Lithium: Critical Minerals Supply — [Sir Gary Streeter in the Chair]

Part of the debate – in Westminster Hall am 3:24 pm ar 23 Ebrill 2024.

Danfonwch hysbysiad imi am ddadleuon fel hyn

Photo of Alan Mak Alan Mak Minister of State (Department for Business and Trade) (jointly with the Cabinet Office) 3:24, 23 Ebrill 2024

It is a pleasure to serve under your chairmanship, Sir Gary. I congratulate my hon. Friend Steve Double on securing this debate. He is a long-standing advocate for his home county of Cornwall and for the UK’s minerals industry. He has spoken powerfully about the importance of critical minerals to our economy and the role that Imerys, British Lithium and Cornish Lithium play in his community. He told us that he established the all-party parliamentary group for critical minerals. He is too modest to say this, but he is the driving force behind all those Hansard mentions of critical minerals, and I congratulate him on that. He speaks with great authority on the subject and I am grateful to him for giving us the opportunity to discuss it today.

I thank Jim Shannon, my hon. Friend Cherilyn Mackrory and Richard Thomson for their contributions to this debate, and I thank the Opposition spokesperson, Sarah Jones, for her kind words of welcome as I take up this post. I also wish to recognise the work of my predecessor in this role, my hon. Friend Ms Ghani. As we have heard, she worked extensively on this issue, and I know that she will continue to support it in her new role in the Foreign, Commonwealth and Development Office.

My predecessor recently visited three key mining projects in Cornwall, including two lithium mines in the constituency of my hon. Friend the Member for St Austell and Newquay. Since I started this role four weeks ago, I have spoken to several UK mining companies, including Cornish Lithium and Johnson Matthey, with Pensana to come. I look forward to seeing for myself more growth-spurring, job-creating projects in the future, and I look forward to visiting Cornwall as soon as I can.

As my hon. Friend rightly notes, we are moving to a world powered by critical minerals. As we heard, we need lithium, cobalt, nickel and graphite to make batteries for electric cars; silicon and tin for our electronics; and rare earth elements for electric cars and wind turbines. These critical minerals are characterised by having the highest levels of economic importance and the highest levels of supply risk. We know that they will become even more important over time as we seek to bolster our energy security and domestic industrial resilience, while pursuing cleaner, green forms of energy production. As my hon. Friend the Member for Truro and Falmouth indicated, the world in 2040 is expected to need four times as many critical minerals for clean energy technologies as it did in 2020. However, we know that critical mineral supply chains are complex and vulnerable to disruption.

Traditionally, production is highly concentrated in certain countries. For example, China refines close to three quarters of the world’s lithium carbonate for batteries and around 90% of the world’s rare earth metals. State intervention in these markets is high. Supply chains are often fraught with environmental, social and governance issues and the market does not fully differentiate products on their ESG credentials.

All these issues present challenges to the UK’s security of supply, because UK industries and jobs, our energy infrastructure and our defence capabilities all rely on minerals that are vulnerable to market shocks, geopolitical events and logistical disruptions, at a time when global demand for these minerals is rising faster than ever. The Government’s view is that it is imperative for us to make our supply chains more resilient and more diverse. We need to support British industry now and in the future. That work is inextricably linked to both our energy security and our national security. For all these reasons, this Government have acted decisively to ensure that we have resilient domestic supply chains that give our businesses the long-term certainty they need.

As my hon. Friend said today, back in July 2022, we published our first ever critical minerals strategy, setting out our approach to improving the resilience of critical mineral supply chains. Above anything, it is a strategy that recognises that critical minerals are a multifaceted issue. It provides an overarching framework for accelerating our domestic capabilities, promotes closer collaboration with international partners and seeks to enhance international markets.

We always said that we would need to monitor global events and recalibrate our approach as necessary. That is one of the reasons we published the critical minerals refresh in March last year, reflecting the changing global landscape, highlighting progress to date and setting out our approach to delivering the strategy for UK businesses. Working closely with industry, we are already making good progress with the strategy, which I will say more about later, but we recognise that there is more to do.

