Australia only produces one per cent of the world's batteries despite having half of its critical minerals and the kickstarting of a $15 billion fund is aiming to change that.
The government's National Reconstruction Fund is starting to bankroll onshore projects to boost local manufacturing in areas such as resources, medical science, renewable technology and defence.
A major focus will be on growing local businesses and companies solely or majorly based in Australia as China works to restrict access to some critical minerals and supply chains.
Industry Minister Ed Husic pointed to a new memorandum of understanding with Indonesia, with the Southeast Asian nation looking to produce more electric vehicles and Australia aiming to build more batteries onshore.
"The reality is we are very dependent on one country doing all that processing, notably China," he told reporters in Canberra on Thursday.
"We have seen that some of the decisions that they do make can have an impact on the way those supply chains work.
"We want to be able to, through the NRF, diversify and transform the economy and reduce our dependency on some of those countries."
Mr Husic said the fund's investment mandate was deliberately left broad to give it flexibility in making decisions and being able to fund innovative projects and ideas that can then be manufactured at scale.
"We've been saying to our innovators, to people that are thinking about coming up with the great ideas that can give our economy muscle long term ... they should not feel like the only way to get ahead is to leave Australian shores," he said.
The coalition opposed the fund, citing the risk of an inflationary impact and productivity stalling through the use of equity instead of grants.
