UK's Rare Earth Refinery Dreams Dashed: Why the Future Lies in the US

In a surprising turn of events, Pensana, the company behind a groundbreaking rare earths refinery planned for East Yorkshire, has opted to abandon its ambitious project in favor of seeking investments in the United States. Over the past seven years, Pensana has made significant strides developing a rare earths mine in Angola, projected to deliver vital raw materials by 2027. The original plan was to establish a refinery at the Saltend Chemicals Plant near Hull, capable of processing these materials into metals for powerful magnets, essential for electric vehicles, wind turbines, and robotics.

This refinery was intended to place the UK strategically in the rare earths industry, currently dominated by China. However, due to economic feasibility issues stemming from China’s market manipulation, Pensana has deemed the project unviable without substantial government support. Chancellor Rachel Reeves emphasized the importance of developing a robust critical minerals strategy to reduce dependency on countries like China during a recent meeting with G7 leaders.

Although plans for the refinery were backed by a multi-million pound investment announced by former Prime Minister Boris Johnson, the company claims that the actual funding of £5m fell considerably short of what was needed. In contrast, the US’s collaboration with MP Materials exemplifies a more lucrative arrangement, boasting over half a billion dollars in investment and favorable contracts to ensure their magnets are sold at stable prices.

In light of these developments, Pensana is now pivoting towards partnerships in the US, including collaboration with ReElement, to foster a sustainable and independent rare earth supply chain. Despite the setback, Pensana’s chairman Paul Atherley maintains optimism for the UK market, highlighting ongoing initiatives like a lithium refinery through another venture in Tees Valley.

The UK government, while expressing disappointment, recognizes the move as a commercial decision and plans to publish a new Critical Minerals Strategy, aiming to bolster long-term supply stability and reduce industrial electricity costs for businesses.