Dependence on China for Critical Minerals Makes UK Vulnerable, MPs Told

Rare Earth experts says Britain must engage with mineral-rich countries

Soil containing various rare earth elements for export at a port in Lianyungang, China, in a file photo. STR/AFP via Getty Images

Dependence on China for rare earth minerals puts the UK in a vulnerable position because the “entire future” of manufacturing is based on them, a select committee of MPs heard on March 21.

Asked which UK sectors are most vulnerable because of China’s dominance in critical minerals, Jeff Townsend, founder of the Critical Minerals Association, told a Foreign Affairs Committee hearing on critical minerals that the resources affect all key industries such as electric vehicles, space, technology, advanced robotics, and weaponry.

MPs were warned that China is likely to remain dominant in the next 10 to 15 years and that the UK must engage with mineral-rich countries to build a supply chain outside of communist-controlled China.

Having lobbied the government to support the critical minerals industry for more than 10 years, Townsend said the recent Integrated Review Refresh, which highlighted a Critical Minerals Strategy, is a “decent” document, although the proposals aren’t sufficiently backed by the Treasury.

China Dominates Critical Minerals

Rare earth mineral consumers began realising Beijing’s ability to use the resources as political leverage in 2010 after the regime limited exports following a boat collision incident near the Senkaku Islands, over which Beijing and Japan both claim sovereignty. But governments didn’t begin countering China’s dominance in the market until recent years.

According to data from UK Critical Minerals Intelligence Centre, China dominates the production of 12 of the 18 minerals, while Australia, Brazil, the Democratic Republic of Congo (DRC), Russia, South Africa, and Vietnam are the biggest producers of the other six.

In terms of mining, Guillaume Pitron, a French journalist and author of “The Rare Metals War,” says 80 percent of the global rare earth mineral extraction came from China until alternative providers started to appear in the market five years ago. China now provides around 58 to 60 percent of the global production.

With regard to refining, the vast majority is done in China as well. Townsend said the country’s control in midstream of most critical mineral production ranges between 60 percent to 99 percent.

Henry Sanderson, journalist and author of “Volt Rush,” said around three-quarters of cobalt from the DRC is refined in China.

Rare earth minerals produced by Australia's Lynas Corp. from its Mount Weld operations are displayed near Laverton, Western Australia, on Aug. 23, 2019. Melanie Burton/Reuters

Pitron told MPs that the United States, Australia, and France were producing and refining rare earth minerals in the 1980s, but the productions ended up partially or entirely closed as China could offer more competitive prices by using cheap labour and ignoring environmental costs.

Asked when the Chinese regime started treating rare minerals as a strategic resource, Sanderson said China’s leaders began stressing the strategic value of rare minerals in the 1980s, but the focus on minerals needed in electric vehicles, such as lithium, nickel, and cobalt began a decade later.

He also said Beijing’s so-called One Belt One Road initiative is built upon former leader Jiang Zemin’s campaign to provide loans to African and Latin American countries in exchange for mineral resources.

Guillaume told MPs that some Western rare earth mineral producers tried to survive back in the 1990s but couldn’t because the Chinese regime’s disregard of environmental and social impacts killed the global market. Experts say the regime is still manipulating prices to make sure there are no mining competitors.

He also suggested China is further distorting the market by giving certain automotive clients cheaper quotes and selling the same products at a higher price to Tesla.

Mineral-Rich Allies

But Sanderson said the Chinese Communist Party doesn’t hold all the cards.

“In a lot of minerals, you know, the West has actually a huge advantage because we have all these allies which are very mineral-rich: Australia, etc. China needs these materials,” he said.

The United States in 2022 passed the Inflation Reduction Act (IRA) which contains provisions to subsidize electric vehicles that use minerals not produced by “a foreign entity of concern.”

Praising actions by both the Trump and Biden administrations regarding critical mineral resilience, Guillaume said he believes the market would become more balanced in 15 years.

Rare earths dug up and processed into concentrate at Mount Weld in Western Australia, are pictured after being shipped to the Lynas plant in Gebeng, Malaysia, July 3, 2014. Sonali Paul/Reuters

The UK recently signed partnership deals in minerals with South Africa, Saudi Arabia, Canada, and Kazakhstan.

Commenting on what the UK can do, Sanderson said Britain is probably unlikely to launch a package as sizable as the IRA, but the first thing it can do is to engage with “mineral-rich countries” such as Indonesia, Chile, and Australia, “and then try to build up processing in the UK and some more of the supply chain so that we can remap the supply chains.”

He also said the UK can look at supporting the development of new technologies that use different types of minerals, such as sodium-ion batteries, which may have the potential to replace lithium-ion batteries.