Focusing on our strengths: refining the UK’s critical minerals strategy

Executive Summary

Critical minerals lie at the nexus of security, green energy technologies and industry. They are essential to a wide range of current and future UK economic activities, but the Conservatives were too slow in recognising vulnerabilities in the UK’s access to them. The UK was, in the words of Conservative MP and former chair of the House of Commons foreign affairs select committee Alicia Kearns, “asleep at the wheel”.

The previous government’s belated “strategy” provided a useful broad framework, and has been followed up with some progress in the last two years. But it is fundamentally not strategic; it is general, rather than tailored to the UK’s specific needs, comparative advantages or industrial policy ambitions. Its international dimension is under-developed. Nor was it supported with the policy tools, resources or structures to deliver it.

In short, the last government’s approach was too slow, too general and too unsupported. The UK has been left behind, lagging partners like the US and EU, who increasingly compete across the value chain. This matters because it leaves the UK exposed to external supply risks. Despite recent falls in price for some minerals, in the long-term demand for many is projected to outstrip supply globally. Refining and processing are also heavily concentrated in a few countries such as China that are increasingly willing to leverage this.

The new government has already taken promising first steps, such as enabling UK Export Finance to provide financial support to overseas projects firms supplying critical minerals to UK exporters in highgrowth sectors. In December, the Minister for Industry Sarah Jones signalled that a new critical minerals strategy will be published in Spring 2025. This paper sets out why this new strategy is needed and puts forward recommendations on how to approach it.

These recommendations are based on interviews with more than 20 industry and policy stakeholders in the UK and beyond. They are non-exhaustive, focusing on three overarching points. (1) The UK needs to tailor its strategy to its interests and advantages. This must be supported with (2) the right institutions and (3) policy tools. The UK should do more domestically, but its limited minerals reserves mean that international policy will also be key. The paper therefore closes with a more detailed set of international policy recommendations.

Strategy: focusing on UK interests and advantages

The new government cannot and should not simply replicate the choices made elsewhere. De-risking critical minerals supply chains is likely to be expensive, which means prioritisation is essential. This prioritisation process should be guided by a few key principles.

First and foremost, an effective strategy will require a clear assessment of the risks the UK faces, the comparative advantages it holds and what its industrial strategy ambitions are.

UK businesses have identified a lack of critical minerals supply resilience as an increasing risk to the country’s industrial base. However, the UK currently has a largely indirect exposure given that it primarily imports critical minerals in finished goods and components.

This means that the UK has an interest in ensuring well-functioning, diversified global critical minerals supply chains that also allow it access to components and finished goods. But its direct exposure will also grow if it aims to compete for more of the green jobs and growth of the future by making more inputs for the green transition, as the new government claims. This means that the upcoming industrial strategy will be hugely consequential. Perhaps due to an instinctive aversion to industrial policy, the Conservatives failed to make the choices needed to underpin a coherent 4 5 critical minerals strategy. The new government deciding, in close partnership with business, what the UK’s long-term industrial priorities are will be foundational to all that follows. This is because determining what critical minerals, and which stages of the value chain, the UK will most likely rely on in future will shape what areas and to what extent it makes sense to prioritise now. In short, the new critical minerals strategy must be closely informed by the industrial strategy due in spring 2025.

It should also leverage the UK’s critical minerals comparative advantages. The UK is a hub for the mining industry and finance; it must better use this. Other strengths include: ESG and responsible mining standards expertise; human capital assets and R&D; and specialist midstream and recycling operations.

Second, while the UK has some critical minerals reserves (e.g. tin, tungsten and lithium), security of supply will depend largely on foreign, trade, development and defence policy.

Third, the new government’s approach should reflect both Labour’s values and its pragmatism. In other words, it should align with Foreign Secretary David Lammy’s doctrine of progressive realism. For example, the UK should promote responsible mining standards, but do so in ways that strengthen rather than undermine resilience of supply.

Institutions: removing the siloes

Under the previous government, policy responsibility was spread across departments in a way that created siloes and uncertainty about roles. But critical minerals is a textbook case of the need to bring together many areas of domestic and international policy, including economic, business and trade, energy, foreign, development and defence policy. One option for doing so is through clearer coordination from the centre.

Policy: strengthening the toolkit

Once established, the UK’s key strategic priorities on critical minerals will then need to be targeted with proportionate support at home and abroad. This will require a strengthening of our policy toolkit. We can learn much from the tools used by partners, tailoring them to the UK’s needs. Examples include: setting targets for priority areas; creating a system to identify and support “strategic projects”; and using innovative ways to catalyse private investment.

A clearer role for international policy

Some of what the UK can do will be domestic, for instance on recycling and demand reduction. But given the UK’s limited minerals reserves and the global nature of the challenge, international policy will be key to ensuring security of supply. The UK’s focus should be on working with others to catalyse responsible private investment in additional extraction and - particularly - refining capacity.

Delivering this will require the development of a new clean energy diplomacy, through both minilateral efforts and bilateral partnerships. The UK must work more closely with like-minded partners. This includes the EU, which was neglected by the previous government, and in the Minerals Security Partnership (MSP). Particularly close coordination, for instance through AUKUS, is needed on the minerals that matter for defence.

But the UK must also work more closely with minerals-rich countries. One forum for achieving this could be the new government’s nascent Global Clean Power Alliance. In contrast to Global North-centric “buyers’ clubs”, this should put greater emphasis on ensuring that both minerals-rich and minerals-poor countries