Rare earths and the fight for independence

In 2020, reacting to the US defence deal with Taiwan, China threatened to cut off its supply of rare earths to three defence manufacturers, including F-35 fighter plane producer Lockheed Martin. 

China’s threat was a warning to countries across the world – and an incentive for them to secure independent rare earth supplies. According to a US Congressional report in 2013 each F-35 contains 417 kilograms of rare earths. 

It’s not just jet fighters. Rare earths such as neodymium and praseodymium are essential to countless hi-tech industries, from batteries for electric vehicles to magnets for wind turbines. And they are vital to MRI scanners, televisions, computer screens, cameras and more. 

While rare earths are not particularly rare, they are hard to find in quantities that make them economic to process. And they are unevenly distributed around the world – so unevenly as to create a mass of geopolitical problems. 

By far the biggest reserves are found in China, Vietnam, Brazil and Russia, which between them hold an estimated 106,000 tonnes – compared with just 1,800 in the US and virtually none in the European Union. Worse, in the eyes of the US and the EU, almost all processing of rare earth ores is carried out in China.

Around 95 per cent of all electric vehicles use traction motors containing rare earth magnets – and China produces 90 per cent of them. Only by developing its strength in refining and separation, from the late 1970s, did China gain a stranglehold over the supply chain. Competing producers went out of business.

The British government, wedded to the myth that market forces will save everything and that state intervention is useless, has been late in formulating its own independent strategy to ensure a reliable supply of rare earth metals to industry.

In November 2021 the UK all-party parliamentary group on critical metals was advised that Britain’s dependency on imported minerals leaves it strategically vulnerable. But this can be changed. There is nothing (including intermittent EU whines about a “level playing field”) to prevent this government from pursuing an independent rare earth investment policy.

Strategy

It has taken time. Finally on 22 July this year, standing in a construction site in Saltend, Hull, business secretary Kwasi Kwarteng announced the government’s response: the Critical Minerals Strategy. 

The strategy talks a good talk about establishing a British supply chain for battery production. But hopes that the government will have the foresight to plan for the long term may be unduly optimistic, strategy or no strategy. 

Workers will need to take charge of the planning for their own futures. In the field of metallurgy this means pushing for policies that will put R&D and skills in the working of both base and precious metals at the forefront.

Outsourcing to obtain cheap goods is what free-market capitalism does. The consequences can be disastrous. The shortages during the pandemic were a mere foretaste of what could happen: UK car production was the lowest for 65 years.

Renewable energy relies on rare earths. Each electric car motor needs 2 kilograms of rare earth magnets – while wind turbines can require up to 400 kilograms. No wonder a report for the US Army in 2019 described rare earth elements as “the new oil”. 

Towards the end of last year the EU launched its European Raw Materials Alliance (ERMA), aiming to cut its 98 per cent dependency on China and increase its output of magnets fourteenfold by 2030. But there’s been little progress so far.

Alena Vishina, a researcher at the University of Uppsala, reckons that it could take 10 or 20 years for the EU to significantly reduce its reliance on China. And even that seems to rely on a plant being constructed in Norway, which is not in the EU but has significant deposits of rare earths.

In the United States, the Ore Act was introduced to develop domestic rare earth capacity, and the Biden administration included rare earths among only three other industries in its supply chain review. But legislation has stalled. 

Whereas China has safeguarded its own rare earth industry from the global free market, the US still takes the shortsighted path of cheap imports. Britain must not make the same mistake.

There are many instances of rare earth-bearing minerals in Britain, for example associated with lead-zinc-fluorite mineralisation in the North Pennines. To date, there has been no mine production, and limited evaluation of potential (in Scotland and Wales). The British Geological Survey considers density is too low to be of economic interest. But the BGS also says more systematic studies are needed, and rare earths are a priority for further investigation. 

‘The US is still taking the path of cheap imports. Britain must not make the same mistake…’

The union Unite has taken up the cause of Britain’s “sovereign capability”, calling on the government to protect critical industry and strategic security assets from the US policy of “buy it, sweat it, flog it” (a witty reference to defence company Meggit). The union wants investment to be spent in the Britain, with guarantees “that must extend to the supply of key components and materials”. This is a call that should extend to all manufacturing, not only defence. Britain’s metals are part of our “sovereign capability”.

Unite’s call for the government to intervene when jobs are threatened, using the Enterprise Act, was based on the bitter experience of sell-offs in electronics (see article, page 6). 

Under the National Security and Investment Act 2021 the government holds extended powers to mitigate risk to Britain’s intellectual property. In the context of advanced materials and components, it “pledges to maintain advantage...if UK companies...are controlled by hostile actors”. Do these pledges mean anything?

To howls of protest from the EU – in July this year it complained formally to the World Trade Organization – Britain is realising the full potential of its surrounding seas. The proliferation of wind farms in areas such as Aberdeen, Swansea, and Dogger Bank off the Yorkshire coast, is proving fertile ground for the magnet magnates. 

Alongside this, the recycling of so-called permanent magnets is set to be big business at Pensana’s Humber plant, bringing extra jobs (see Box). The magnets in the turbines are not as permanent as they sound (“permanent” in this use means “always on”). But they can be recycled. Hence the Hydrogen to Humber recycling programme at Saltend. 

Globalism

Pensana has globalist ambitions, shipping minerals to SE Asia and the US, later to the EU. Unions and parliament should be vigilant: lucrative exports should not leave Britain itself short of essential minerals. Free-market non-intervention can only harm Britain’s prospects.

An industrial renaissance has started following Britain’s departure from the EU. The main task now is to assert control over our trade and supply chains, whichever foreign power attempts to dominate, or simply happens to have developed mastery (which could be said in the case of China). 

Independence means not becoming a pawn in anyone’s trade war, maintaining our own regulatory standards, and opposing sell-offs.

• Related article: New factory on the Humber