How ambitious is the UK’s critical mineral strategy?

In November, the UK government released its much anticipated critical mineral strategy: Vision 2035. In it, the government defines a list of minerals which it has determined are critical and/or important for growth.

Within the strategy, the Department for Business and Trade sets out a target that by 2035, 10% of the aggregate annual demand for critical minerals in the UK should be met by domestic production, 20% by recycling and that no more than 60% of critical mineral demand be met by a single country. The strategy specifically sets a higher target for lithium, aiming to produce 50,000 tonnes LCE domestically by 2035.

To support these goals, the UK wants to increase international collaboration, provide more funding, improve access to finance and further develop the Critical Minerals Intelligence Centre.

Can the UK meet these targets?

On an aggregate level, the UK government states the country is on track to meet 6% of its critical mineral demand from domestic production and 18% from recycling by 2035. Whilst more investment is needed to boost these numbers, the strategy doesn’t look unachievable on this basis.

Using data from Benchmark’s forecasts, Source analysed how the UK’s production of select battery and energy minerals compares to the demand from the battery and magnet sector. Although the targets are aggregate, this analysis shows that significantly more development and investment are needed in the battery upstream to meet growing demand from electric vehicles and energy storage.

For most minerals in the battery and magnets space, the UK has no production and very few projects beyond the early stage mark. Nickel and lithium are the notable exceptions. For nickel, there is Vale’s Clydach Nickel Refinery in Wales, and there is a range of lithium projects in Cornwall and the North East.

In the case of lithium, the data clearly show that whilst the forecast production of lithium falls short of the 50,000 tonne target, if investment can be found to bring planned projects to fruition it is possible to meet and surpass the target for lithium chemical production.

On the recycling side, the existing pipeline of recycling projects in the UK is insufficient to meet the 20% target. However, analysis by the Benchmark Recycling Service suggests that the 2035 scrap pool contains sufficient material to meet the targets for nickel, cobalt, and manganese.

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What plans are there to bolster the supply of critical minerals?

Meeting the domestic production targets will require significant investment from both public and private sectors, though the targets are not legally binding (but politically significant).

Government funding remains key to derisk domestic and overseas critical mineral projects, with a view to attracting the necessary private capital and, in turn, unlocking future supply. Notably, a new government commitment to allocate up to GBP50 million (US$67 million), channelled through the Department for Business and Trade, has been announced to support early-stage domestic critical minerals projects and to be deployed alongside other existing public funding mechanisms, such as the National Wealth Fund (NWF) and the UK Export Finance (UKEF).

While the UK can deploy equity support domestically through the NWF, providing equity finance internationally would help to derisk overseas projects and unlock international supply to UK-based downstream players. This requires a widening of the NWF’s mandate, in line with UKEF’s mandate, which has already been expanded, enabling it to support overseas critical minerals projects through guarantees, loans, and insurance. Finally, unlike the US, Canada, and the EU, the UK reportedly has no plans to introduce price support mechanisms, such as price floors.

Although the need for supply diversification through international partnerships is strongly acknowledged, as the UK will remain highly reliant on critical mineral imports, the strategy remains rather vague on a detailed international partnership framework and policy instruments. In this light, active multilateral participation in the G7, the Mineral Security Partnership (MSP), and other fora, as well as the deepening of existing and future bilateral cooperation, will be vital.

The analysis in this article draws on the in-depth data collected by our in-house team of experts. To learn more about the services that Benchmark offers, please fill out the form below and one of the team will be in touch.