Policy paper

UK government response to the Task and Finish Group’s recommendations on industry resilience for critical minerals

Published 4 March 2024

Foreword  

Since returning to government in 2022, critical minerals have been a top priority for me. For many years, critical minerals were a niche subject. Now, the world is waking up to the importance of the issue and the UK is at the forefront of an international effort to secure our supply chains. In January this year, I represented the UK at the Future Minerals Forum in Saudi Arabia alongside 80 other governments, and last October, I co-hosted the Minerals Security Partnership at the London Metals Exchange, here in the UK. 

As part of the 2023 Critical Minerals Refresh, I launched this Task and Finish Group on Industry Resilience for Critical Minerals to give their insights on the dependencies UK industries have on global critical mineral supply chains, and how that will evolve in future. I warmly welcome their findings and would like to thank Katherine Bennett, Colin Church, and all the members for sharing their knowledge and expertise. I also share the group’s desire to act in a joined-up way across government and industry. The recommendations in the report seek to ensure greater security of supply for UK manufacturing sectors, create a more circular economy, improve the sustainability of our supplies and promote the UK’s own role in critical mineral value chains.  

My department has considered the findings and recommendations. In this response, I have set out the action that government is taking and will take going forward. This will boost the delivery of our Critical Minerals Strategy and make sure the government works to meet the needs of industry.  

Together, government and industry can take action to ensure that UK businesses have access to enough critical minerals, from responsible, reliable and resilient sources.  

Nusrat Ghani MP

Minister for Industry and Economic Security at the Department for Business and Trade

Introduction 

A resilient and sustainable supply of critical minerals is vital for our economic growth, net zero transition and national security.  

Recognising the importance of these materials and the risks in their global supply chains, in July 2022, government published the UK’s Critical Minerals Strategy to promote resilience in critical mineral supply chains. Collaboration between government, industry, and other stakeholders is vital to successfully delivering on its wide range of ambitions and harnessing the UK’s wealth of expertise. It is especially important to support UK industry – those that depend on a secure supply of critical minerals – to promote resilience and diversity in their supply chains. To support this objective, and as part of the Critical Minerals Refresh publication in March 2023, the Minister for Industry and Economic Security, Nusrat Ghani MP, launched an independent Task and Finish Group on Industry Resilience for Critical Minerals. This was a first-of-its-kind initiative for industry-government engagement on critical mineral supply risks. 

The group’s task was to:

• investigate critical mineral dependencies and vulnerabilities across UK industry sectors
• design a framework for monitoring critical mineral supply risk across these sectors
• develop independent advice on measures for government, industry and other stakeholders to promote the UK’s security of supply of critical minerals

The Task and Finish Group’s work complements the ongoing research of the Critical Minerals Intelligence Centre (CMIC) programme, which is sponsored by Department for Business and Trade (DBT) and delivered with the British Geological Survey (BGS). The CMIC is using primary data to update the UK criticality assessment for technology metals and minerals and forecast UK demand of materials for clean energy technologies. The Task and Finish Group’s findings will form part of important evidence that government is gathering to underpin delivery of the UK Critical Minerals Strategy, alongside insights and support from the Critical Minerals Expert Committee.

The Task and Finish Group was chaired by Katherine Bennett, Chief Executive of the High Value Manufacturing Catapult, with support from the Vice-Chair Colin Church, Chief Executive of the Institute of Materials, Minerals and Mining (IOM3). Members were drawn from industry sectors that depend on critical minerals, as well as critical mineral supply chain experts. It was sponsored by DBT. The Task and Finish Group: industry resilience for critical minerals report was delivered to Minister Ghani on 19 December 2023. This document is the government’s response to the report’s findings and recommendations.

Response to findings 

Government warmly welcomes the Task and Finish Group’s insights on critical raw material (CRM) supply risks. These insights will help industry sectors understand their dependencies and vulnerabilities and help businesses mitigate risks in their own supply chains. 

The report highlights CRM dependencies across:

• aerospace and defence (cobalt, tantalum, gallium)
• automotive (lithium, graphite, gallium)
• chemicals (silicon, cobalt, graphite)
• electronics (silicon, germanium, gallium)
• energy (zinc, boron, rare earth elements)
• medical technologies (cobalt, tungsten, silicon)

A range of supply risks were identified, notably a high reliance on imports, a high concentration of mining and refining capacity in one country, and high reliance on countries with weak governance or political instability.