I reassure my hon. Friend and all Members that we take a comprehensive and strategic cross-Government approach to critical minerals. While the Department for Business and Trade leads on critical minerals strategy, the delivery and evolution of the strategy and many of the policy levers lie outside my Department, and therefore we co-operate with Departments across Whitehall. I also reassure him that officials from my Department engage closely and regularly with officials in the Department for Energy Security and Net Zero where necessary.

It is also important to note that we support UK industries, especially those that depend on a steady flow of critical minerals, to seek resilience and diversity in their own supply chains. That is why last year we launched the independent task and finish group on industry resilience for critical minerals—a first-of-its-kind initiative for industry-Government engagement on critical minerals supply risks. The task and finish group has raised the importance of critical minerals with key industrial sectors, helping them to manage the risks in their supply chains. It has also given us insights about the UK’s dependencies and vulnerabilities, and published a report containing a series of recommendations on how to best guide the delivery of our strategy. The Government warmly welcome the group’s report and our full response to those recommendations was published last month. I encourage Members to read that report if they have not already.

As my hon. Friend the Member for St Austell and Newquay will be aware, the Government launched the Critical Minerals Intelligence Centre in 2022, in partnership with the British Geological Survey, to monitor risks in supply chains and assess just how critical different minerals will be over time. Their first assessment identified 18 critical minerals, including lithium, rare earths, tungsten and tin, and an update is due by the end of this year.

These are vital efforts but we know that our work is not yet done. That is why we continue to work with industries across the board to support resilience and diversification in their supply chains. We re-emphasised that commitment in our critical imports and supply chains strategy, published by my Department at the beginning of this year. As my hon. Friend mentioned, the Critical Imports Council is a key part of that work. I was proud to chair its inaugural meeting earlier this month and I welcome that the Critical Minerals Association and the Institute of Materials, Minerals and Mining are key parts of it. I look forward to working with them, as I know my hon. Friend does.

Here at home, we are supporting UK critical minerals producers to take advantage of the opportunities right along the value chain, including in Cornwall. While we will always rely on international supply chains, we have to maximise what the UK can produce domestically; my hon. Friend made the case for that powerfully. We need to make sure this is done where it is viable for businesses, and where it works for communities and our natural environment, as my hon. Friend the Member for Truro and Falmouth rightly mentioned. I agree with her that the UK is perfectly placed to lead on midstream processing, including refining and materials manufacturing, building on its globally competitive chemicals and metals sector.

My hon. Friend the Member for St Austell and Newquay is absolutely right that we have the capabilities to mine or refine enough lithium in the UK to satisfy more than our demands by 2030, but that is not true of all critical minerals. We have more than 50 projects at various stages of development to mine, process and recycle critical minerals domestically, and we want every one of those to be set up for success. That is why, to accelerate the growth of our domestic capabilities, the Government are investing big in critical minerals programmes. Our automated transformation fund, for example, is supporting projects in automotive supply chains, such as British Lithium, Green Lithium and Pensana. Meanwhile, as my hon. Friend will know, the UK Infrastructure Bank has invested over £24 million in Cornish Lithium. I was pleased to meet both the chief executive and the chief financial officer of that company in my second week in this role, which I hope underlines the importance of that company and his county to me and the strategy. They are part of a growing ecosystem, which includes gigafactory footprints that are getting bigger by the week.

At the same time, the Government are taking decisive steps to reduce the price of energy, as my hon. Friend the Member for Truro and Falmouth mentioned, to ensure competitiveness with other major economies across Europe, including through the British industry supercharger, which she will know comprises a series of targeted measures to bring energy costs for key industries into line with our major competitors.

As my hon. Friend the Member for St Austell and Newquay knows, the UK is also a pioneer in recovering critical minerals from waste, and we are ensuring that we stay ahead of the pack through Innovate UK’s circular critical materials supply chains programme to build and develop resilient supply chains. We are also exploring regulatory mechanisms to promote battery, waste-electricals and equipment recycling, which is an opportunity for this country.

The Government have a clear vision for the role the UK can play in critical minerals supply chains and we are throwing our full support behind business to harness and grow our competitive advantage, but we know that Britain cannot go it alone on critical minerals. International collaboration is key to building more resilient, diversified and responsible supply chains both here and around the world. The UK therefore has a role to play as an international deal maker, leveraging our extensive multilateral engagement and our strong relationships with mineral-rich producer countries and consumer markets.