Australia and EU seal trade deal to cut reliance on China’s rare earths

EU’s Von der Leyen says critical minerals partnership is ‘crucial’ as China dominates supply chains.

Australia and the European Union have signed a trade deal removing tariffs for nearly all exports of Australian critical minerals, amid concerns over China’s dominant position in the supply of rare earths.

European Commission President Ursula von der Leyen on Tuesday said the deal, which was eight years in the making, meant the EU and Australia were “moving even closer together”.

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“We ⁠cannot be over-dependent on any supplier for such crucial ingredients, and that is precisely why we need each other,” von der Leyen told Australia’s parliament.

“For both Europe and Australia, getting China right is a strategic imperative, and this is why bringing to life our critical minerals partnership will be crucial to our success.”

China dominates global critical mineral supply chains, controlling roughly 90 percent of processing for rare earths, which are essential for the production of technological equipment such as electric cars, lithium-ion batteries, LED televisions and camera lenses.

Australian Prime Minister Anthony Albanese said the removal of almost all import tariffs on Australian critical minerals into the EU would help stabilise global supply chains.

The agreement will also remove more than 99 percent of tariffs on EU goods exports to Australia, cutting 1 billion euros ($1.2bn) a year in duties for companies. EU exports to Australia are now expected to grow by up to 33 percent over the next decade.

Albanese told a news conference that the agreement would be worth about 10 billion Australian dollars ($7bn) annually to the Australian economy.

Trade between the two sides is substantial, with EU firms exporting 37 billion euros’ ($43bn) worth ‌of ‌goods to Australia in 2025 and 28 billion euros ($33bn) of services in 2023.

As a bloc, the EU was Australia’s third-largest two-way trading partner in 2024 as well as the sixth-largest export destination, official data showed. The bloc was Australia’s second-largest source of foreign investment in 2024.