The UK has identified its weaknesses in the critical mineral space
The midstream is a particular weakness, with risks of work continuing to go abroad unless more facilities are built
Technology may have an impact on demand, but impact in the medium term will be negligible

Countries need to secure and process large amounts of critical raw materials for new technologies to achieve net zero.

Batteries for electric vehicles, hydrogen electrolysers, offshore wind turbines and new grid infrastructure require critical materials with rising global demand.

Supply chains are concentrated in specific countries for these materials and trade protectionism re-emerged during the Covid-19 pandemic. Consequently, many nations have begun working on strategies to improve supply chain resilience.

Supply chain resilience

In its 2022 Critical Minerals Strategy, the UK published a list of critical minerals needed for transition and other technologies. Amongst others, it included lithium, cobalt and nickel, which are used in battery manufacture. Meanwhile, platinum and palladium are used in hydrogen manufacture and use.

Most mining and production of these resources is done overseas.

The government commissioned an analysis of the UK’s supply chain resilience for critical minerals. At the end of last year, the “Task and Finish” group published a report.

“The work of the Task & Finish Group identified that a key area of strength for the UK is in the midstream of critical raw material value chains, as well as the opportunity to increase material circularity,” said the group’s final report.

Strengthening its midstream position would give the UK a foothold in critical materials supply chains without abundant domestic resources, helping build resilience.

Much of this midstream activity occurs overseas, particularly in China. According to the IEA Global Critical Minerals Outlook, it has around a 35% share of global nickel refining, 50-70% of lithium and cobalt, and nearly 90% of rare earth elements refining.

Circularity

The UK already has a key presence in the midstream for the precious group metals (PGMs) platinum and palladium. Johnson Matthey is the world’s largest secondary refiner of PGMs and the world’s largest recycler by volume.

Recycling critical materials is a key focus for the nation’s strategy, given the lack of primary resources for these materials in the UK and nearby regions.

“Circularity is crucial,” said Margery Ryan, PGM Research and Strategy Manager at Johnson Matthey.

Johnson Matthey produces a significant amount of PGM salts and intermediates for its technology businesses to make products or sells to companies worldwide for PGM-based technologies.

“The refinery we have in the UK is one of the few in the world that can do full five metal refining, which means it not only handles platinum, palladium and rhodium, but also does ruthenium and iridium,” said Ryan. Iridium is a key element in hydrogen production electrolysers.

Room for research

Despite the UK’s strengths, there is plenty of room for growth in the midstream of critical mineral infrastructure.

Ryan called for the UK to leverage its strong presence in PGMs. She said this could help develop new technologies, such as Sustainable Aviation Fuel (SAF) and enhanced biomass use for chemicals, materials and fuels, which require these materials.

“We think there’s a massive opportunity here for the UK to exploit, but it requires R&D.”

There is room for improvement in other sectors. According to the Observatory of Economic Complexity, the UK has no copper smelter, despite being the fifth largest exporter globally.

Edinburgh-based Evolve Metals is building a facility in the northeast to refine pure copper from scrap metal to address the problem. More capacity is needed, as electricity network upgrades – a crucial factor in the transition – require large amounts of metal.

“We would question the fact that copper is not on the critical minerals list,” said Ryan.

Scaling up

Another area for improvement is in the battery material midstream. Recycling firm EMR plans to establish a lithium-ion battery raw materials extraction plant in Birmingham, starting at demonstration scale in the first half of 2025. This will extract nickel, cobalt and lithium from batteries.

Other firms are developing similar plants in Europe. The UK should quickly develop more such plants to strengthen its presence in critical material supply chains, according to Gavin Mudd, Director of the UK Critical Minerals Intelligence Centre (CMIC).

“In terms of circularity, an area for development within the UK is making sure once material is collected it gets fully recycled. That’s where some of the midstream infrastructure is missing in the UK.”

“There are technologies out there that can do this, but often they don’t scale up economically yet. So people are working on how to come up with better processes to make it more economic,” he added.

Indigenous supplies

The UK has some indigenous critical mineral resources. Developing these is key to ensuring resilience.

“We’ve got some nickel despots that contain platinum up in Scotland, we’ve got deposits of lithium in Cornwall. There’s also potential for the clay deposits in the South West, which also contain some lithium,” said Mudd.

Cornish Lithium is one of the principal firms developing Cornwall’s lithium resources.

The firm plans to use two extraction methods, one from sub-surface water and one from granite rock. It will process on site to produce lithium chloride. It will then send this to offtakers for conversion into lithium hydroxide, for lithium-ion batteries.

The firm plans to refine some lithium chloride to battery-grade lithium hydroxide itself. But a key midstream supply chain gap remains.

“What’s missing in the UK supply chain is a cathode active materials facility, where the lithium hydroxide or carbonate is mixed up with other battery materials to make materials for the battery itself. There’s only two companies that do that in Europe at the moment: BASF and Umicore,” said Jeremy Wrathall, CEO of Cornish Lithium.

*Jeremy Wrathall, CEO of Cornish Lithium, visiting No 10* *in August 2024*

Domestic demand

Despite this, the firm is discussing potential UK offtakers, but it has not reached any firm deals. Tata Group battery manufacturer Agratas is working on plans to start production in Bridgwater, Somerset. This is expected to generate some lithium demand when operations begin in 2027.

Cornish Lithium aims to produce 10,000 tonnes per year of lithium hydroxide. This is around 10% of UK demand in 2030, as forecast by the Faraday Institution. The company aims to meet UK demand but will export if necessary.

Most lithium is produced from spodumene mined in Australia and processed in China. Cornish Lithium believes its products can compete on price with overseas lithium once freight costs are included. Its processes produce around 40% fewer carbon emissions than spodumene refining.

Developing native lithium resources is important because a secondary market for the material is not developed.

“It takes a long time for enough cars to be in the system to provide batteries to be recycled to produce sufficient lithium to meet demand. There may come a time when years that happens, but we are not there yet,” said Wrathall.

*Molten PGM in arc furnace. Source: Johnson Matthey / George Brooks*

Demand-side management

Besides circularity, another method of reducing the risk of critical minerals is demand-side management where substitute materials or technologies displace demand.

“Circularity is crucial, but it has to be coupled with demand side management, including increased efficiency of metal use and the investigation of substitute materials,” said Johnson Matthey’s Ryan.

Several battery technologies are being promoted to address critical minerals supply chain concerns. One of the most prominent is solid state batteries.

Some solid-state batteries may use less cobalt than lithium-ion batteries. But most varieties under development use more lithium.

New technologies take time to become established, face commercialisation problems or prove too expensive.

“As things stand, we believe that new battery technologies are not going to shift the needle to close the expected gaps for critical minerals for batteries,” said Ryan.

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