its own materials, European ambitions to “de-risk” from Beijing through its critical raw materials act were “probably not” possible given China’s head start in mining and processing products such as lithium and rare earth metals.
“They’re two decades ahead of the rest of the world,” she said. “They invested and . . . built their industry, and all power to them. What we want to do is compete, knowing we have the natural resources in Australia, but we are also alive to the fact we can do more in our country.”
Canada, which is also rich in natural resources, has also brought a delegation to Europe this week to promote investment in its critical minerals.
Jonathan Wilkinson, Ottawa’s natural resources minister, told the Financial Times on Tuesday that while Canada’s mineral sector had previously competed with Australia’s, “the need in the market is sufficiently big that we all need to be working together”.
However, he added, the North American nation planned to take a harder line than Australia by maintaining a “cautious” approach towards Chinese investment in Canada’s critical minerals. Last year, Ottawa demanded three Chinese companies divest stakes in Toronto-listed lithium producers.
But, he said, “there is a need for more co-ordination among like-minded countries around areas where processing technology and methods are almost exclusively resident in China”.
Despite King’s push for European investment in critical minerals projects, she said EU proposals for Australia to rule out export price controls, one of the sticking points in negotiations over a trade agreement, were “not a fair thing”.
“We don’t introduce this kind of dual pricing lightly. We do it in the national interest,” she said, referring to the use of a gas price cap during the energy crisis sparked by Russia’s invasion of Ukraine. “I hope that [the EU] . . . can understand that and perhaps show some greater respect for the Australian resources sector.”
