The UK business secretary has said a critical minerals alliance between major world economies “makes sense” as the US continues to recruit partners to curb Chinese dominance.
Amid US proposals to create a new critical mineral trading bloc to counter reliance on top producer China, UK business and trade secretary Peter Kyle said “alliances make perfect sense, as long as they take into account the specific peculiarities of domestic markets”.
“All of us have different needs, and all of us are producing different minerals so we have to make sure that it’s completely cooperative,” he told reporters at a UK Export Finance (UKEF) event on Thursday, February 5.
Kyle added he was approaching any strategic partnership talks “with a can-do spirit”.
His comments came as the UK and US governments signed a new partnership to “speed up efforts to secure the critical minerals needed to boost domestic production and power the industries of the future” following a summit in Washington DC on Wednesday.
Ministers from dozens of other countries – including several EU members, South Korea, India, Japan and Australia – gathered in the US capital for fresh talks on co-operating to break China’s dominance of the sector.
Western nations agreed in 2024 to collaborate on expanding export credit agency backing and development finance for critical minerals, following concerns over lagging investment in long-term supply and over-reliance on China.
Critical minerals are crucial for sectors such as technology, defence and renewables, but EU auditors warned this week that financing the extraction, mining and processing of minerals was still in early stages.
A McKinsey report in October last year also said that nearly US$5tn in capital expenditure could be needed to address a looming shortfall in metals supply.
The UK government’s Critical Minerals Strategy, published last November, pledged up to £50mn of new funding to “turbocharge domestic production and processing”.
“It might well be that these things will take time to deliver, and we can’t wait for the alliances before we start acting, and that’s why what [UKEF] is doing is so important,” Kyle told journalists.
UKEF CEO Tim Reid added that the export credit agency is “absolutely focused on critical minerals – we’re looking to enhance our product suite to be able to help with that critical minerals challenge or opportunity”.
Reid said the agency had already announced “a couple of new product interventions where we can support projects on the basis of offtake – meaning imports of critical minerals – rather than only traditional exporting”, via its recently launched Critical Goods Export Development Guarantee.
The government has also put forward legislation to increase UKEF’s capacity from £80bn to £160bn.
“Part of our incremental capacity and our ability to help will flow into the [critical minerals] sector, and we’ll be looking to do more over the months and years to come,” Reid said.
