UK’s first magnet refinery gets financial boost as first-ever strategy for supply of critical minerals published

22 July 2022


Multi-million pound investment in UK’s first-ever magnet materials refinery – the second-largest outside of China – launches alongside UK Critical Minerals Strategy.

•    Government-backed Pensana to build the second-largest magnet materials refiner outside of China, in East Yorkshire, creating jobs and boosting UK’s electric vehicle (EV) supply chain

•    The facility claims to be the world’s first independent & sustainable rare earth separation plant

•    New Critical Minerals Strategy sets out measures to improve the resilience of critical mineral supply chains

•    Critical minerals – like those used in magnets – are essential to economic & national security and capitalising on growing industries

A multi-million pound investment in the UK’s first-ever magnet materials refiner was launched today – securing hundreds of jobs in East Yorkshire, and a strong foothold for Britain in the international market.

This comes as the Government publishes the UK’s first ever Critical Minerals Strategy to bolster the resilience of supply chains and seize on the economic opportunities of growing industries, such as electric vehicle (EV) manufacturing and offshore wind.

Speaking at the official opening of Pensana’s £145 million Saltend site today (Friday 22 July), Business Secretary, Kwasi Kwarteng confirmed that the facility will be developed to process the critical minerals used in magnets, a key component for manufacturing electric vehicles (EVs). Pensana expects operations to begin at the end of 2023.

The facility is backed by the Government’s Automotive Transformation Fund, an £850 million programme to electrify Britain’s automotive supply chain and protect our nation’s competitiveness in the global market. It will make the UK one of the only places in Europe to have the facility to refine the rare earth oxides used in the creation of magnets, and will also lead to the creation of 126 new and skilled jobs in the area.

As set out in the new Critical Minerals Strategy, minerals such as graphite, lithium and silicon are vital to the economy, as they are key components of products ranging from laptops to aircraft. But supply chains are complex and markets are volatile, with most critical minerals sourced from just a handful of countries, particularly China. This leaves UK jobs and industries reliant on minerals vulnerable to market shocks and geopolitical events. Ensuring UK firms have a resilient and sustainable access to critical minerals will be vital for the growth of future industries, such as EV manufacturing, which will support jobs across the UK for decades to come, and national security.

That’s why today’s strategy sets out plans to develop more robust supplies of these minerals for the vast range of industries reliant on them, protecting Britain’s interests into the future. The measures include bolstering domestic production, building the UK’s skills base, carrying out world leading research & development, and enhancing reuse and recycling. It also notes the importance of working with international partners and like-minded allies to build trading relationships and diversify supply chains.

Business & Energy Secretary, Kwasi Kwarteng said: “With rising geopolitical threats, Britain needs to move quickly to secure the rare earth minerals necessary to supply our future industries. Most of these minerals are sourced from just a handful of countries, leaving Britain vulnerable to market shocks. We need to develop and strengthen our own supply chains to protect our national security into the future.

Examples of clusters of critical mineral capabilities across the UK
Examples of clusters of critical mineral capabilities across the UK

Russia’s illegal invasion of Ukraine is a timely reminder of how global events beyond our control can impact supply chains, with profound consequences for the economy. To boost our domestic resilience, today’s Critical Minerals Strategy lays out our plan to bring high value manufacturing back to the UK to protect our country’s future access to supplies.

Our support for Pensana’s new facility in Yorkshire shows we are already putting the Strategy’s aims into action to diversify our supply chains away from dominant market players.

Pensana Chairman, Paul Atherley said: “Pensana is delighted to have secured funding from the UK Government’s Automotive Transformation Fund, which demonstrates the Government’s support for Pensana’s role in securing the UK’s magnets metals supply chain.

Our Saltend rare earth processing hub will be the world’s first independent and sustainable rare earth separation plant, with plans to produce 5% of the global magnet metals in 2024. This will play a vital role in transforming the UK’s EV and offshore wind industries, as well as creating high value local jobs in the Humber region.

Production of critical minerals is expected to rise sharply – some as much as 500% by 2050. They are often irreplaceable in the products people rely on for their daily life, in clean technologies and national security – from electric vehicles and mobile phones to wind turbines and fighter jets.

The new strategy sets out an “ACE” framework, with plans to accelerate growth of the UK’s domestic capabilities, collaborate with international partners, and enhance international markets. Work to develop the UK’s onshore supply chains forms just one part of what is planned domestically, with a focus on rebuilding skills, boosting research, and recycling and reusing more as well.

Actions are also planned to use the City of London’s unique position as a global trading hub for metals and minerals to make global markets more effective in delivering the minerals we need. Part of this will be to push for better environmental, social, transparency and governance standards in critical mineral markets worldwide. Holding the market for critical minerals to higher standards helps reduce the likelihood of unforeseen events causing supply problems.

The UK’s mineral mining heritage dates back to the Bronze Age. Cornish tinners, for example, were renowned and exported their innovations and expertise around the world. The UK has pockets of mineral wealth including lithium, tin, tungsten and others, found from the Highlands of Scotland to the tip of Cornwall, as well as clusters of expertise in refining and material manufacturing.

This follows the creation of the UK’s first Critical Minerals Intelligence Centre (CMIC) based in Nottingham. The Centre will improve the resilience of the UK’s critical mineral supply chain by providing policymakers with up-to-date data and analysis on supply, demand and market dynamics.

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