The UK’s export credit agency has launched a guarantee to bolster Britain’s critical minerals supply chains amid intensifying competition from China.
UK Export Finance (UKEF)’s new Critical Goods Export Development Guarantee is aimed at UK-based businesses that supply critical mineral products to UK exporters – even if they are not exporters themselves.
For instance, a British manufacturer that supplies a metal alloy component containing critical minerals to the UK electric vehicle industry seeking a loan to build a large-scale production site is eligible for the guarantee if its customers export part of their output.
To qualify, the supplier must be conducting business in the UK and supplying more than 50% of those critical minerals goods to UK exporters.
As part of the new scheme, UKEF will provide an 80% guarantee on finance provided by commercial lenders, thereby reducing lenders’ risk when backing suppliers.
This will “enable these suppliers to access high-value finance, helping them to secure long-term import contracts or invest in domestic capability”, particularly in “strategic sectors such as automotive, clean energy and advanced manufacturing”, UKEF said in a statement on November 24.
UKEF CEO Tim Reid added: “The Critical Goods Export Development Guarantee marks a significant step forward in UKEF’s mission to support UK exporters and strengthen our economy.
“By backing UK-based companies who are vital to our export supply chains, we’re not just providing finance – we’re helping to build a more secure foundation for UK businesses to compete globally.”
The UK’s Critical Minerals Association welcomed the announcement, with CEO Kirsty Benham hailing it as a “key pillar for securing the UK’s position in critical minerals supply chains”.
The scheme will operate alongside UKEF’s existing Critical Minerals Supply Finance, which supports overseas companies that have agreements to supply critical minerals goods to UK exporters.
Through the new guarantee, UKEF can only back the supply chains of minerals listed in the UK Criticality Assessment 2024, as well as “growth minerals” such as beryllium, chromium, copper and uranium, identified in the government’s recently unveiled Critical Minerals Strategy.
The strategy, published on November 22, and backed by up to £50mn of new funding, sets out a 10-year plan for securing critical minerals for the UK.
Labour has said it would “put an end” to the country’s “overreliance on foreign imports” by ramping up domestic production and “protecting the UK from shortages in global shocks like natural disasters or war”.
Critical minerals are vital for sectors like renewables, technology, automotive and defence.
But China’s current dominance of global production and supply chains makes Britain “vulnerable from overreliance on a select few exporters for its supplies of materials needed to power things like electric vehicles and wind turbines”, the government has warned.
UKEF has welcomed the government’s decision to bolster domestic production.
A recent McKinsey study claimed nearly US$5tn in capital expenditure could be needed globally to address a looming shortfall in metals supply.
