A trade deal with the United Arab Emirates could unlock billions of dollars of investment in Australia’s critical minerals mining and processing sector.
Trade Minister Don Farrell is optimistic short, sharp negotiations will see money start flowing as soon as next year.
He flies to Abu Dhabi on Friday for the second round of talks, after officials kicked off discussions in January.
The UAE used its leadership of the UN climate conference in December to announce it would establish a US$30 billion climate-focused investment fund.
Other state-owned companies and funds from the Middle East powerhouse have been linked to $200 billion worth of green energy investments worldwide.
The country has assets worth $2.9 trillion (US$1.9 trillion) in its sovereign wealth funds, according to data provider Global SWF, making it the world’s fourth largest source of investment finance.
Senator Farrell wouldn’t speculate on how much of that money could flow to Australian projects but said the UAE had made it very clear it was keen to invest in critical minerals and processing here.
“What the free trade agreement does is facilitate that process,” he told The West Australian in an exclusive interview before the negotiations.
“Firstly, it’s a sign of goodwill between the two countries that we have signed an agreement. But secondly, it smooths the way for that investment.
“I’m confident that with some goodwill we can make progress, and either by the end of the year, have an agreement or have a pathway to an agreement.”
A trade agreement could offer priority under the foreign investment review board’s rules and create easier dispute resolution.
The minister anticipated investment funds would flow “straight away” after a deal was struck.
Australia’s reserves of critical minerals have been a focus for many countries as they seek to diversify supply chains beyond China’s near-monopoly.
“Although China has very extensively covered the field in terms of critical minerals in world markets, the reality is we are number two in that regard,” Senator Farrell said.
“I think you’ll find that there will be lots of countries around the world who won’t want all their eggs in the one basket and that will look to diversify the relationship.
“The reason that the UAE are keen to invest with us is that they appreciate that there needs to be more than one country supplying these products and Australia’s perfectly situated to do that.”
US Secretary of Commerce Gina Raimondo last year told Prime Minister Anthony Albanese that countries like Australia and America needed to work harder and faster to develop the critical minerals industry because of China’s jump start.
Europe had also planned to tap into Australia’s critical minerals resources, but that was scuttled when talks on a broader trade deal collapsed last year. There are still hopes of a revival.
Senator Farrell anticipated the trade negotiations with the UAE would be simpler, saying some of the barriers, particularly in agricultural areas, that hampered the EU deal were not at issue here.
The EU also saw 25-year negotiations for a trade deal with South American countries fall apart last year.
Some in the Australian government also see landing an agreement with the UAE as a way to send a message to an increasingly protectionist world that there are countries still interested in free and fair trade.
During the week-long visit to the UAE, Senator Farrell will also meet his Chinese counterpart Wang Wentao – the first meeting at ministerial level since academic and writer Yang Hengjun was handed a suspended death sentence in China’s court system for espionage charges.
The Australian minister will also use a meeting of the World Trade Organization conference to push for changes including fixing the dispute settlement system and creating mechanisms for appeal.
