SYDNEY, Oct 27 - The European Union expects a wave of investment into the Australian critical minerals sector as it pushes to diversify its supply chain away from China, the bloc's ambassador to Australia Lawrence Meredith said on Tuesday.
Australia and the European Union struck a free trade agreement in March after eight years of negotiations, removing tariffs on almost all goods and easing EU access to Australian critical minerals.
Once both parties sign and ratify that agreement, expected early next year, a 5.5% EU tariff on critical minerals will be removed.
"It is going to be a game changer," Meredith said.
In parallel, talks are "very close" for Australia to sign a memorandum of understanding with the European Investment Bank, which would act as the bloc's funding vehicle, Meredith added.
"The European Union will be massively investing in critical minerals. Since we wish to diversify away from China, then one of the most likely partners has to be Australia," he said.
EU policy proposals have laid out as much as €10 billion ($11.2 billion) for critical raw materials within the larger €409 billion competitiveness fund, as the EU debates its budget from 2028 to 2034.
Australia is one of several critical minerals "superpowers" in which the EU is looking to invest, including Brazil, South Africa and Canada. The EU also expects to invest along the supply chain, including in processing, Meredith said.
Australia said on Tuesday it would refresh its critical minerals strategy to place greater emphasis on refining and processing, as competition for investment intensifies and supply-chain concerns persist.
The bloc is looking initially at the minerals that Australia will prioritise for its strategic reserve: gallium, antimony and rare earths.
Australian companies going faster through the early project development would speed the investment process, he said.
"(The FTA) is a signal that Europe wants to do far more with Australia. We also have a security and defence partnership. A lot of that is dual technology, and it requires precisely these critical minerals," he said.
The European Union plans to mobilise €800 billion into defence under ReArm Europe by 2030.
Australia is also on track to join the EU's flagship funding program for research and innovation, Horizon Europe, next year.
Meredith said 2026 had been a "transformational" year for Australian-EU relations.
"You've seen a big surge in EU-Australia in 2026, and I'm very confident we will go to the next level in 2027." REUTERS