EU ready to take stakes in Australian resources projects, trade commissioner says

By Melanie Burton

MELBOURNE (Reuters) -The EU is prepared to take direct stakes in Australian critical minerals projects and will soon announce a list of projects it will support, EU Trade Commissioner Maros Sefcovic said on Friday.

Sefocvic spoke with Australian resources minister Madeleine King on Thursday about specific projects and ways to finance them to secure supply for the bloc, which he said has been caught short on essential resources like energy in the past few years and forced to overpay.

"We did the first such selection of the projects where we would declare our official interest," Sefocvic told reporters in Melbourne. "That list should be published very, very soon."

The European Union wants access to critical minerals like lithium and rare earths from resource-rich Australia, which are vital to industries spanning artificial intelligence to defence.

Vulnerabilities in the supply chain have come into sharp focus this year with dominant producer China restricting exports in a tit-for-tat trade standoff with the United States.

The EU could finance Australian projects through equity stakes, long-term off-take agreements or joint investments, Sefocvic said.

Financiers would include the European Investment Bank, which agreed to deepen cooperation with Australia in critical minerals this week, as well as national development banks and industrial companies that could pay in advance to secure Australian supply, he said.

Sefocvic said the EU wants to emulate Japan's approach to securing supplies of critical minerals by strategically investing in mines and processing plants.

"We in Europe, we paid so much for dependencies over the last years," he said.

"It started with Russian oil and gas. We know how much we overpaid when we had to diversify very quickly. We see how we are squeezed now on chips and some critical raw materials."

In terms of a free trade agreement between Australia and the EU, "we clearly have momentum," Sefcovic said, adding he expects talks to continue early next year.

A previous attempt to reach a trade deal failed in 2023, with Canberra wanting more ability to sell farm goods in Europe.

(Reporting by Melanie Burton in Melbourne and Renju Jose in Sydney; Editing by Sonali Paul and Kevin Buckland)