In this article Liane Hartley, NPC Consultant explores the challenges of securing access to the critical raw materials that the UK needs to make the transition to a zero carbon economy and future, and what UK policy makers can learn from the approaches other countries have taken to secure their access to these materials.
In June 2019, the UK government became the first country to pass legislation to bring greenhouse gas emissions to net zero by 2050. The government’s Net Zero Strategy was published in October 2021 to set out how this ambitious target could be delivered. Doing so, the government expects to unlock over 400,000 new jobs and £90bn in investment.
A central tenet of this strategy is transitioning the UK to cleaner and more sustainable green energy solutions and reducing our reliance on fossil fuels. Making the transition to green energy requires scaling up investment and delivery of the UK’s green energy infrastructure. Manufacturing the technology we need to generate green energy, at the pace and scale necessary to meet our net zero targets, demands securing access to key materials and their supply chains.
The materials essential for manufacturing components for green technologies, for example generators for wind turbines or batteries for Electric Vehicles (EVs), include Critical Raw Materials (CRM). CRMs are minerals and metals found in the Earth’s crust and include cobalt, nickel, lithium, rhenium and tantalum, platinum, palladium.
The demand for CRMs is not confined to manufacturing green energy infrastructure. The report Securing Technology-Critical Metals for Britain produced by experts led by the Birmingham Centre for Strategic Elements and Critical Materials (BCSECM) and the Critical Elements and Materials (CrEAM) Network at the University of Birmingham, noted that such materials are vital to seven of the top ten UK export markets, with a value of more than £150 billion annually.
CRMs are by their nature finite and in short supply, including those “rare earth” materials deposited in highly specific geological conditions and locations. However, the geographical location of deposits is not the only factor limiting access and supply of CRMs. There are also political, economic, social, and technological factors to consider. For example, there is concern that the UK’s decision to leave the EU means access to CRMs could be a key bargaining factor in the negotiations over future international trade agreements. China has also used their control of approximately 90% of the market for rare earth materials as a mechanism for gaining geopolitical advantage, prompting the United States government to cites China’s control of this market as a key geopolitical and global economic risk.
Recognising the critical importance of securing access to these materials for the UK economy and meeting its net zero targets, the government commissioned the British Geological Survey (BGS) to produce the UK Criticality Assessment of Technology Critical Minerals and Metals. BGS published its report in June 2022, which identified minerals at risk of supply disruption and key mitigation strategies. The research was based on 26 CRMs important to the UK economy and the report found that China is the lead producer of 16 of those 26. They also found that 18 CRMs breached the thresholds for what the researchers considered to be the two elements of criticality:
- The propensity for there to be disruptions in the supply of the specific material.
- The vulnerability felt by consumers and economies as a result of the disruption to supply.
With limited rare-earth deposits of our own to exploit in sufficient quantities and rapidly escalating demands for CRMs, the UK could be in a vulnerable position in terms of securing access to them even in the short term, let alone into the future. And with the finite nature of some of these minerals forming an even more fundamental element of criticality; should we be concerned about not only access to these minerals being disrupted but the prospect of them running out completely or the cost of acquiring them becoming too high?
And the UK is not the only country with high demands for such materials. The CrEAM report points to evidence put forward by the EU Commission in 2020 which states “it is predicted that by 2050 the EU will require 60 times more lithium, 15 times more cobalt, and ten times the amount of rare earths compared to the current supply to the whole EU economy.”
The UK government has not yet published its own strategy, although the Net Zero Strategy includes a commitment to publish one and this is expected in late 2022. Other recent developments towards a more strategic approach to CRMs include the creation of the UK Critical Minerals Intelligence Centre, in July 2022 which will be run by BGS. The purpose of the centre is to provide data and analysis on the availability of critical minerals including cobalt, lithium, and graphite, to support evidence-based policy and enable greater supply chain resilience. In January 2022, the government held the first meeting of the Critical Minerals Expert Committee, including representation from across government, academia, finance, and industry. The purpose of the Committee is to provide independent advice to government and propose actions to be taken to secure access to CRMs. Taken together, these activities signal that the UK is taking significant early steps towards a more coherent and strategic approach to securing UK’s access to CRMs.
However, the EU and governments across the world have already been working to develop their own strategies for managing and securing access to CRMs. Looking to research commissioned by metals association Eurometaux, the UK can potentially learn from how the EU is exploring solutions to key challenges affecting its supply of CRMs and use this to inform our own strategy.
The research was helpfully summarised in this article by Mining Technology Magazine as having three key elements, which are explored in turn for their application to the UK context:
- Developing new mines in the continent.
- Developing new refineries to process mined materials.
- Developing greater capacity and infrastructure for recycling.
