The European Union signed an agreement with Australia to secure the supply of raw materials for solar panels and chips

The European Union and Australia have concluded an agreement to strengthen cooperation and investment in key mineral sectors. The partnership is a response to China's dominance of the supply chain of materials essential for high-tech and green manufacturing.

Ministers from Canberra and Brussels signed a memorandum of understanding (MOU) on Tuesday to work together over the next six months to develop "concrete actions" to improve cooperation on key mineral projects.

Eu Trade Commissioner Valdis Dombrovskis said in a statement: "Australia is a like-minded partner and global leader when it comes to key raw materials... This partnership will give the EU more sustainable access to key raw materials, while also boosting Australian investment."

The United States and its Allies have struggled in recent years to find alternative sources of key minerals such as lithium, cobalt and nickel, which are used to make products such as computer chips, solar panels and military equipment. China currently controls most of the supply, and given the increased strategic competition between Washington and Beijing, the United States could be at risk of export restrictions.

Securing supplies of key materials has become a serious concern for the EU because of fears that China is "weaponising" its dominance in the sector.

Australia has large deposits of several key minerals that are largely untapped and has tried to develop its domestic industry through financing tools and tax incentives, including new measures announced in the May budget.

Under a memorandum of understanding signed Tuesday, Australia and the EU will seek to increase investment in key mineral projects, including joint ventures, and collaborate on research and innovation.