UK minerals group warns of investment flight after rare earth project scrapped

The UK Critical Minerals Association has warned that the country's critical minerals sector faces mounting pressure to retain investment after rare earths developer Pensana reportedly abandoned plans for a British refinery in favor of a US-based facility.

On Oct. 16, UK media outlets reported that Pensana had cancelled plans for the GBP250 million rare earths processing refinery at the Saltend Chemical Park in the Humber Freeport near Hull, citing comments from CEO Paul Atherley. The company will reportedly shift its refining operations to the US where the Trump administration is ramping up financial support for domestic critical minerals production.

Pensana has not replied to emailed requests for confirmation of the decision from S&P Global Commodity Insights.

In a statement emailed to Commodity Insights, CMA CEO Kirsty Benham described Pensana's decision to cancel the project as "disappointing" given that the previous UK government had offered a grant of up to GBP4 million to help finance the Saltend refinery.

According to Benham, the decision reinforces the need for the UK to develop "the most globally competitive business environment" in order to compete against the considerable financial incentives being offered to critical minerals suppliers in countries, such as the US.

In August, the Trump administration announced it would propose almost $1 billion to advance and scale up mining, processing and manufacturing technologies in the critical minerals and materials supply chains.

"The Chancellor [Racheal Reeves] needs to recognise that the UK cannot be globally competitive without offering the right fiscal environment to attract and retain companies and investors," Benham said, adding that the CMA looks forward to the new UK Critical Minerals Strategy due later this year.

"More than ever, the UK needs to see leadership from the highest levels of government to retain the advantages of home-grown critical minerals businesses, or risk losing many more in the months and years to come," Benham said.

The UK published its first Critical Minerals Strategy in July 2022, identifying 18 critical minerals essential for economic and national security. The strategy aimed to diversify supply chains away from Chinese dominance.

The group's warning comes as the US and the UK seeks to reduce dependence on China for critical minerals essential to renewable energy and defense technologies. Access to rare earths and rare earth permanent magnets is considered particularly urgent given Beijing's increasingly restrictive export regulations.

China announced an expansion of its restrictions on rare earth exports on Oct. 9, following a licensing system China imposed on exports of rare earth materials in April. Chinese exports of permanent magnets containing rare earths plummeted, later recovering in July and August after talks with the US.

According to the US Department of Commerce, China controls nearly 60% of rare earth mining operations, more than 85% of processing capacity and more than 90% of permanent magnet production. China also holds a similarly dominant position in the processing of other critical minerals, such as lithium, copper, cobalt and graphite.