New mines: there are options for mining some lithium and rare earth deposits across Europe but the lead in times for these projects are long. Coupled with a lack of public support for mines due to environmental concerns, and the rising cost of labour, this means the future of these projects is uncertain. Any project that is taken forward is unlikely to come on line earlier than 10-20years, meaning they cannot help with meeting immediate increased demand. In fact, Europe’s mining output for some materials such as copper and zinc is actually expected to decline. For the UK, the BCSECM and CrEAM network Securing Technology-Critical Metals for Britain report recommended that the UK develop its indigenous sources of lithium and tungsten, and the UK Office of Science and Technology recommends opening new mines and expanding existing assets. However, taking forward these recommendations could undermine efforts to meet Net Zero targets, given how energy intensive mining operations are.
New refineries: existing plans to develop new lithium and nickel refineries could help the EU to reduce its reliance on sourcing from overseas and limit China’s dominance of providing processed materials. However, again this is a highly energy-intensive operation and current spikes in energy costs arising from the Ukraine crisis means that the costs of developing and operating these refineries becomes unviable. It is also unlikely to completely replace the need for imports. The BCSECM and CrEAM network report notes refiner opportunities in the UK: “the UK already has processing capability for some materials used in batteries, e.g., the Vale ‘Mond’ refinery in Clydach which processes nickel. Nickel is fully recyclable without loss of quality. Potentially battery wastes could be an attractive proposition for UK refiners, as they could provide a more concentrated feedstock than raw, mined material.”
Recycling: several opportunities to grow recycling capacity are presented by certain components reaching their end of life, including solar PV panels and electric vehicle batteries. This capacity and infrastructure to support it needs to be in place realistically by 2035-40 to align with component end of life horizons. In addition, Europe already sources almost half its aluminium, copper, and zinc supply through recycling. Challenges around the poorer quality of recovered materials compared with mined materials and the cost of recovering metals from electrical equipment used in low quantities making this unviable, also need to be considered. For the UK, the Royal Mint has recently announced plans to create a facility to recover gold from waste electronic equipment, using an innovative chemistry-based approach. This means that the Royal Mint will be able to provide its own on-site and sustainable source of gold for the business in future.
In terms of what a UK CRM strategy could look like, the report produced by BCSECM and the CrEAM network provides a vital basis and evidence base for developing a UK CRM strategy. It looks in detail at the context and challenges behind securing access to primary CRMs, as well as secondary recycled CRMs and includes detailed case studies exploring insight and lessons learned for growing a UK supply chain. The report also covers governance and regulatory issues framing the growth of CRM supply chains before providing a set of conclusions and recommendations for UK policy makers.
The report’s key recommendations for developing a UK CRM strategy include:
- Create a single body responsible for developing strategic access to CRMs and effective inter-departmental collaboration at government level.
- Diversify access to primary CRMs, through resource diplomacy as part of new trade negotiations.
- Make the UK an international refining centre for specific CRMs by 2025.
- Identify the investments needed to set up primary processing, refining, and recycling facilities.
- Accelerate projects to develop indigenous sources of CRMs (lithium, tungsten).
- Grow the skills base in advanced materials processing and refining of CRMs.
- Urgently address the lack of data on material flows for CRMs in and out of the UK economy.
- Review waste management law to promote recovery of CRMs.
The Council on Geostrategy has also produced a policy paper entitled Critical Minerals: Towards a British Strategy to provide insight and support the development of a UK CRM strategy. The report concludes that the UK strategy will “likely differ from the original US strategy with its primary emphasis on defence and also from the EU’s with its emphasis on localisation and control with environmental standards as the main lever. In fact, the UK’s approach is likely to have more in common with Japan’s which, though initially anchored in supply security, has also had a strong emphasis on the development of intellectual property and wealth creation via its automotive and industrial firms and the associated investment opportunities.”
This recognition that as a fellow island nation, Japan has much to teach the UK about taking a strategic approach to managing secure CRM supply chains was echoed in the BCSECM and CrEAM network report. It noted how Japan has created the Japan Oil, Gas and Metals National Corporation (JOGMEC) to enable trade agreements and partnerships to be developed with countries to access CRM supplies and also support and finance resource exploration and mining projects. Japan also has a highly comprehensive approach to managing CRM supply that includes strong recycling capacity, building trade and supply chains with diverse suppliers to de-risk supply disruption, ensuring adequate supplies of CRMs and exploring the use of alternative materials supported by strong investment in growing its own innovation and knowledge base.
As we eagerly anticipate the publication of the UK CRM strategy, it will be interesting to see if the government do indeed choose to mirror the Japanese approach and focus on our already strong R&D and financial services capability, or if the direction of negotiations over any new international trade deals the government strikes with other countries has dictated the approach instead.