Other risks include:

• high price volatility
• companion metal fraction (CRMs that are extracted as a secondary product)
• low recycling rates

Government is acutely aware of challenges associated with the high geographical concentration of critical mineral supply chains, and the associated risks of price volatility and sanctions. These are global issues, and not something one country can solve alone. While government remains committed to accelerating the growth of domestic capabilities, it is not possible (or even desirable) to onshore all aspects of critical mineral supply chains. Resilient global supply chains have a diverse supply base and rely on global markets and an effective trading system. The UK and others benefit from such a system, and we will work with our partners to promote it. Simultaneously, the UK can benefit from a more diverse supply of critical minerals, as producer countries invest in new capacity. We are building relationships with influential countries and strategic producer countries that share our goals, while protecting our national security and values. 

The report shows that while UK industries have direct dependency on critical minerals – like our gigafactories dependence on battery metals – much of our dependence on critical minerals is indirect. Often, manufacturers depend on intermediate materials, components or end products that contain critical minerals. Business approaches to CRM supply risk management vary; some are taking steps to promote resilience along their supply chains, but practices are nascent and not widely adopted. Steps include companies pursuing greater supply chain traceability, vertical upstream integration, increasing circularity and company-level stockpiling in specific cases. The National Protective Security Agency (NPSA), and DBT, working with the Chartered Institute of Procurement and Supply also published the Safeguarding Supply and Protected Procurement guidance for businesses. This sets out how to embed resilience and security into their working practices. Government will continue to engage industry to support it to mitigate supply risks and encourage manufacturers to adopt best practices.

Response to recommendations

Recommendation 1 – develop a long-term vision on industry resilience that includes critical minerals for the UK

We strongly agree with the need for a long-term vision. The Critical Minerals Strategy, and Critical Minerals Refresh in 2023, provides an overarching framework to deliver a wide range of activities to improving the resilience of critical mineral supply chains. Government continues to work closely with industry to identify risks and support an industry-led approach to driving resilience. Our advanced manufacturing sector is a major driver of economic growth, employment, and the clean energy transition.  

The critical imports and supply chain strategy, launched by DBT earlier this year, sets out how government intends to work with industry and international partners to build secure and reliable supply chains. It is the UK’s first overarching strategy focused on building resilience across our imports, including critical minerals. The strategy includes clear steps:

• to build our supply chain analysis capabilities
• continue to provide a reliable and supportive business environment
• respond and adapt to shocks
• address long-term trends
• expand collaboration between government and industry on issues of supply chain resilience

Government will continue to work with industries to support resilience and diversification in their supply chains. 

Further detail on the UK’s own role in critical mineral value chains is set out in our response to Recommendation 3.

Recommendation 2 – enhance critical mineral supply chain transparency through improved data availability to support decision making

Government supports this recommendation. As outlined in the UK Critical Minerals Strategy, government acknowledges the complexities of critical mineral markets . Data is often not readily available, markets can be volatile, and supply chains are fraught with environmental, social and governance (ESG) issues. Better data availability is in the UK’s interests to support well-functioning markets and responsible, traceable supply chains, to help de-risk investments and development of new projects. 

The UK’s technology sector has significant expertise in traceability systems. For example, Circulor offers solutions to trace materials, emissions and compliance from mine to end product in some of the most opaque supply chains globally. 

Several data and transparency initiatives are in hand across government working with industry and research communities. CMIC provides the critical minerals community with insights on mineral supply chains and associated risks, via a range of supply chain studies, demand forecasting and market monitoring. HM Revenue and Customs and the Office for National Statistics, alongside a consortium of experts from industry and academia, have completed a data pooling pilot project. This demonstrates data sharing environments to improve traceability and transparency in the circular economy. Cabinet Office is also leading work on a possible trial critical minerals market information system (CriMMIS) designed to improve data standards and market transparency at a global level. Government will continue to play its part in transparency and traceability to improve understanding of critical mineral flows through the economy and support businesses to manage their supply risks.

