Demand for critical metals like lithium and cobalt has soared in recent times due to their usage in electric vehicles amid a global push towards cleaner sources of energy to tackle climate change.
At the same time, countries like the United States, Australia and India are pushing to develop new sources of critical minerals to counteract China's dominance over those supply chains.
Minister Madeleine King said Australia would commit A$5.8 million ($3.98 million) towards a three-year investment partnership, while signing an agreement between critical minerals firm Khanij Bidesh India Ltd and the Critical Minerals Facilitation Office of Australia (CMFO).
Both the Indian company and CMFO will jointly fund a due diligence study in lithium and cobalt mineral assets of Australia with an initial amount of $6 million.
"Once the due diligence is completed and potential projects are identified, we will explore investment opportunities through different methods as envisaged in the MoU (memorandum of understanding)," said minister King.
($1 = A$1.46)