The Department for Business, Energy & Industrial Strategy (BEIS) published the UK's first Critical Mineral Strategy in July, following pressure from the Critical Minerals Association United Kingdom (CMA UK), its members and other organisations. The strategy aims to address how the UK government plans to meet its decarbonisation goals without a pragmatic strategy for responsible sourcing.
Critical minerals are the building blocks for net-zero carbon and environmentally conscious alternatives to fossil fuel-based technologies. Yet currently, market monopolisation and offshoring of both extraction and refining have left the UK, like many other nations, without a secure supply for its industrial needs.
Geopolitical turbulence, including reports of social unrest in China, and the conflict between Ukraine and Russia affecting nickel supply chains, have emphasised the drawbacks of monopolised globalisation.
In a progressive transition from industrial to service economies, the western world not only disconnected itself from the source of raw materials but also willingly gave away responsibility. Mining and extraction were seen by some as dirty activities and someone else's problem.
It was no longer in our backyard, and they were therefore no longer our emissions or environmental consequences to deal with. Where an opportunity presented itself China took it, with the foresight and understanding that consumerism requires raw material, and materials of the future must be mined.
No nation can mine every critical mineral, but China monopolised the midstream processing and refining industry, funnelling global feedstock into a pinch point in the supply chain. Miners need to sell their products while original equipment manufacturers need processed material – and China became master of both industries simultaneously.
With this comes risk, however; especially in a world that projects a sixfold increase in critical minerals required for net-zero-carbon technologies from 7.1m tonnes in 2020 to 42.3m tonnes by 2050. Among these are the quantities of copper and carbon – in the form of graphite – required for electric cars, or the copper and zinc required for wind turbine technology.
Like other critical minerals, those used in batteries for electric vehicles, phones, laptops etc., are found around the globe according to geology. Some nations have come to dominate the production of certain critical minerals as a result.
For example, the Democratic Republic of Congo produces most of the world's cobalt thanks to its geology; although this is helped by the country's cheap labour supply and the lack of stringent environmental protections and legislation.
The extracted critical mineral ore may be processed on site, but is often shipped to China for further processing and refining. Whichever the critical mineral, the processing and refining involves the removal of waste materials. This is where significant value is added. China controls 60–80% of the materials necessary for anode and cathode production for the battery minerals supply chain as well as production.
This leaves many miners reliant on agreements with Chinese companies, at a price those firms dictate. Many but not all original equipment manufacturers are reliant on just-in-time supply from China, although this is vulnerable to disruptions. One example of this includes the semiconductor chip shortage, now in its third year.
Nations such as the UK that have neglected their domestic mining industries are now racing to secure critical minerals to achieve their net-zero targets. This comes with many challenges, such as navigating geopolitically fragile and vulnerable supply chains, and competing against state-backed Chinese companies. The industry has welcomed the publication of the UK strategy, despite its tardiness, as marking a turning point for critical minerals.
The UK has potential for primary domestic extraction (mining or extracting of virgin materials) and secondary extraction (reprocessing of waste, tailings, slags, and sludges from steel production), as well as for onshoring; that is, bringing critical minerals extracted overseas into the UK. It can do this by setting up robust midstream industries for processing, refining and alloying, that accelerate the recycling of select critical minerals for the circular economy.
Figure 1 is an overview of the typical stages from early greenfield exploration, through to extraction (mining, in solution or in situ), processing and smelting, refining, component manufacture, original equipment manufacturer (OEM) manufacture/component assembly, and recycling. Traders typically bridged the gap between upstream production of minerals and the midstream processing and refining. The concern over security of supply has prompted some OEMs to secure offtake directly from miners, some smelters and refiners also source feedstock directly from miners.
Figure 1: Upstream, midstream and downstream processes
There is significant potential in Cornwall and Devon to extract copper, lithium, tin and tungsten, with an emerging cluster of lithium explorers and prospective refiners in the North East of England as well. However, the responsible extraction and sourcing of critical minerals is facing delays because of the following factors.
Mineral rights: a complex and outdated system delays access to land and any exploration activities.
Planning and permitting: local planning authorities have been under-resourced, there has been a lack of expertise and knowledge surrounding critical minerals extraction, as well as a lack of central government coordination. Some responses are proposed in a recent CMA UK paper.
Access to funding: the UK government does not underwrite critical mineral projects of national importance, so private investors are cautious about committing capital when such schemes are subject to complex mineral rights and planning and permitting systems.
BEIS therefore opens its strategy with the heading 'Accelerate, collaborate and enhance', and outlines its ambitions to deal with the challenges facing industry. But what will it take to fulfil each of the UK's ambitions? The paper sets out its approach below.
This will require untangling conflicting policy and legislation to streamline mineral rights, planning and permitting. Capital will need to be injected, and a mining agency or a coordinating body created to ensure that local planning authorities are sufficiently resourced and knowledgeable to accelerate applications for planning and permitting critical mineral mines and extraction sites.
The government will also need to play an active role in educating the public about why the UK needs critical minerals if we want renewable energy and energy security. Without public support for responsible extraction, critical minerals projects of national importance will face resistance on a local and national scale due to misinformation and misconceptions about the industry.
