UK launches first critical minerals strategy

The UK government has released its critical minerals strategy, which sets out how the country will secure critical mineral supply chains to ensure the energy transition, Secretary of State for Business, Energy and Industrial Strategy Kwasi Kwarteng said July 22.

The strategy aims to accelerate growth of the UK's domestic capabilities, collaborate with international partners and enhance international markets to make them more responsive, transparent and responsible, Kwarteng said in the foreword of the strategy report

"Critical minerals will become even more important as we seek to bolster our energy security and domestic industrial resilience – in light of Russia's illegal invasion of Ukraine – and as we move away from volatile, expensive fossil fuels," he said, adding that by 2040, global demand for critical minerals for clean energy technologies was expected to be four times higher than today.

"However, critical mineral supply chains are complex and opaque, the market is volatile and distorted, and China is the dominant player," Kwarteng said.

"This creates a situation where UK jobs and industries rely on minerals vulnerable to market shocks, geopolitical events and logistical disruptions, at a time when global demand for these minerals is rising faster than ever," he added, saying that it was "vital," for the UK to make its supply chains more resilient and more diverse to support future British industries, deliver on the energy transition and protect national security.

To support the launch of the strategy, the British Geological Survey carried out its first criticality assessment and defined a list of highly critical minerals for the UK. These include cobalt, graphite, lithium, magnesium, palladium, platinum, rare earth elements, silicon, tin, tungsten and vanadium.

The list also includes antimony, bismuth, gallium, indium, niobium, tantalum and tellurium.

The Department for Business, Energy & Industrial Strategy's Critical Minerals Expert Committee also compiled its first watchlist of minerals deemed to be increasing in criticality, which include manganese, nickel, iridium, phosphates and ruthenium.

Supply chain challenges

Some supply chain challenges mentioned in the strategy report, among others, were global demand growth due to decarbonization targets likely outstripping supply chain capacity, due to long lead times for mine development and mineral processing. Higher demand had already caused lithium prices to increase exponentially in 2022.

This is especially true for lithium prices, with Platts' seaborne lithium carbonate and lithium hydroxide assessments up 111.2% and 136.6%, respectively, since the start of 2022 at $71,400/mt CIF North Asia and $75,000/mt CIF North Asia as of July 21, according to S&P Global Commodity Insights data.

Critical minerals are also often by-products or co-products of mining for other commodities, leading to disconnected supply and demand, while the mining and processing of these minerals was highly concentrated in certain geographies, creating supply constraint risks and price volatility due to geopolitical events or logistical disruptions.

Other challenges included the opacity and volatility of critical minerals making their supply chains are complex, pressure to substitute materials likely becoming detrimental to the development and adoption of the clean energy technologies, and environmental, social and governance performance, or ESG, issues.

Accelerate, collaborate, enhance approach

Through the government's accelerate, collaborate and enhance approach, the strategy aims to accelerate domestic capabilities by maximizing what can be produced domestically, rebuild mining and minerals skills, conduct research and development to solve critical minerals supply chain challenges, and accelerating a circular economy of critical minerals in the UK by increasing recovery, reuse and recycling rates and resource efficiency to reduce pressure on primary supply.

"We will maximize what the UK produces along the critical minerals value chain – through mining, refining, manufacturing and recycling – in a way that creates jobs and growth and protects communities and our natural environment," Kwarteng said.

Under the strategy, the UK will collaborate with international partners to diversify supply globally to be more resilient, as well as support UK companies participating overseas in diversified responsible and transparent supply chains, and develop diplomatic, trading and development relationships to improve the resilience of supply to the UK.

The UK aims to enhance international markets by boosting global ESG, which in turn will reduce the vulnerability to disruption and level the playing field for responsible businesses, as well as using improved data and traceability to develop well-functioning and transparent markets, and championing Champion London as the capital of responsible finance for critical minerals.

"The strategy sets out our ambitions to work with other countries to strengthen trading and diplomatic relationships, and efforts to make supply chains more diverse, transparent, responsible and resilient," Kwarteng said, adding that this would create opportunities for UK companies overseas and make sure UK businesses traded on a level playing field.