Pensana and the future of the UK’s critical mineral strategy

The UK stands at a critical juncture in its energy and resource policies, with a looming challenge around securing access to critical minerals. In November 2024, the British Geological Survey identified 34 raw materials as essential to the country’s future, marking a significant rise from the 18 materials recognised in 2021. Among those still critical, many are rare-earth elements where the UK remains heavily reliant on imports, especially from China, which dominates the global supply.

The nation’s dependence on foreign minerals has become an increasing concern, particularly as the UK attempts to meet ambitious energy transition goals. The government has set a target to generate 95% of the country’s electricity from low-carbon sources by 2030, but it faces challenges such as high energy prices and its reliance on imports, leaving it exposed to both geopolitical risks and rising costs. The UK is also struggling to meet its offshore wind power targets, which are now projected to be delayed until 2048, largely due to a lack of domestic manufacturing capabilities for turbines.

The automotive industry, too, is under pressure, with major players like Vauxhall closing factories due to policies designed to accelerate the shift to electric vehicles (EVs). At the same time, the UK has failed to implement new tariffs on critical mineral exports from China, unlike the US and EU. The government’s commitment to phase out coal mining, raise taxes on oil and gas, and halt new exploration licences in the North Sea further compounds the situation.

However, in response to these challenges, the UK has started to change its approach, especially after the disruptions caused by the Covid pandemic and the Russian invasion of Ukraine. The government is focusing on international partnerships to secure the supply of critical minerals and energy. Notable efforts include agreements with countries such as Canada, Australia, and Zambia to support mining initiatives, as well as collaborations with the US to foster the recycling and refining of minerals.

One promising initiative is Pensana’s proposed rare earth processing hub in Saltend, which would become the second-largest magnet materials refiner outside China. This move, alongside plans to build large-scale lithium refineries in Teesside, highlights the UK’s potential to reduce its dependency on foreign sources. The UK government has also outlined plans to expand nuclear capacity and invest in renewable energy sources like wind and solar.

Despite these efforts, securing the necessary investments remains a challenge. UK mining companies, including those attending the Resourcing Tomorrow Mines and Money conference, are concerned about financing and the long timeline for returns on investments. While some government-backed funds, like the UK Shared Prosperity Fund and UK Infrastructure Bank, exist, the lack of government subsidies for the sector has raised concerns about the country’s ability to compete globally.

The UK faces a pivotal moment in securing its critical mineral supply. While the government has recognised the importance of addressing these challenges and developing new domestic capabilities, the task will require significant investment and strategic planning. Pensana’s role in refining rare earth materials could be a key piece in the puzzle, contributing to a more self-sufficient and resilient UK economy in the years ahead.

Pensana plc (LON:PRE) explores and mines neodymium, praseodymium, and rare earth minerals. The Company’s flagship assets are the Saltend rare earth refinery project in the United Kingdom and Longonjo neodymium and praseodymium (NdPr) Project in Angola.

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