Communities should have a platform to express concerns and communicate with operators to ensure that such projects benefit the community and the environment as well as the national economy. The public needs to understand the wider implication of a lack of secure energy supply; for instance, no longer being able to transition away from fossil fuels as quickly.
Mine crane
The UK was once the centre of excellence for mining, processing and refining minerals. Yet mining and, more recently, geoscience courses have been closing across the UK. Camborne School of Mines, part of the University of Exeter, closed the last mining engineering course in the UK in 2020, and plans to replace it with an apprenticeship.
A damaging rhetoric is also sweeping across universities. Birkbeck, University of London, recently stopped all on-campus recruitment by oil, gas, and mining companies. This means that the UK's soft power that came with exporting such talent globally is now waning.
There are many reasons for the decline of geoscience courses including:
lack of early years education on where materials come from
negative perceptions of the industry
lack of advertising
career advisers' poor knowledge about the industry
increasing requirement for a master's degree to enter the industry
lack of financial support for students from less advantaged socio-economic backgrounds to study at postgraduate level.
The UK technical workforce is ageing, and institutions are closing geoscience courses in favour of what are considered greener alternatives. Nations such as China, however, are investing in educating the next generation of geologists, engineers, surveyors and metallurgists to carry out technical jobs that offer opportunities for travel and exciting careers.
The UK government has a role in ensuring that pupils are educated about where materials come from. The nation needs young people who are conscious of climate change and environmental implications to innovate and make extraction and processing more efficient and less environmental damaging.
The UK is a leader in pioneering early-stage technologies (technology readiness levels 1 to 3), but many innovative technologies are exported to the EU, where companies can access grants and funding needed to take projects to market. This means that the EU benefits and profits from UK innovation, while less value is retained in the UK. Establishing innovation funds that target commercialisation will help to retain this value in the UK and support the growing domestic need for critical minerals and technology.
To move towards a more circular economy, the UK government will need to review its existing legislation, including waste classification, and improve domestic waste collection to target those critical minerals such as rare earth elements that are highly vulnerable to supply chain disruption. The UK will also need a successful processing and refining industry to support the recycling and processing of secondary materials.
This will require the UK to collaborate with like-minded nations outside China's sphere of dominance. The USA, Australia, Canada, Brazil and Japan are already forming partnerships, and the UK is at risk of being left out without decisive action and a financial package to support western companies attempting to create an alternative supply chain. The UK cannot create critical minerals supply chains by itself.
UK companies can face an unfair disadvantage globally in comparison to their government-backed competitors. If the UK government wants to position its companies favourably, it will need to support them in participating overseas in diversified, responsible and transparent supply chains. This will involve strategically underwriting projects that have potential to reduce the UK's reliance on monopolised markets, and help companies attract private investment quickly.
The UK Foreign, Commonwealth & Development Office will need to engage other states, build strong intergovernmental relationships and advocate for British companies adhering to responsible practices.
The UK will need to ensure that responsible businesses are not disadvantaged by providing tax incentives and financial support during market distortions. If it can boost the global environmental, social and governance (ESG) performance across the global industry, it will reduce vulnerability to disruption and level the playing field for responsible businesses. Any UK stance or alignment with ESG standards will need to promote such business, but be careful to avoid creating unnecessary red tape that stifles production.
To do so, the government must collaborate again with like-minded nations, including those in the Commonwealth and developing countries, to inject significant capital into alternative supply chains. Supply chains often become opaque after extraction as minerals are processed. Little validated data is available here as Chinese companies – which are responsible for the bulk of this processing and refining – are reluctant to share it with western companies.
Implementing provenance verification and blockchain traceability tools is costly. The additional capital required to prove the origin of materials can therefore make a project unfeasible unless the cost is passed on to the consumer, which may be unwilling to pay the premium.
The city's finance sector has catalysed the implementation of ESG best practices throughout the industry. Currently, projects are only as good as the investors' minimum requirements for offering finance. It is unclear how the government will do this, but it can certainly look at options to attract more business into London through tax incentives.
BEIS calls its strategy an ambition, outlining what the UK needs to have to meet its industrial and net-zero goals. But the implementation plan is not due until later this year. With a few months left, questions still remain over what the new UK government will prioritise.
The plan will need to be robust, forward-thinking and pragmatic in its approach. Collaboration across departments is crucial to untangle conflicting policies, legal loopholes, underresourcing, and a lack of understanding of just how critical these minerals are. The issues associated with critical minerals concern almost every government department.
Yet, if we are to turn ambition into action, we are still missing a central coordinating body. To speed up domestic production, secure supply, and re-emerge as global leaders, the UK needs a critical minerals champion, a leader in government who understands that the future economy must be built on responsibly sourced critical minerals.
BUILT ENVIRONMENT JOURNAL
Sam Piplica MRICS 21 March 2023
CONSTRUCTION JOURNAL
Francis Au, Brian Shuptrine FRICS and H.K. Yu 15 March 2023
