A major blow to the UK's rare earths industry has been dealt, as plans for a groundbreaking refinery in East Yorkshire have been scrapped. The project, led by Pensana, aimed to establish a strategic presence in an industry currently dominated by China. However, the company has decided to shift its focus to the United States, seeking investment and support there instead.
Pensana's ambitious $268 million project in Angola, one of the largest of its kind, will commence raw material production in 2027. The proposed refinery near Hull would have processed these materials into powerful magnets, essential for high-tech applications like electric vehicle motors, wind turbines, and robotics.
But here's where it gets controversial: despite the name, rare earths are not as rare as one might think. They are, in fact, abundant in the Earth's crust, but their extraction is costly and challenging. China, with its market power, has kept prices low, stifling competition and making UK refining uneconomical without significant government backing.
Chancellor Rachel Reeves, speaking at the International Monetary Fund, acknowledged the growing tension between the US and China over rare earths. She emphasized the need for the UK to develop its own critical minerals strategy to reduce reliance on others.
In 2022, Boris Johnson announced a multi-million-pound investment in the Saltend project, but according to Pensana's founder, Paul Atherley, this fell short of expectations. He compares the UK's contribution to a US deal with MP Materials, which received substantial investment and loan support, along with a 10-year agreement for minimum magnet prices.
Pensana has since announced plans to collaborate with US refiner ReElement, aiming to develop a sustainable rare earth supply chain. The company also intends to list its shares on the Nasdaq.
Mr. Atherley remains optimistic about the UK, citing his involvement in Tees Valley Lithium's plans for a lithium refinery in the Northeast. However, the government's response to the refinery's cancellation has been lukewarm, with a spokesperson expressing disappointment but emphasizing that it was a commercial decision.
The UK's future in the rare earths industry hangs in the balance, and the question remains: will the government step up to support critical mineral projects, or will the UK continue to rely on others for these essential resources? What do you think? Share your thoughts in the comments!
