The UK’s Critical Minerals Refresh 2023 – CMA's Evaluation
On the 13th of March 2023, the UK Government released its Critical Minerals Refresh. Congratulations to the teams in the Departments for Energy Security & Net Zero; Business & Trade; Foreign, Commonwealth & Development Office for leading the charge and developing a UK Critical Minerals Refresh that raises all the right issues and ticks the right boxes.
A prominent supporter of the UK’s critical minerals agenda, Minister Ghani opened the Refresh by stating: “We cannot rely on mineral supply chains vulnerable to market shocks, geopolitical events and logistical disruptions, at a time when global demand is rising faster than ever. So we are taking decisive action.”
The launch of an independent Task & Finish Group on Critical Minerals Resilience for UK Industry to investigate the critical mineral dependencies, vulnerabilities, and opportunities across UK Industry sectors with a report due at the end of the year.
Collaboration on critical minerals with international partners, including recent partnerships with Canada and South Africa and engagement through the Minerals Security Partnership (MSP), and G7.
Funding to the sector through:
Circular Critical Materials Supply Chains (CLIMATES) with an initial £15 million for research and development (R&D) in rare earth elements used for permanent magnets.
£65.5 million Accelerate-to-Demonstrate (A2D) Facility which includes a dedicated funding pillar on technology innovations for critical minerals in developing countries.
However, it is disappointing that the publications of the UK Government’s Green Finance Strategy Update 2023 and Powering Up Britain on the 30th of March 2023 make no mention of the significant increase in supply of critical minerals needed to meet net zero targets or energy security requirements. The Department for Energy Security & Net Zero is the same department leading on both critical minerals and energy security – and yet siloed teams are publishing policy papers without joining up the dots. Departments across Whitehall, particularly the Treasury, need to demonstrate greater support for securing Critical Minerals required to meet other policy initiatives, and teams within departments should showcase that workstreams are taking a big picture approach and linking up Ministerial priorities. Critical minerals challenges and opportunities cannot be addressed in an isolated manner.
The EU Approach
The EU’s Critical Raw Materials Act (CRMA), published on the 16th of March 2023, is a game changer in its ambitious scope and targeted regulation to develop critical mineral supply chains. The EU’s Act estimates that the state investment needed to boost the EU manufacturing capacity of strategic net-zero technologies, including batteries, is around EUR 92 billion over the period 2023-2030.
The EU Commission has asked the Platform on Sustainable Finance 2.0 to develop taxonomy criteria for mining and refining as part of its work to compile a list of environmentally sustainable activities.The UK Government on the other hand proposes that nuclear should be featured in its Green Taxonomy as part of its updated Green Finance Strategy whilst neglecting the importance of green investment in critical minerals.
The EU CRMA has also legislated to put in place a 24-month limit on permitting decisions for mining. If the authority does not make a decision once this timeframe elapses, the project is automatically considered approved. This is the opposite of the UK, where if a decision is not reached, the application is refused. The process is halved at 12 months for processing and recycling. The EU regulations will considerably reduce the risk of investment, prompting investors to invest in mining, processing, and recycling projects across the EU rather than in the UK.
The US Approach
The 2022 US Inflation Reduction Act (IRA) is poised to have a significant impact on both U.S. energy and foreign policy. With the aim of bolstering U.S. energy security and addressing climate change, the law provides tax incentives of billions of dollars for the development of renewable energy and other innovative technologies. To incentivize the production of critical minerals, the IRA includes a new advanced manufacturing production tax credit for companies that mine or refine these materials. Additionally, the law provides tax credits aimed at promoting the sale of EVs, with the condition that the materials used to make these vehicles must come from the United States or from countries with free trade agreements with the United States. The IRA's green energy tax incentives amount to approximately $369 billion.
The UK should seek greater alignment with the EU and US, or risks falling through the gaps as investors, developers, and original equipment manufacturers are increasingly attracted by the EU’s CRMA and US’s Inflation Reduction Act.
