Critical Minerals Association calls on UK government to facilitate responsible supply chains

The Critical Minerals Association called on the UK government to take urgent action to facilitate development of secure supply chains for responsibly sourced critical minerals, in its 'Breaking Down Barriers for Responsible Sourcing of Critical Minerals' report released July 18.

"We cannot build a green economy without responsibly sourced critical minerals," the CMA said, adding that without urgent action to secure supply, there could be serious implications for energy security, a just energy transition and the UK downstream industry's reliance on critical minerals.

"Actions, not words, will determine whether the UK will make the most of its advantages and opportunities to be a leader in responsible sourcing of critical minerals, or if it will fall further behind on the global stage," the CMA said in the report.

Numerous barriers exist to developing responsible critical mineral supply chains to meet the UK's net-zero and green economy ambitions, including access to capital, ESG (environmental, social and governance) standards, talent pipelines, and an enabling environment for local economic growth, according to the report.

To overcome these, the CMA made five recommendations, including a government statement of commitment, which would highlight the importance of creating responsible critical mineral supply chains and acknowledge increased demand for critical minerals needed for renewable energy and net-zero technologies at the COP27 climate conference in Egypt later this year.

Critical mineral prices have been strong in 2022 on the back of strong demand globally. Platts' seaborne lithium carbonate and lithium hydroxide assessments are up 110.65% and 136% respectively since the start of 2022 at $71,200/mt CIF North Asia and $74,800/mt CIF North Asia as of July 18, according to S&P Global Commodity Insights data.

The government should also create an enabling environment for domestic critical minerals projects by reviewing its planning and permitting processes and legislation to ensure local players are well-resourced and experienced, their roles and responsibilities are clarified and delays are avoided, while also ensuring projects adhered to international ESG best practices, the CMA said.

To achieve this, it recommended that the government establish a critical minerals coordinating body or a mining agency, as well as a coordinating body for companies and investors to have single points of contact in government.

The government should also add mining as a category to the Environmental Permitting Regulations 2016 in England and Wales and in the Scotland and Northern Ireland equivalents, the association said.

ESG forum

Another recommendation is to develop an ESG expert multi-stakeholder forum, which would include experts from industry, academia, NGOs and government collaborating towards aligning ESG standards in extraction, processing, recycling and the circular economy.

While supply chains are already complex, taking into account ESG and government policies makes them more so, although this could be assisted by adopting ESG best practice, the CMA said.

It said better equivalency of ESG standards is required and, although this is starting to take place, too many standards and complex systems remain. Further development and international alignment is needed to prove that ESG standards have been adhered to through scientific verification, assurance, provenance and blockchain technologies.

Suggested actions for the forum to take include UK alignment with international partners, the development of "green premiums" for ESG-compliant and recycled critical minerals, incentives for using verification technologies, developing auditing and regulating processes, and the creation and set up an ESG innovation fund.

Incentivize investment

The CMA also recommended that the government incentivize investment and feature responsible critical minerals exploration, extraction and processing as part of its "Green Finance" initiatives.

This would ideally include encouraging investment in ESG-compliant critical mineral projects with advanced decarbonization strategies, developing the UK's taxonomy on critical minerals, mineral extraction and processing, and de-risking investment by underwriting and supporting projects of national importance and providing financial assurances to UK companies.

Investors in the City of London could play a key role by holding their investments to account to adhere to best practice ESG, according to the report.

"Without significant investment in critical minerals exploration, upstream, midstream, recycling development, the world will not have sufficient access to the critical minerals... The question around who pays for ESG and recognizing the cost involved in best practice ESG is key for ensuring a level playing field between junior and major operators," the CMA said.

The final recommendation is the development of a talent pipeline and career pathways as part of the government's "Green Jobs" initiatives into fields along the critical mineral supply chain, such as geoscience, metallurgy, engineering, planning and circular economy.

"If the UK wants to attract private investment inwards for its industry and support job creation, particularly in levelling up regions, the UK and Devolved Administrations need to ensure that national and local government processes are aligned to national government strategies, and that areas such as planning and permitting are streamlined to recognize the urgency of the world's critical mineral needs, and to avoid unnecessary delays," the CMA said.