‘Get moving or you’ll miss the boat,’ Australian resources minister tells EU
Talking to journalists in Brussels on Tuesday (26 September), the Australian Minister for Resources and Northern Australia Madeleine King argued for more European investments into the Australian critical minerals sector, criticising the EU’s insistence on banning dual pricing in the free trade negotiations between the EU and Australia.
With China in a dominant position and Japan and the US increasing their investments in the Australian raw materials sector, European companies were behind the curve, King said.
“I’ve met with them, and they are changing their mindset, but I think they just need to change it a bit quicker,” she said, arguing that American competitors were much faster in increasing their investments.
“I’m just here to tell you, you know, get moving, or you will miss the boat,” she told the Brussels journalists.
De-risking close to impossible
Australia has large deposits of lithium, nickel and other minerals crucial for the green transition.
“We’re the largest producer of lithium,” King said, adding that 96% of the lithium spodumene produced in Australia was going to China for refining.
China dominates the processing of many minerals, which has caused the EU, the US, and other countries to try “de-risking” their supply chains from their dependency on China.
Asked whether it was even possible to de-risk to an extent that China would not have a strategic dominance in these sectors, the Australian minister said: “Probably not. They are two decades ahead of the rest of the world, they’ve invested in this capacity.”
“And in some respects, I think the Western world has outsourced its mining and mineral processing to China because they’ve chosen not to do it,” King said.
Australia’s reaction to the Chinese dominance is investing in its processing capabilities. However, Australia needs foreign investors to make the necessary capital for that.
Access to critical minerals is also one of the main motivations for the EU to negotiate a free trade agreement with Australia. The negotiations are ongoing even though the Australian trade minister Don Farrell startled EU negotiators when he abruptly stopped visiting Brussels in July, arguing that more internal consultations were needed.
Australia wants more from the EU in exchange for its minerals
Negotiations for a free trade agreement (FTA) between the EU and Australia are stalling as Australia wants to leverage its wealth in critical raw materials to get more access for its meat and sugar industry.
Show some respect
Next to the traditionally tricky questions around agricultural market access, the EU and Australia also fight over so-called dual pricing.
The EU would like to have access to Australian resources under the same conditions as Australian consumers. It wants Australia to commit to a policy prohibiting dual pricing that disadvantages EU companies compared to Australian ones.
But Madeleine King is having none of it.
“That is not a fair thing, I think, for the European Union to have put to Australia,” she said, arguing that Australia needed to be able to shield its citizens from strong price fluctuations and help its industry develop.
One of the dual pricing policies in question is the regional government of Western Australia’s policy of reserving 15% of liquified natural gas production from each LNG export project for the domestic market, which reduces prices for domestic gas consumers.
“We do need to make sure there is gas available for local manufacturing and affordable gas for local people,” King said.
“I hope that the European Union and the commissioners undertaking the negotiations can understand that and perhaps show some greater respect for the Australian resources sector.”
Not everybody can have all of the raw material supply chain
The EU’s discussions with Australia over “double pricing” of raw materials during the negotiations for a free trade agreement (FTA) point to a conflict of goals in the EU’s approach to ensuring its supply of critical raw materials.
Managing expectations on green hydrogen
Another sector that the EU is interested in is Australian green hydrogen. With Australia having an abundance of sun and wind energy at its disposal, it could be a promising producer of green hydrogen that energy-intensive industries in Europe are hoping for as a way to decarbonise their production.
In 2022, for example, the German and Australian governments launched a “German-Australian Hydrogen Innovation and Technology Incubator” (HyGATE) to build a green hydrogen supply chain between the two countries until 2030.
While Minister King sees a lot of potential for the domestic use of hydrogen, she was very cautious about getting hopes for green hydrogen export too high.
“The export side of things is still, I think, a long way away,” she said, arguing that “the science isn’t there yet.”
“A whole new export infrastructure [is] required that is not yet invented, though a lot of effort is going into that.”