What’s in the UK’s Critical Minerals Refresh
The CMA commends the UK Government’s initiative to set up the Task & Finish Group on Critical Minerals Resilience and looks forward to seeing the UK Supply Chains and Import Strategy later this year. The CMA hopes that the UK Government will make the most of the coming months to meaningfully engage with all stakeholders and ensure that the Task & Finish Group reflects the views of relevant industries, recognising that whilst the urgency is real, this will be vital to delivering a high-quality outcome. The sooner this is completed, the faster UK Government can implement its recommendations.
The CMA is pleased to note that many of its recommendations in our 2022 papers – ‘A Talent Pipeline’, ‘Mineral Rights’, ‘Planning & Permitting’, and ‘A Blueprint for Responsible Sourcing’ – have been recognised in the Refresh’s chapter on enabling domestic production of critical minerals. The commitments from government to support critical mineral companies to identify funding, assess the UK’s geological potential, improve the planning system, investigate solutions to mineral rights barriers, and map the skills gaps in critical minerals are exactly what is needed.
A glaring omission, however, is a recognition of the importance of developing a midstream to add strategic value to the UK’s critical minerals offerings. We look forward to the government taking our 2023 ‘Midstream Processing & Refining’ paper into account in future updates. In particular, we highlight the need for government to incentivise and accelerate investment into midstream processing and refining, leverage UK freeports, lower energy prices to competitive levels, and support UK critical minerals companies overseas to secure offtake for the midstream and downstream industries.
The UK is not alone in having long planning and permitting processes – which are vital to ensuring that local communities have a say in projects that affect their local environment, but that are often subject to unnecessary delays due to lack of staff resources, knowledge, overlapping processes by different departments and no accountability around meeting deadlines. Compared to the USA and Canada, the UK is small and should prioritise streamlining planning and permitting processes for critical minerals mining, processing, refining, and recycling companies, to ensure the UK is an attractive, internationally competitive jurisdiction for investment.
Mining, processing, refining, and recycling of critical minerals also need to be recognised for their national strategic importance to the UK by the Department for Levelling Up, Housing and Communities (DLUHC). The UK Government needs to ensure that local councils are better resourced and supported to effectively deal with these projects. The UK should seek to embed international best practice environmental, social, and governance (ESG) expectations into the planning and permitting system. This can place the UK as an ESG leader amongst MSP partners, match the EU’s ambition, and demonstrably show leadership on best practice ESG domestically.
The UK Government’s foreign direct investment proposition to promote investment in UK critical minerals projects is much needed amidst global competition for investment, and countries around the world actively promoting their own domestic projects. The UK Government’s commitment to supporting the export of the UK’s clean mining, midstream, and recycling capabilities is also welcomed by the industry.
Whilst the circular economy commitments are important, more work needs to be done on this front. There is no deadline for the UK’s circularity assessment, which needs to be completed as soon as possible. The waste legislation in the UK is not fit for purpose for a circular economy of critical minerals, and this cuts across all technologies and not just waste electrical and electronic equipment (WEEE). Waste codes have not been updated since the 1970s and do not reflect the changing technological environment – leading to policy failures, whereby disposable vapes with lithium-ion batteries are being sent to landfill daily. There is no indication of how R&D and commercialisation of recycling technologies will be increased. The CMA would be happy to support the government in further developing this fundamental work stream.
The CMA looks forward to the R&D blueprint and greater detail on how the UK Government plans on delivering R&D funding and hopes that UK Government has set expectations on the Knowledge Transfer Network (KTN) around what the outcomes of the funded projects would be, when they would be achieved and how they would help solve UK security of supply issues. The real risk is that UK Government delegates programmes and funding to various bodies to deliver aspects of the critical minerals supply chain without setting expectations on deliverables. Government should not be committing funding to research projects that do not align with its wider strategic goals and policies.
The CMA is pleased that the UK Government has been making rapid strides in developing international partnerships on critical minerals and signing memorandums of understanding (MOUs) with Canada, Kazakhstan, Saudi Arabia, and South Africa as well as joining the MSP partnership. We look forward to supporting the UK Government as they work to deliver the commitments in the MOUs.
The CMA commends the government’s commitment to demonstrating global leadership on ESG performance and we look forward to supporting the UK Government through the CMA’s ESG working group, which authored two ESG reports outlining barriers and opportunities around UK leadership in this space.
