Australian Trade Minister Don Farrell and Resources Minister Madeleine King signed the memorandum of understanding with EU Trade Commissioner Valdis Dombrovskis and Internal Market Commissioner Thierry Breton on Tuesday.
Talks between officials from both sides will be established under the pact, as will greater information sharing and a roadmap outlining specific actions and areas of co-operation will be developed within six months, the memorandum stipulates.
Don Farrell says the partnership will draw European investment to Australian clean energy projects. (Lukas Coch/AAP PHOTOS)
The partnership would encourage European investment into Australian renewable energy projects, Senator Farrell said.
"Australia's problem is this, we're a big country with a small population, we need access to capital," he told AAP after signing the memorandum.
"We've always needed access to capital to extract and, in particular, process and get some upstream value out of the minerals."
"Investment from our international partners is vital."
The signed agreement lists seven main objectives including identifying and developing projects together, enhancing business links in the sector and closer co-operation on research.
The memorandum also paves a path to boost Australia's domestic critical mineral sector and "enable the EU to diversify its suppliers for materials necessary to achieve the green and digital transition".
The United States and allies such as Australia and Europe are trying to increase domestic manufacturing to stop an over-reliance on China, which dominates the supply chain and has subjected nations to economic coercion.
Critical minerals of importance including lithium, nickel and cobalt are used in the production of batteries and other renewable energy technologies considered key to achieving net-zero emissions by 2050.
"The EU and Australia recognise that sustainable critical and strategic minerals play an essential role in the development of a net-zero economy," the memorandum of understanding said.
The minerals are also used for microchips that power computers and advanced technologies as well as defence capabilities.
Australia houses some of the world's largest critical minerals deposits, including 52 per cent of global lithium production.
"Those advantages will be crucial to help develop and grow the low-emissions technologies that will help the world to lower emissions and to help Australia and our export partners achieve our climate commitments," Ms King said.
"The clean energy transition will ride on the back of Australia's critical minerals."
The inking of the memorandum "augurs well" for negotiations to restart on a full free trade agreement, Senator Farrell said, after an impasse in negotiations over agricultural products.
"This is a very positive step from (the) Europeans on our way back to fresh negotiations," he said.
"It's pretty clear that the Europeans understand the importance of the relationship between Australia and Europe. particularly as it relates to the decarbonisation of our respective economies."