Recommendation 3 – build on the UK’s competitive advantages and develop its midstream economy

We fully agree that the UK has unique strengths in critical minerals. Whilst we will always rely on international supply chains, we must maximise what the UK can produce domestically, where viable for businesses and where it works for communities and our natural environment. The UK is a strategic location for midstream processing, including refining and materials manufacturing, building on its globally competitive capabilities in this field. The UK also has significant innovation in recovering critical minerals from waste, such as research by the Faraday Institution into recovery of lithium from batteries and world-leading work on rare earth magnet recycling at the University of Birmingham.

To accelerate the growth of these domestic capabilities, government has deployed a variety of financial support mechanisms including:

• the Automotive Transformation Fund (ATF), which can support critical mineral projects in automotive supply chains
• the UK Infrastructure Bank (UKIB), which recently invested £24 million to support Cornish Lithium
• UK Export Finance (UKEF)

But to attract private investment into the critical minerals value chain in the UK, it is important to create a supportive business environment too. For example, government has taken decisive steps to reduce the price of energy to ensure they are competitive with other major economies across Europe, including through the forthcoming British Industry Supercharger. The recent Levelling-Up and Regeneration Act has reiterated the government’s commitment to improving the planning process and proposed reforms. These will deliver a more consistent, streamlined, and digitally enabled approach to the way planning applications are made, promoting faster and better decision making.

Building on this work, DBT will further develop its response to critical mineral supply chain risks by developing a vision for the role the UK can play. It will also consider new supportive policy proposals to build on the UK’s existing competitive advantages, particularly in the midstream economy.

Recommendation 4 – take a shared approach between government and industry to build a robust circular economy for critical minerals

We warmly welcome industry’s intentions to make better use of CRM already in circulation – increasing recovery, reuse and recycling rates and resource efficiency, to alleviate pressure on primary supply.  

The UK has world-leading recycling innovation, which can support a circular economy. For example, companies like HyProMag and Ionic Technologies are commercialising novel ways to recycle rare earth permanent magnets, and Altilium Clean Technology are developing technologies and infrastructure to recycle EV batteries. Government is supporting innovation through programmes such as the unlocking resource efficiency research project, which is aiming to minimise new resource use and maximise recycled, reused, remanufactured and low carbon materials to help decarbonise industry. Other circularity initiatives include:

• the Circular Economy Centre for Technology Metals (Met4Tech), part of UK Research and Innovation’s (UKRI) National Interdisciplinary Circular Economy Research (NICER) Programme, a £30 million programme to support research and development in the circular economy
• the £15 million UKRI Circular Critical Materials Supply Chains (CLIMATES) programme, which supports innovation in rare earth elements

Government is also exploring regulatory mechanisms to promote recovery of critical minerals from waste. The Department for Environment Food and Rural Affairs (Defra) is consulting on reforms to the waste electrical and electronic equipment (WEEE) regulations. The consultation proposes reforms relating to collection infrastructure for household WEEE financed by producers of electrical and electronic equipment, as well as reforms to “take-back” obligations that apply to distributors. Additional reforms under consultation could help ensure producers of vapes properly finance recycling costs when they become waste. Later in 2024, Defra, in collaboration with the devolved administrations, is also expected to consult on regulations for end-of-life batteries.  

We note the Task and Finish Group’s concerns about waste classification limiting the international movement of waste containing critical minerals. Waste exports and classifications are subject to international obligations – most prominently the Basel Convention and related OECD Decision.^{[footnote 1]} The Environment Agency (EA) implements UK law that is largely derived from these international obligations. The law is intended to balance the benefits of resource retention while ensuring that hazardous waste is dealt with in an environmentally sound manner and not dumped when exported to other countries. In England, the Waste Framework Directive (WFD) can support identification of materials that can be assessed as meeting end-of-waste criteria, which can contribute towards resource retention of critical minerals. If a material can meet those requirements, then it may be classed as non-waste and moved outside of waste controls.

We also note the Task and Finish Group’s suggestion to simplify UK Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH) guidance. Defra and the Health and Safety Executive (HSE) are exploring options for an alternative transitional registration model (ATRm) for UK REACH, which will lower costs and the administrative burden for industry. Further details on this will be shared this year, including a consultation.