Unless more finance is invested into new critical minerals projects, the world will not have the critical minerals it needs. The UK Government’s recognition of the importance of London as a centre of finance, and its commitment to convening mining finance and metals trading communities will be an important step forward to make this happen.
It is disappointing however, to see that the updated 2023 Green Finance Strategy, as alluded to in the Critical Minerals Strategy Refresh, makes no reference to critical minerals – despite the need for critical minerals to be recognised as an integral part of the transition to net zero and the fight against climate change. The CMA submitted evidence to the Green Finance consultation last year and notes that this evidence has not been acknowledged. We hope that the critical minerals leads in UK Government continue to engage with green finance leads to highlight the importance of including critical minerals and the technical complexities of metals and mining in the upcoming UK’s Green Taxonomy.
Our Evaluation of the UK’s Critical Minerals Refresh
The Critical Minerals Refresh shows how far the UK Government has come in the past few years. There is a clear recognition of the challenges, risks and opportunities, and we expect critical minerals to continue growing in importance.
What is still missing is a UK overarching vision for the future of critical minerals and associated supply chains and a timeline. All of the individual elements to develop secure, responsible critical mineral supply chains are present in the Refresh, but what is the end goal of these actions? When all of the important commitments outlined are completed, what will the UK look like? How many critical mineral mines, midstream plants, and recycling facilities, will we have domestically? How many MOUs will we have – and how will we know which of our international partners will hold true and support the UK’s security of supply? At what point will we expect all of these commitments to be delivered? Will this be by 2030, when we have moved to all electric vehicles, or by 2050, when we have moved to Net Zero? The UK is already falling further and further behind its allies. It takes on average over 16 years to bring a new mine onstream from the initial discovery of the minerals resource, which is why clear timeframes are key.
If there is no target completion date or end goal, how will anyone know whether the delivery of the UK’s critical minerals strategy has been successful, or not? A more targeted vision of what exactly the UK Government is working towards would help set the framework around ambitions, deadlines, and specific deliverables. This would also send a signal to international partners, investors, and industry that the UK Government is serious about its supply chains. There is no real commitment that the government can be held accountable for, because everything in the strategy has either already been announced, or is promised to be expanded on in the future.
If the government is serious about critical minerals being a priority, they need to also ensure that this is properly resourced within government – that there are sufficient civil servants working on the important task at hand – and that there are individual owners at the right level of seniority and with the right level of enthusiasm for each of the critical minerals commitments. As a cross-cutting issue, the importance of critical minerals should be in the minds of all civil servants across UK Government.
As the work continues, the UK Government will increasingly be delegating responsibilities out to associated but independent government bodies to undertake important pieces of work. Whilst enabling experts in these bodies to identify and deliver solutions is important, it is crucial that the UK Government’s critical minerals teams do not lose sight of the end goal – and that they hold all partners to account to ensure that delivery moves the UK one step closer to tangibly solving problems and creating opportunities. The work does not end until the UK has thriving, responsible critical mineral mining, processing, recycling sectors, strong international partnerships in which the UK has sufficient bargaining power to be allocated critical minerals offtake, and innovative, home-grown R&D commercialised.
The UK Government officials and partners, who have been working hard to deliver this policy paper and its associated actions less than a year after the first strategy was released, should be proud of their work. There is still a long way to go, and much to be done, and for the UK to succeed, the country will need every single government leader to understand the importance of critical minerals. Not just the visible leaders, such as Minister Ghani who has been representing the UK at international mining events. But also, the leaders who may be less visible, who are leading their teams to do the fundamental work that digs deep into the detail and solve the problems at hand. We hope that every changemaker who is paving a way forward for critical minerals does not get swept away into the maelstrom of staff turnover. If every country around the world is developing their vision for critical minerals – we need all hands on deck to make sure the UK is not left behind.
Article by Kirsty Benham, Founder, Critical Minerals Association
Sources:  https://single-market-economy.ec.europa.eu/system/files/2023-03/SWD_2023_68_F1_STAFF_WORKING_PAPER_EN_V4_P1_2629849.PDF  European Commission, Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions. 16th March 2023  https://www.iea.org/reports/the-role-of-critical-minerals-in-clean-energy-transitions/reliable-supply-of-minerals