UK 'far behind' in critical minerals supply chain, urged to take action

The critical minerals industry urged the U.K. government to take "urgent action" on myriad environmental, social and governance challenges so miners can better facilitate a green economy.

The Critical Minerals Association, which represents the U.K.'s critical minerals supply chain, released a blueprint in June 2021 on responsible sourcing of critical minerals to build the U.K.'s green industrial revolution. It pushes for government action on miners' challenges of access to capital, the talent pipeline, planning and permitting, and ESG standards.

The association's follow-up paper released July 18, "Breaking Down Barriers for Responsible Sourcing of Materials," said key obstacles remain.

"Community opposition/relations, access to water, safeguarding biodiversity, regulatory and planning complexity, lack of capacity, and knowledge of mining among national and local government decision-makers" were cited as key roadblocks to the development of the U.K.'s critical minerals by risk and ESG consultancy Satarla Ltd.'s Aldo Pennini in an email interview. Pennini co-chairs the Critical Minerals Association's ESG working group.

U.K. 'far behind' U.S., Australia, Canada on critical minerals

In October 2021, the U.K. government released its net-zero strategy that importantly mentioned critical minerals. The government said the U.K. would become the first G-20 country to require its largest businesses to disclose their climate-related risks and opportunities, which helps ensure miners are ESG-compliant.

Britain's energy security strategy in April highlighted the importance of securing the critical minerals needed for the green energy transition to reduce global reliance on Russian fossil fuels, cutting Russian energy revenues after its invasion of Ukraine. The British Geological Survey also announced the U.K.'s first critical minerals list June 30.

However, more needs to be done to compete with other mineral-rich Western countries.

"The U.S., Australia and Canada have all recently committed billions to critical mineral projects, plans and investment, and we are far behind. There are quite a lot of changes that need to occur," Kirsty Benham, co-founder of the Critical Minerals Association, told S&P Global Commodity Insights.

"If you reduce reliance on Russian oil and gas but don't develop your own critical minerals, you'll end up relying on Russia again for things like nickel to create your renewable energy, so you're back to square one," Benham said. This urgency needs to "trickle down" from the national level to all levels of government, Benham added.

Mark Thompson, CEO and co-founder of Tungsten West PLC, hailed the July 4 creation of the Critical Minerals Intelligence Centre and the recently formed Critical Minerals Expert Committee as positive steps. Tungsten West said July 19 that it would restart the Hemerdon mine, believed to be one of the world's largest tungsten deposits, in the first half of 2023.

Yet "there is still a significant way to go to support junior mining companies in bringing important projects from exploration into production," Thompson told Commodity Insights.

"Security of supply is a key issue for the West and the U.K., and the government should be aiding these organizations financially, particularly at present with the cost base inflated, and creating a more seamless permitting process, thus creating a clearer path to production," Thompson said.

Metal-intensive transition to a green future

The transition to a net-zero economy will be metal-intensive, and the extractives sector, which needs to provide vast quantities of raw materials, requires a long lead time and is highly capital-intensive. Thus, the Critical Minerals Association's 2022 paper said protracted tenure acquisition and permitting make it tough to progress projects and raise capital.

"The U.K. government needs to appreciate the need for increased metals production to achieve the energy transition, as well as the many stakeholders that have diverse interests in metals production and their ESG performance expectations of the sector," SRK Consulting (UK) Ltd. sustainability consultant Jane Joughin, a key contributor to the blueprint's finance and permitting sections, said in an email interview.

"It also needs to advance governance frameworks supporting responsible mining in the U.K. and to ensure the country secures access to critical minerals," Joughin said.

There is "rapid evolution" in the thinking of the wide range of actors that participate in the mining industry on responsibilities for sustainable development and resource stewardship, whose influence can "exceed that of governments in many jurisdictions," Joughin said.

"Recognizing mining as very much part of the low-carbon sustainability-focused future, the mining sector's many stakeholders are leveraging change and/or laying out their views on the ideals," Joughin said. "The mining sector stakeholders currently having [the] most influence on the ESG performance of mines are financiers and downstream manufacturers."

Rethinking mine permitting

ESG-related issues can add years to project approvals and mine development, and projects take at least 10 years from concept to operation, according to Satarla's Pennini.

"If we are to meet the Paris goal of keeping global warming below 2 degrees Celsius [from pre-industrial levels], governments will need to rethink how they approach mine permitting," Pennini said.

Yet miners face an uphill battle given community attitudes, and the Critical Minerals Association also wants a federal coordinating regulatory body overseeing the various levels of permitting that miners see as confounding.

"Few young people consider the industry as a career option. More education and communication is needed. This is urgent given how critical minerals and mining are to addressing climate change and how quickly supply of some minerals will need to grow to meet future demand," Pennini said.

The U.K.'s Department for Business, Energy and Industrial Strategy, which handles the critical minerals sector, has been contacted for comment. The U.K.'s landmark Critical Minerals Strategy was launched July 22.

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