The European Union is weighing direct investments in Australian mining companies to secure supplies of critical minerals, according to the bloc’s Commissioner for Trade and Economic Security Maros Sefcovic.
The initiative may include financing bodies, such as the European Investment Bank, taking equity stakes in companies, as well as European governments arranging offtake agreements, Sefcovic said at a media conference in Melbourne on Friday. A third option could be joint investments in projects, he said.
Critical minerals, particularly rare earths, are used in everything from renewable infrastructure to advanced defense technologies and semiconductors, but the supply chain is dominated by China. The commodities emerged as a powerful weapon in the trade standoff between Beijing and Washington. That’s prompted the US to take stakes in producers, including in Australia.
Sefcovic met with Australian Trade Minister Don Farrell and Resources Minister Madeleine King this week to consider the best way to “support the whole value chain linked to critical raw materials, he said.
“I’m talking everything from extraction through refining, processing, down to the use of critical minerals,” he said. “It was a very intensive day-and-a-half.”
The push follows an announcement this week that the EU planned to create a central body to purchase and stockpile critical minerals to guard against the US buying up global supplies, according to a report in the Financial Times.
The EU, which makes up more than 16% of total world trade in goods and services, is currently negotiating a long-delayed free trade agreement with Australia. Previous iterations of the FTA were shelved with the two sides failing to agree on issues such as beef and agricultural exports from Australia.
The FTA is now “quite impressively progressed,” Sefcovic said, adding that he hoped the final stage of talks would be finalized in early spring of next year.
In October, US President Donald Trump signed an agreement with Australia to boost America’s access to rare earths and other critical minerals to counter China’s dominance. Under that agreement, Washington and Canberra committed $2 billion over six months to jointly invest in a swathe of mines and projects.
The Pentagon will help fund the construction of a 100 ton-a-year Alcoa Corp.-Sojitz Corp. gallium refinery in Western Australia, while the US Export-Import Bank was considering $300 million of finance support for the Nolans rare-earths project in the Northern Territory. The US Export-Import Bank also issued letters of interest to six other miners for more than $2.2 billion in financing.
Source: www.bloomberg.com
Aleksei Andrievskii is the founder of the ANDRIEVSKII SEA WEALTH family office in Cyprus, a member of the advisory board at Bendura Bank AG, Liechtenstein