The challenges of building resilient supply chains for critical minerals require a different approach to the past 20-30 years, UK industry minister Lee Rowley said at today's Critical Minerals Association (CMA) conference in London.
The UK's increased focus on supply chains for critical metals such as rare earths used in magnets, lithium and cobalt for batteries, and gallium for semiconductors can be directly linked to Covid-19. "When the pandemic hit, the UK was 99pc dependent on China for the supply of personal protective equipment and many of those contracts were just not fulfilled," member of parliament Alex Stafford said. "Today in the critical mineral space I see a twofold threat — the whole world is going green so we could be facing shortages for our local suppliers and we are clearly dependent on China's goodwill for the processing and refining of critical minerals."
A range of government initiatives have been launched including potential support for upstream critical mineral projects in the UK and for the development of midstream processing capacity. "We are also taking a leading role in building a Five Eyes [Australia, Canada, New Zealand, UK, US] critical mineral alliance to co-ordinate a strategy. And we have already seen some discussions with Australia," Stafford said.
The challenges are immense and the window of opportunity to capture rapid growth in demand and technological change is narrow. "The government has historically worked on the downstream but has never looked all the way through the supply chain. And the downstream, midstream and upstream will all need to be built at the same time," CMA founder Jeff Townsend said.
Industry representatives highlighted the many barriers facing market entrants including high electricity and diesel prices and regulatory barriers. And exposure to extreme price volatility.
"Prices for rare earths have risen threefold this year and this is making a lot of projects look very attractive. But we have to ask the question what could happen if prices start to go south," said Ian Higgins, managing director of rare earth alloy producer Less Common Metals. "What can we put in place today? Even if the risk of this is low the potential impact is large."
