The UK's Missed Opportunity: A Rare Earths Refinery Heads to the US Instead
In a move that has sparked both disappointment and debate, plans for a groundbreaking rare earths refinery in East Yorkshire, UK, have been abruptly shelved. The company behind the project, Pensana, has opted to seek investment in the United States, leaving many to wonder about the implications for the UK's strategic position in the global rare earths market. But here's where it gets controversial: could this decision be a symptom of a larger issue—the UK's struggle to compete with the aggressive investment strategies of other nations, particularly the US and China?
Pensana has spent the past seven years developing a rare earths mine in Angola, a $268 million (£185 million) project poised to become one of the largest of its kind globally. By 2027, it’s expected to start delivering raw materials. The original plan was to build a refinery at the Saltend Chemicals Plant near Hull, where these materials would be processed into metals essential for creating powerful magnets. These magnets are the unsung heroes of modern technology, powering everything from electric vehicle motors and wind turbines to advanced robotics. For the UK, this project represented a golden opportunity to gain a strategic foothold in an industry currently dominated by China. And this is the part most people miss: despite their name, rare earths are not actually rare. They’re relatively abundant in the Earth’s crust but are notoriously difficult and costly to extract, making their supply chain a high-stakes game of global economics.
So, what went wrong? According to Pensana, China has been using its market dominance to artificially suppress prices, effectively stifling potential competitors. This has made refining rare earths in the UK economically unviable without substantial government support. In 2022, then-Prime Minister Boris Johnson announced a 'multi-million pound investment' in the Saltend project as part of the Tory government's 'Critical Minerals Strategy.' However, Pensana's founder and chairman, Paul Atherley, revealed that the actual contribution—a mere £5 million—was 'nowhere near enough.' In contrast, the US government has struck a deal with MP Materials, offering over half a billion dollars in investment and soft loans for a similar facility in California, along with a 10-year price guarantee for the magnets produced. This stark disparity raises a thought-provoking question: Is the UK doing enough to secure its future in critical industries?
Earlier this year, Pensana announced a partnership with US refiner ReElement to develop a 'sustainable, independent rare earth supply chain,' and the company is now planning to list its shares on the Nasdaq stock exchange. Atherley remains optimistic about the UK's potential, pointing to another project he’s involved in—Tees Valley Lithium, which is moving forward with plans for a lithium refinery in the Northeast. Yet, the decision to shift focus to the US has left many questioning the UK's commitment to fostering innovation and securing its place in the global tech race.
A spokesperson for the Department for Business and Trade expressed disappointment but framed it as a commercial decision for Pensana. They assured that a new Critical Minerals Strategy is in the works to secure long-term supply chains and highlighted efforts to reduce industrial electricity costs as part of the modern Industrial Strategy. But is this enough to prevent future opportunities from slipping away?
Bold Question for You: Should the UK government have done more to retain this project, or is it reasonable to let private companies make such decisions without significant public intervention? Share your thoughts in the comments—let’s spark a debate!
