Overview of the EU-Australia Memorandum of Understanding on Critical and Strategic Minerals

The European Union (“EU”) and Australia on 28 May 2024 signed a Memorandum of Understanding (“MOU”) to forge a partnership aimed at developing a secure, stable, ethical, and sustainable supply chain for critical and strategic minerals across their respective regions. This partnership aligns with the goals of the Paris Agreement and the ambition to transition to net zero economies by 2050, as well as a key objective of Australia’s ‘Critical Minerals Strategy 2023-2030’ (published in June 2023) to create diverse, resilient and sustainable supply chains through strong and secure international partnerships with ‘like-minded’¹ partners such as the EU. The collaboration is intended to create a framework for the parties to capitalise on development opportunities in respect of the full value chain of these minerals, which are vital for the clean energy sector, digital transition, and industries such as defence and aerospace.

Key Objectives of the Partnership

Key objectives of the partnership include:

• identifying and developing mutually beneficial projects across the entire value chain in both the EU and Australia, including business links and investment support;
• enhancing economic and industrial integration between Australia and the EU in the sustainable and strategic value chain of the critical minerals sector;
• developing open, fair and competitive markets for these minerals, fostering Australia’s domestic sector and enabling the EU to diversify its suppliers;
• cooperating on environmental, social, and governance (“ESG”) standards, including to:
  • align on international pricing in line with ESG standards;
  • increase supply chain transparency, and promote responsible mining through market recognition for high ESG standards;
  • strengthen market opportunities and projects for EU and Australian industry players with proven ESG credentials in the space;
• collaborating on research and innovation to advance technologies in exploration, discovery, observation, extraction, processing, refining, circularity and recycling;
• exploring joint cooperation in third countries with mutual shared interests, focusing on minimizing environmental impacts and benefiting local communities; and
• promoting innovative and digital technologies and services across the entirety of the critical minerals value chain.

Principles and Scope:

The partnership will be implemented under the terms of and in accordance with the existing Framework Agreement², facilitating cooperation across multiple levels, including public and private sectors, and involving a variety of stakeholders. It encompasses the entire value chain from exploration, through development and mine operations to recycling and waste processing.

The MOU sets the framework for cooperation across three key areas:

• integration of sustainable raw materials value chains including the joint facilitation of projects (for example, by way of joint ventures), creation of new business models and promotion and facilitation of trade and investment linkages;
• cooperation on research and innovation along the raw materials value chains to enhance knowledge and minimize environmental and climate impacts; and
• promotion of high ESG criteria and policy alignment, with a focus on worker safety and sustainable production.

Implementation Steps:

The partnership will be implemented within the institutional framework of the Framework Agreement, particularly Article 27. The steps include:

• establishing a Critical and Strategic Minerals Dialogue for officials;
• sharing information to enable partnership implementation;
• developing a Roadmap within six months of signing the MOU to outline specific cooperative actions (including respective parties identifying leading organisations to implement actions); and
• organising regular meetings to review progress, discuss new strategic directions, and endorse the Roadmap.

What This Means for Industry Players

For industry players, this MOU presents a range of opportunities and considerations. While specific actions are yet to be finalised, at a high level, we outline below the key takeaways:

• Facilitate Market Expansion and Investment Opportunities within the respective regions. The MOU encourages the development of mutually beneficial projects and business links (existing and future) between the EU and Australia. Both local industry and global players may find new avenues for expansion and investment support, potentially leading to joint ventures or new business models that capitalise on the integrated economic and industrial landscape between the two regions.
• ESG Compliance and Market Recognition: With a strong emphasis on ESG standards, there is increasing pressure to ensure operations comply with stringent  ESG criteria. Such compliance is not only a matter of regulatory adherence but also a strategic advantage, as the MOU aims to promote responsible mining practices and market recognition for high ESG standards. Industry players with proven ESG credentials may find themselves at a competitive advantage as the partnership progresses, with strengthened market opportunities.
• Supply Chain Diversification and Stability: The collaboration aims to create open, fair, and competitive markets for critical minerals. This could facilitate diversification of supply chains and reduce reliance on single supplier or consumer markets, thereby enhancing stability and resilience in operations going forward.
• Innovation and Technology Advancement: The partnership’s focus on research and innovation along raw materials value chains suggests that industry players should be prepared to invest in or adopt new technologies and practices in exploration, extraction, processing, and recycling to maintain competitiveness and meet the partnership’s objectives. Additionally, this may prove to be an opportunity for leaders within the space to promote their technologies, particularly those aligned with other objectives of the partnership such as the ESG criteria.
• Policy Alignment and Worker Safety: The promotion of high ESG criteria will likely necessitate a review of policies and practices related to worker safety and sustainable production. Industry players will need to align their internal policies with the partnership’s principles to ensure continued access to these markets.
• Collaboration in Third Countries: The MOU also opens the door for cooperation in third countries, which could lead to international expansion opportunities which may not have been previously possible due to, for example, economic or regulatory barriers (especially in regions where the EU and Australia have shared interests).

¹ Australia’s Critical Mineral Strategy 2023-2030 aims to address concerns about China’s current dominance over the critical minerals global supply chains by aligning with partners who share similar aims, including the US, UK, Japan, South Korea, EY and India. China is currently estimated to control approximately 60% of the world’s production of rare earth minerals and materials (see for example: Of Chinese Behemoths: What China’s Rare Earths Dominance Means for the US | Baker Institute). 

² The Framework Agreement between the European Union (EU) and Australia which was signed by then High Representative of the European Union for Foreign Affairs and Security Policy/Vice-President of the European Commission, Federica Mogherini, and former Australian Minister for Foreign Affairs, Julie Bishop, at Manila, the Philippines, on 7 August 2017. The Framework Agreement came into force on 21 October 2022.