UK Loses Strategic Rare Earths Project to US
A planned rare earths refinery that would have given the United Kingdom a strategic foothold in the critical minerals sector has been scrapped in favor of US development, according to reports. The Saltend project, which would have produced magnets for electric vehicles, wind turbines, and robotics, has been abandoned by mining company Pensana after what sources indicate was insufficient government support.
China’s Market Dominance Creates Pricing Challenges
Despite their name, rare earth elements are relatively abundant in the Earth’s crust but difficult to extract economically. According to Pensana, China has used its market power to keep prices artificially low, stifling potential competition and making refining in the UK uneconomic without significant government backing. The report states that this pricing strategy has created global supply chain vulnerabilities that nations are now attempting to address.
UK Government Support Deemed Insufficient
Although Boris Johnson’s government announced “a multi-million pound investment” in the Saltend project in 2022 as part of its Critical Minerals Strategy, Pensana’s chairman Paul Atherley revealed the actual contribution was only £5 million, which he described as “nowhere near enough.” Sources indicate the Treasury proved unwilling to contribute additional funding despite the project’s strategic importance to UK manufacturing and green technology sectors.
US Incentives Dwarf UK Commitment
Analysts suggest the contrast in government support between the UK and US proved decisive. According to the analysis, while the UK offered minimal funding, the US government provided MP Materials with over half a billion dollars in investment and soft loans for a similar refinery facility in California. The US deal reportedly includes a 10-year agreement ensuring all magnets produced are sold at a minimum price, creating the financial certainty that Pensana found lacking in the UK arrangement.
International Efforts to Secure Supply Chains
Chancellor Rachel Reeves, speaking at an International Monetary Fund meeting, confirmed the UK is working with G7 counterparts on critical minerals strategy to reduce reliance on dominant suppliers. This comes amid growing tensions between the US and China over rare earths, with multiple nations seeking to establish independent supply chains for these essential components of modern technology.
Company Shifts Focus to US Partnerships
Pensana has announced plans to team with US refiner ReElement to develop what they describe as a “sustainable, independent rare earth supply chain.” The company is also planning to list shares on the Nasdaq stock exchange, further cementing its American orientation. Despite the shift, Mr. Atherley insists he remains “very positive on the UK,” with another company he’s involved in, Tees Valley Lithium, continuing with plans for a lithium refinery in Northeast England.
Broader Context of Critical Minerals Development
The abandonment of the Saltend project occurs against a backdrop of global competition for critical minerals infrastructure. Recent developments in the sector include new approaches to mineral processing and international efforts to secure supply chains. Meanwhile, technological advancements continue globally, with engineers developing new solutions for material processing challenges. The strategic importance of these developments is underscored by increasing government attention to supply chain security across multiple technology sectors.
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