UK critical minerals strategy
Why critical minerals are essential for the UK’s net zero transition
The UK will increasingly rely on critical minerals as it transitions to net zero.
To meet this need, the UK government published its first ever critical minerals strategy. The strategy is designed to build a resilient and sustainable critical minerals supply chain to support green industries and the energy transition in the UK. To demonstrate its progress and commitment to the strategy, the UK published an update on the 16 March 2023.
This article outlines the strategy and four developments we believe are needed to make it a success.
What is the critical minerals challenge?
Critical minerals are embedded in everyday life. We will increasingly rely on them as the UK transitions to net zero and continues to digitalise. Critical minerals are used in green energy infrastructure such as wind turbines, electric vehicles and solar panels, as well as everyday electronics such as mobile phones, laptops and tablets.
It is estimated that by 2040 we will need four times as many critical minerals as we do today, and by 2050 produce over 500 per cent more.
The UK does not have the capacity to meet its own demand from its domestic resources, and global supply chains may not have the capacity to meet growing global demand.
Where capacity does exist, it is with a handful of countries that have established control over most of the market and where supply chains are complex. Combined with the challenges of how long it takes to develop new mines and mineral processing capabilities, this leaves the UK exposed to supply chain disruptions – the consequences of which can be disastrous, as seen by the COVID-19 pandemic and the Ukraine war.
What is the UK critical minerals strategy?
In July 2022, the UK government published its Critical Minerals Strategy to address these challenges.
The message is clear: the country needs to bolster its supply chain resilience and security to support the future of British industry and do so in a sustainable way.
The strategy aims to achieve this by:
- accelerating the UK’s domestic capability
- collaborating internationally
- enhancing international markets to promote responsive, transparent and responsible practices.
How can the UK critical minerals strategy be successful?
The objectives of the UK critical minerals strategy are designed to be ambitious, and work is needed to scope, test and implement them.
Deloitte believes the following are vital to their achievement:
- Revive and build new mining and refining capability in the UK. With the right strategy, UK production could reduce the burden on international supply chains.
- Improve access to sustainable finance for companies investing in critical minerals projects. Companies will need to demonstrate robust ESG performance to secure investment from finance institutions.
- Develop strong international ESG practices and governance. Enhancing ESG throughout the critical minerals supply chain could reduce disruptions and will be necessary to meet stakeholder demands.
- Create a strong UK-based circular economy for critical minerals. This would include efficient recovery and recycling centres capable of extracting minerals, as well as designing equipment for the energy transition with circular economy principles in mind.
We look at each of these scenarios in more detail in forthcoming articles. To read them, please see the links below.
