A major opportunity for the UK to establish itself in the rare earths industry has been lost, as a groundbreaking refinery project in East Yorkshire has been scrapped. This development is a significant blow to the country's ambitions in this critical sector.
The Rise and Fall of Saltend's Rare Earths Refinery
For over seven years, Pensana has been working on a $268 million rare earths mine in Angola, a project that would have been a game-changer for the global market. The plan was to build a refinery at Saltend Chemicals Plant near Hull, processing raw materials into powerful magnets for high-tech applications like electric vehicles, wind turbines, and robotics.
But here's where it gets controversial: despite the UK's strategic interest, Pensana has decided to seek investment in the US instead.
Rare earths, despite their name, are actually quite common minerals found in the Earth's crust. However, their extraction is complex and costly, giving China an edge in the market. China has allegedly used its market power to keep prices low, making it challenging for other countries to compete without significant government support.
Chancellor Rachel Reeves has acknowledged the growing tension between the US and China over rare earths and is working with G7 counterparts to reduce reliance on these critical minerals.
In 2022, Boris Johnson announced a multi-million-pound investment in the Saltend project, but Pensana's founder, Paul Atherley, claims this contribution fell short, and the Treasury was unwilling to provide more support.
Atherley highlights a stark contrast with a US government deal with MP Materials, which received over half a billion dollars in investment and soft loans for a similar facility in California, along with a 10-year agreement for minimum magnet prices.
Pensana has since announced plans to partner with US refiner ReElement to develop a sustainable rare earth supply chain and list its shares on the Nasdaq.
Atherley remains positive about the UK, with another of his companies, Tees Valley Lithium, moving forward with a lithium refinery in the Northeast.
The Department for Business and Trade expressed disappointment but acknowledged the decision as a commercial one for Pensana. They plan to publish a new Critical Minerals Strategy to secure supply chains and reduce industrial electricity costs for businesses.
So, what does this mean for the UK's future in the rare earths industry? And is the government doing enough to support critical mineral projects? These are questions worth exploring further.