Recommendation 5 – implement strategic international partnerships, trade deals, friend shoring

International collaboration is essential to building more resilient, diversified and responsible supply chains for critical minerals, and we fully agree with this recommendation. The UK has a role as an international dealmaker, leveraging our extensive multilateral engagement and our strong relationships with mineral-rich producer countries and consumer markets. 

The report highlights government’s significant progress over the past 12 months, including agreeing bilateral partnerships on critical minerals with international partners. In March 2023, Minister Ghani signed an MoU with Canada, in addition to those with South Africa, Saudi Arabia, Canada, Australia, Kazakhstan, Zambia, and Japan. The UK is also represented at major multilateral forums, including the Minerals Security Partnership (MSP), International Energy Agency, G7, International Organization for Standardization and others. This ensures that we are collaborating with close partners to improve the resilience and security of critical mineral supply chains. In October 2023, Minister Ghani co-hosted an MSP meeting at the London Metals Exchange, with a focus on boosting responsible investment and sustainable finance in critical mineral supply chains. 

Our international engagement takes into account our trading, diplomatic, development and economic security objectives. We are targeting our partnerships towards other countries according to their position as:

• a producer country of critical minerals
• its like-minded approach to market-led, transparent and diversified critical mineral supply chains
• a stated desire to work collaboratively with the UK

A core element of our international engagement is focussed on helping like-minded, resource-rich countries develop critical mineral resources in a market-led way that aligns with sustainability, transparency, human rights and environmental goals. It is essential to support development priorities, particularly in helping producer countries move along the value chain. The recent International Development White Paper commits to explore how its development tools can support the diverse, responsible, and transparent critical mineral supply chains. Through the Growth Gateway programme, part of the Foreign, Commonwealth and Development Office’s (FCDO) British Investment Partnerships Directorate (BIPD), we have committed to provide £2 million to the World Bank’s Resilient and Inclusive Supply-chain Enhancement (RISE) initiative. This will help developing countries increase manufacturing of clean-energy products and boost their participation in the minerals industry leading to quality local jobs and economic growth.  

Furthermore, UKEF is exploring working to uncover opportunities where government-backed finance can be an enabler for building supply chain resilience for UK companies. The BGS is also working internationally with other geological surveys to strengthen critical mineral supply chains and building capacity in low- to middle-income countries. 

The UK will continue to build international trade and partnerships on critical minerals to support our security of supply of critical minerals. The report’s findings will help ensure that the needs of UK industry are a driver in our international engagement.

Recommendation 6 – adopt a holistic approach to assess the environmental and social impacts of critical mineral supply chains

We welcome the emphasis that industry places on responsible sourcing of critical minerals. Government is committed to:

• playing a leading role in global efforts to drive up ESG performance
• levelling the playing field for responsible businesses
• improving the resilience of supply chains, by reducing vulnerability to disruption

The UK’s engagement in International Organization for Standardization (ISO) processes, such as the International Workshop Agreement on Sustainable Critical Mineral Supply Chains, supports efforts to unify international standards for critical minerals, including ESG standards. 

The UK supports voluntary human rights due diligence approaches by our businesses to respect human rights and the environment across their operations and supply relationships. In the extractives industry, the UK actively promotes compliance with the OECD’s Due Diligence Guidance for Responsible Mineral Supply Chains from Conflict Affected and High-Risk Areas. We are a founding member of the European Partnership for Responsible Minerals (EPRM), which promotes “responsibly sourced minerals”, with a particular focus on artisanal mining.  

The UK is an implementing country of the Extractive Industries Transparency Initiative (EITI). We are also championing the UN Resource Management System (UNRMS). This is a holistic framework to support the sustainable development and use of resources – for example, through government support for a UNRMS case study in the Copperbelt region in Zambia. 

Government will continue to work with businesses and international partners to tackle the myriad environmental, social and governance risks in critical mineral supply chains. This will ensure our supplies are more responsible and make our supply chains less vulnerable to disruption.

Recommendation 7 – support UK skills and innovation development

Government endorses the need for skills and innovation to support the UK’s development of domestic capabilities in the critical minerals midstream and circular economy.  

