Our dependency on China for critical minerals is dangerous
For three decades, the UK has increasingly relied on China for critical minerals and in particular ‘rare earths’.
Successive governments have failed to acknowledge the importance of critical minerals to our economy and neglected to act. We are in a race for technological advantage – and Parliament must start pushing Government to go faster.
China’s position – right in the middle of the critical minerals supply chain – is no accident, but a strategic move. China now possesses the vast majority of the world’s critical mineral refining capabilities. Some have placed this proportion as high as 90 percent.
Critical minerals are essential to many modern technologies and will play a particularly important role in the green transition.
But the scale of our reliance on critical minerals is far greater. Each F-35 Lightning II fighter jet has – by some calculations – around 920 pounds of rare earth elements. The solar panels, wind turbines and electric vehicle batteries on which our net zero goals depend are all reliant on a host of critical minerals. Without lithium and cobalt, the batteries in our phones would run flat.
To allow any state such a significant monopoly on materials so vital to our future is foolish. But our dependency on China is not just foolish, but dangerous.
In recent years, we’ve witnessed instances of transnational repression of Hongkongers, forced labour in Xinjiang and increasingly aggressive behaviour on the international stage. UK-China relations have deteriorated. Trade is a double-edged sword. While it is a driver of prosperity, enabling economies to blossom and develop, trade also can mean we tie ourselves to other nations.
When supply bottlenecks take hold, they can be devastating. Russia’s renewed illegal invasion of Ukraine unleashed an energy price shock that meant every household in Britain faced rocketing bills. And a surge in demand for electronic goods during the pandemic led to the chip industry’s small number of producers being unable to meet demand. States can exploit shortages to their own ends. If China pulls the plug on critical minerals, we’ll all pay the price.
The perilous position we are in has been evident for many years. In fact, the European Union and the United States have already started to act. The US Inflation Reduction Act established incentives to build a domestic clean energy supply chain while the EU is proposing its own Green Industrial Plan.
By contrast, the UK Government is only just waking up to the magnitude of the challenge. In December the Foreign Affairs Committee published its report “A rock and a hard place: building critical mineral resilience”, finding that the UK has fallen behind our allies. We are now left playing catch up and need to move much, much quicker.
Our vulnerability is an urgent problem that requires an urgent solution.
The Government’s Critical Minerals Strategy last year is a positive development. But this is a high-level strategy document, not a detailed implementation plan. Our vulnerability is an urgent problem that requires an urgent solution. Our report calls on the Government to provide industry and allies with clear guidance on how the UK plans to diversify its critical mineral supply chains.
We also found that the UK needs to refine its approach to potential trading partners. We need to develop appealing offers, that take account of local priorities and support their specific needs, as well as delivering for UK businesses. We cannot escape the fact that mining is an unavoidable element of the green transition, and local communities are affected. We have called for the Government to lead an honest conversation about this.
Despite the Critical Minerals Strategy, there is real risk that Government will lose momentum and fail to take tangible steps. Meanwhile our allies are making progress, with critical minerals a focus of landmark legislation in both the US and EU. But UK policymakers risk letting our window of opportunity close. A strategy is not enough; specific actions are vital to ensuring the future of our most important supply chains.
That’s where Parliament comes in. MPs must do what MPs do best: hold the Government’s feet to the fire. We must urge the Government to treat this issue with the same seriousness as our closest allies.
Tackling the vulnerabilities of the UK’s critical minerals supply chains will require long-term thinking and cross-departmental action. China has no shortage of ambition here, and as a result, is securing leverage over us. Parliament must drive the Government to respond effectively, ensuring that the UK’s critical minerals agenda extends beyond a policy paper.
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