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03 December 2024

UK Prioritizes Supply Security Amid Mineral Shortages

New assessment highlights growing dependency on imports and China’s influence on global mineral supply chains

The demand for specific minerals to achieve advanced technologies and energy transitions is soaring, raising alarms about the stability of supply chains globally. The UK's latest assessment of these 'critical minerals' unveils significant concerns, spotlighting its reliance on imports and China’s tightening grip on the production of these key resources.

According to findings from the British Geological Survey (BGS)-managed Critical Minerals Intelligence Centre (CMIC), gallium, germanium, and magnesium are flagged among the top ten minerals facing serious supply disruption risks. This year’s report, released on November 28, 2023, evaluated 82 raw materials, vastly broader than the 26 reviewed back in 2021. From this extensive analysis, 34 minerals emerged as imperative, including 17 newly identified materials.

Among the minerals sustaining their 'critical' status are bismuth, gallium, indium, magnesium, silicon, and tellurium. These designations resonate with parallel assessments from other global economic powerhouses like the EU, US, Canada, and Australia, underscoring the competitive race for securing these resources.

The growing need for gallium, germanium, bismuth, and magnesium reflects not only their utility across various advanced industries but also emphasizes collaborative efforts across nations to stabilize supplies. For example, gallium has remained pivotal for semiconductor manufacturing, whereas germanium plays significant roles within fiber optics and solar panel technologies.

Yet the stakes are high. The UK, like many other countries, does not produce key raw materials, relying heavily on imports, which raises big concerns about national security and economic stability. The UK’s report pointedly remarks on its lack of domestic production of gallium, germanium, indium, silicon metal, or tellurium—an alarming indication of dependency particularly as China holds the lion's share of mining and refining operations.

Trade regulations are shifting under this market pressure. China, which currently oversees 94.9% of refined gallium production and 92.2% of refined germanium production worldwide, has undertaken export restrictions since August 2023, reverberations of which are already visible on the market. Prices soared following these policy shifts—gallium jumped from $250-265 per kilogram to $470-550, and germanium rose steeply from $1,350-1,400 to around $2,850-3,000 per kilogram.

Such measures indicate the precarious nature of mineral supply chains, as highlighted by analysts. “China’s controls have exposed gaps and vulnerabilities,” observes Emre Uzun, Fastmarkets analyst, shining light on the broader impacts of these changes leading to higher prices for strategic materials and increased anxiety among market participants.

For the UK, the pathway to rectify these supply chain vulnerabilities involves more than just relying on conventional sources. The government is currently reviewing its industrial strategy, signaling intent to bolster domestic capabilities across eight identified growth sectors, including advanced manufacturing and clean energy — all industries intricately tied to the use of these minerals.

The importance of securing stable supplies becomes echoed within governmental reforms and international strategies aimed at ensuring long-term sustainability and competitive advantage. With significant potential for innovation and alternative sourcing, the dual pressures of geological realities and geopolitical tensions shape the future for UK supply chains.

Perhaps the most compelling aspect of this debate is the urgency felt across industries and governments alike. The race to secure these minerals has intensified. The new assessment elucidates the fragility of current pathways and incites discussions concerning future-proofing strategies against potential disruptions. Addressing these vulnerabilities not just benefits companies but also preserves the UK’s economic resilience and energy security.

Over the horizon, if strategic planning and investments are aligned effectively, there might be prospects of Levelling-Up within the sector. Emphasizing collaborative partnerships between the government, industry, and global supply partners will be pivotal. A combination of strategic foresight complemented by innovation could potentially alleviate some of the looming risks identified within this new report. Yet, as the world shifts rapidly to embrace advanced technological solutions and renewable energy sources, the call for examining and strengthening supply chains has never been more urgent.

Through proactive and collective action, nations grappling with mineral dependencies might navigate through this maze of uncertainties, turning vulnerabilities primarily identified in the recent assessment toward more stable and sustainable solutions.

While we stand on the brink of new technologies, the lessons learned during this period of reevaluation may pave the way not only for the UK but for countries worldwide striving to secure their future mineral needs.

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