Britain remains dangerously exposed to economic coercion because of a dependence on “weaponised” Chinese critical minerals, MPs have warned
Britain is dangerously vulnerable to economic blackmail due to its reliance on “weaponised” Chinese critical minerals, MPs have cautioned. An inquiry has found that without securing supplies of critical minerals, Britain cannot re-arm, achieve net zero or construct AI infrastructure deemed essential for future prosperity.
The Business, Innovation, Science and Trade Committee has stated the Government appears unable to meet its 10 tests to “precision de-risk” UK supply chains and start countering the threat of economic coercion. According to experts, China controls the refining of nearly all critical minerals.
The country’s leadership unofficially blocked exports of rare earth elements to Japan in 2010, after Japan’s detention of the captain of a Chinese trawling vessel over a dispute in the East China Sea.
This reportedly triggered a 26-fold surge in commodity prices. The Government’s critical minerals strategy forms part of efforts to tackle supply chain vulnerabilities and protect sectors including defence, clean energy and advanced manufacturing.
However, the committee has revealed Britain lacks current geological surveys, while high energy costs render domestic processing uneconomical.
Around 80% of UK metal waste is shipped abroad rather than recycled domestically, while outdated restrictions on public finance institutions are hindering investment in alternative supplies, it added.
The committee has urged a five-part plan to address Britain’s most dangerous dependencies. These recommendations include prioritising sovereign capabilities in areas where reliance on China poses unacceptable risks, and combining government and industry intelligence on minerals currently obscured within trade statistics to predict demand.
The committee additionally called for domestic mining, processing and recycling to be maximised, alongside the creation of allied ‘buyers’ clubs to share the costs of new mines and smelters.
A critical minerals finance facility should also be established, bringing together institutions to fund strategic projects.
The committee recommended “freeing” British International Investment, the Government’s development finance institution, to take equity stakes in overseas mining ventures.
It also pushed for widening UK Export Finance’s remit to bolster economic security, while highlighting how the National Wealth Fund’s £25 million minimum equity investment makes financing smaller, early-stage projects particularly challenging.
Committee chairman Liam Byrne said: “Critical minerals are the alpha of the new economy. We cannot re-arm Britain, build AI or deliver net zero unless we secure the minerals these technologies depend on. Yet 16 years after China first weaponised its chokehold over rare earths, Britain remains dangerously exposed.
“We don’t know enough about what minerals we need or where to find them. Our energy costs make processing uneconomic, we’re exporting valuable metal waste, and our public finance institutions are shackled by outdated rules. We’re never going to eliminate Chinese minerals from our supply chains.
“But it’s foolish to leave Britain exposed to economic coercion when we could be building alternative supplies. That’s why we need a new critical minerals finance facility with the financial firepower to invest in new mines, processing plants and recycling, working with our allies to share the costs. De-risking even a prudent proportion of our supplies will take over a decade. Britain cannot afford to drift.
“We must act now before dangerous dependencies become strategic liabilities.”
A Government spokesperson responded: “We are taking bold action through our critical minerals strategy, forging new international partnerships to improve our supply chains, while also delivering £400 million to ramp up domestic production and recycling.
“Our strategy also sets clear goals for 2035, including meeting 10% of demand through domestic production and 20% through recycling, with no more than 60% of any critical minerals coming from any single country – building resilience for industry both at home and further afield.”