The House of Commons Business, Innovation, Science and Trade Committee has proposed a Critical Minerals Finance Facility to support mining, processing and recycling projects, warning that British industry remains exposed to concentrated international supplies of materials used in defence, energy equipment and advanced manufacturing.
Its report, published on 5 November, calls for public financing institutions to coordinate investments through equity, loans, long-term purchase commitments and, where appropriate, price floors. The proposals are intended to help projects overcome high development costs and uncertain commercial returns, but would require further government decisions before any new facility could operate.
The committee’s inquiry examined dependencies across mineral supply chains rather than extraction alone. Critical materials can pass through several countries between the mine and the manufacturer: ore is processed into concentrates, converted into refined metals or chemical products, and then incorporated into components such as magnets, batteries and electronic devices.
This separation creates vulnerabilities that may not appear in a manufacturer’s direct purchasing records. A British engineering business can buy a finished component from a European supplier while the underlying refined material is sourced through a concentrated processing market elsewhere. Understanding that exposure requires more detailed information than the immediate country of import.
China’s position in mineral refining is central to the committee’s concerns. Citing international evidence, the report identifies China as the leading refining country for 19 of 20 strategic minerals, with an average market share of approximately 70%. Mining operations outside China do not necessarily eliminate that dependency if the extracted material must still be processed there.
The committee argues that the UK must identify the particular minerals and processing activities for which a disruption would create unacceptable industrial or security risks. That approach would distinguish between inputs that can be substituted or sourced comparatively easily and those whose absence could interrupt production of strategically important equipment.
Demand forecasting is another recommended priority. Existing trade statistics do not consistently reveal the quantity of a critical mineral embedded in imported motors, power systems, vehicles or other finished goods. The report calls for government and industrial intelligence to be combined so that future demand assessments better reflect the materials ultimately consumed by UK manufacturing.
Domestic extraction, refining and recycling could reduce selected dependencies, but the committee identifies obstacles to investment. Geological information needs updating, energy costs affect the viability of processing facilities, and planning and financing requirements can delay projects long before a new plant is ready to deliver commercial output.
Energy-intensive mineral processing can face particularly high operating costs. The committee records evidence that electricity at a UK nickel refining operation cost almost 60% more than at a comparable French facility. Such differences can weaken the financial case for domestic production even where technical skills and potential markets are available.
Recycling is also underdeveloped relative to the volume of material leaving the country. According to the report, around 80% of UK metal waste is exported rather than processed domestically. More local recovery could supply secondary raw materials, although the amount ultimately available would depend on separation, collection quality, metallurgical recovery rates and the economics of recycling different metal streams.
The proposed Critical Minerals Finance Facility would bring together institutions with different existing mandates. The committee recommends allowing British International Investment to take equity stakes in overseas mining projects that strengthen supply security, while widening UK Export Finance’s remit to support investments contributing to economic security rather than only conventional exports.
It also identifies the National Wealth Fund’s £25 million minimum equity investment as a potential barrier for smaller processing and early-stage projects. Industrial-scale mines may need large funding packages, but specialised refining, separation and recycling technologies can begin with smaller facilities whose financing needs do not fit the same thresholds.
Long-term offtake agreements could help such projects secure capital by providing prospective buyers and lenders with greater certainty about future sales. A purchaser committing to take material over several years can support a project’s revenue assumptions, although contractual commitments must still address product quality, volumes, delivery terms and the risk of commissioning delays.
The committee also proposes allied purchasing arrangements in which partner governments and industries pool demand or financing for alternative sources. New mines and smelters can require investment reaching US$3 billion, making international cooperation potentially important where an individual country’s market is too small to support a project independently.
Stockpiling offers a more immediate, though limited, protection against supply interruption. The report recommends introducing a critical minerals reserve initially aiming to maintain approximately 60 days of supply for defence capabilities, with procurement structured to support domestic mining and refining where possible.
A stockpile cannot replace a working production chain indefinitely. Material must be acquired, stored in a usable form and managed against changes in industrial specifications, while downstream processors need the equipment and capacity to turn stored material into components. The committee therefore presents strategic reserves as one part of a broader diversification programme.
Public procurement could reinforce the proposed changes by rewarding greater resilience in supply arrangements. The committee wants purchasing decisions and larger contracts to consider the origins of critical inputs and the progress suppliers make in reducing exposure to vulnerable chains, rather than relying solely on immediate price and delivery commitments.
The report also recommends domestic processing incentives and closer coordination with allied countries. Its conclusions recognise that the UK’s dependencies have developed over decades and cannot be removed quickly: establishing new mines, refineries and industrial supply agreements may require ten to fifteen years.
The finance facility, new institutional powers and proposed reserve are not current government programmes. The report places those measures before ministers for consideration, while manufacturers continue to depend on existing import arrangements and the investment decisions of mineral producers and processors.