As set out in IOM3’s 2023 report on critical minerals value chain skills gaps to UK government into critical mineral skills, the UK faces a range of opportunities and challenges regarding skills to support critical mineral industries. Since publication of the Critical Minerals Strategy, DBT has worked with the higher education sector to boost skills in this area. For example, it has supported Camborne School of Mines to boost its position as Europe’s leading mining school, working with industry to launch a degree apprenticeship in mining engineering in 2023. UKRI’s Natural Environment Research Council has recently provided £2.6 million of funding for a brand-new centre for doctoral training at the University of Leicester. Training and Research Group for Energy Transition (TARGET) Mineral Resources will train up to 36 multidisciplinary mineral resources researchers. This will deliver skills and knowledge that cover the whole of the resources lifecycle and boost UK expertise in sustainable mineral resources. More broadly, through the Green Jobs Delivery Group, government, industry, the skills and education sector, local government and other relevant stakeholders are working together on a Net Zero and Nature Workforce Action Plan. This will enable the UK workforce to deliver net zero and wider environmental goals.  

Government also recognises the importance of boosting innovation in these fields. The Critical Minerals Research Landscape Review, sponsored by DBT and delivered by Innovate UK Knowledge Transfer Network, signposts large-scale publicly funded R&D programmes relevant to critical minerals, and sets out where further innovation is needed. As referenced in the response to Recommendation 4, the UK is supporting innovation in the circular economy, for example via the Met4Tech programme and Innovate UK’s CLIMATES programme.

Other specific recommendations to government

In addition to the overarching recommendations that the Task and Finish Group present in their report, there were several findings that government would like to acknowledge given the call to action for named departments:

‘Highly specialised materials limit substitutability and inhibit recycling’, page 26

Government notes the potential benefits that more flexible technical and design specifications in the defence sector could bring, including the potential for cost savings and increasing supply chain breadth and resilience. However, military equipment is designed to function in a range of extreme operating environments. Safety of service personnel and the ability of the equipment to continue functioning are paramount. Nonetheless, the Ministry of Defence will work with its supplier base to consider where potential trade-offs could safely be achieved.

‘Design of UK financing and contracts for power generation may limit turbines’ useful life’, page 49

The overarching principle behind the duration of the contracts for difference (CfDs) is a balance between minimising the overall costs on consumers and facilitating low costs of capital to encourage investment. This has been analytically modelled at 15 years in the UK. Across most jurisdictions, the most common contract lengths for renewable electricity support schemes are 15 or 20 years. Contract lengths greater than 20 years are typically only applied to technologies such as hydropower and geothermal.

While government appreciates the group’s rationale behind this recommendation, the Department for Energy Security and Net Zero (DESNZ) does not accept that the length of the CfD would cause premature decommissioning. The CfD scheme is designed so that a developer’s bidded strike price reflects the price required to recoup the capital investment of the project regardless of the contract duration of the CfD. When the CfD ends, the investment will have been paid off in the 15-year period and the developer is assumed to be able to continue generating on the merchant market until the end of the asset’s operating life. It is the developer’s choice when to retire, life extend or repower assets. Modelling shows that any additional increase to the CfD is a net cost to the consumer. Government is therefore not currently considering a change to the length of the CfD.

Closing remarks 

The Task and Finish Group on Industry Resilience for Critical Minerals has achieved its objectives to advise on UK industry’s critical mineral dependencies and vulnerabilities. We would like to thank the group for sharing its expertise and advice at this important time in delivering on the UK’s Critical Minerals Strategy. Whilst this initiative has reached its conclusion, the risks faced by UK industry will continue to evolve. It is important to maintain ongoing engagement between government and industry on supply chain risks, and DBT intends to use this network to continue to monitor risks and support businesses in their response.  

The Task and Finish Group’s insights will help shape future government policy. As committed to in the Critical Minerals Refresh, DBT intends to publish a Critical Minerals Strategy delivery update in the summer of this year. This will highlight progress on delivering the strategy for UK industry, upcoming delivery milestones, and setting out a vision for the role the UK in critical minerals value chains.

1. OECD Decision on the Control of Transboundary Movements of Wastes Destined for Recovery Operations. ↩