The UK has invested millions of pounds of taxpayers’ money in a £150m rare earths processing site in the north of England as part of the launch of the country’s first rare earths strategy. critical minerals to weaken China’s stranglehold on vital materials used in electric cars, wind turbines and fighter jets. jets.
The government’s first undisclosed investment to bolster its supply of critical minerals goes into a project led by London-listed Pensana to turn rare earth oxides into metals – crucial ingredients for magnets needed in automotive sectors and renewable energies.
Industry experts have raised concerns about Pensana’s level of disclosure, the quality of its resources and the compensation of its executives, while saying its goal of producing 12,500 tonnes of separated rare earths and 5% of global magnetic metal production by 2024 is too ambitious.
China controls about 80% of the world’s processing capacity for rare earths, a set of 17 elements that are difficult to process in large quantities. Beijing has used its dominance of the rare earths supply chain to gain geopolitical advantage, banning exports to Japan over a territorial dispute in 2012.
“China dominates the sector and China will consume all of its rare earth resources for its own production,” said Paul Atherley, president of Pensana. South Korea and Japan would initially buy material produced at the Hull plant for magnet production until the UK has domestic magnet manufacturing capabilities, he said.
Security of metal supplies became a priority for Western governments after Russia, a huge producer of nickel and platinum, waged war on Ukraine.
“We only have to look at the gas situation in Europe where Germany is too dependent on Russian gas,” Kwasi Kwarteng, state secretary for business, told the Financial Times. “You need a sovereign capability here in the UK.”
But some rare earth experts are pessimistic that Pensana is the only one to help the UK do it. The company is to raise $250 million by the end of the year and plans to import rare earth oxides from its Longonjo mine in Angola, where construction is just beginning.
The ore will first be processed in Angola to produce the rare earth oxides which will then be separated into metal at the Hull plant.
But industry experts are troubled by the risks involved with the project. Thomas Kruemmer, author of the Rare Earth Observer blog with 10 years of experience in the industry, said processing the ore in Angola would generate large volumes of thorium, a radioactive material, likely requiring the involvement of the nuclear watchdog. of the United Nations, the International Atomic Energy Agency.
“There’s a lot of hot air and promise,” he said, adding that miners listed in Canada or Australia would have been required to release a lot more information in feasibility studies.
Per Kalvig, a senior researcher at the Center for Minerals & Material, echoed those concerns and warned that processing the ore and transforming it into the refined metal products used in high-tech magnets normally involves multiple specialist processing companies.
“The plan for full production in 2024 does not seem feasible unless Pensana announces very soon that it will be teaming up with an experienced partner,” he said. “The expertise required across the value chain from mine to magnet does not develop overnight.”
Atherley, who previously raised $120m from investors for a uranium project in Spain that was never built, will receive £275,000 a year, which can rise to £750,000 with bonuses.
The base salary of Pensana chief executive Tim George is £300,000, which can rise to £1.2million, according to the company’s annual report. Industry figures say executives of small-cap miners with salaries above £250,000 are generally a red flag.
Atherley said the company would store thorium in tailings sites in Angola, that its financiers were happy with his education and that his salary was nothing out of the ordinary compared to lawyers and brokers in the City of London.
The UK released its critical minerals strategy on Friday to bolster the country’s supply of metals essential to the energy transition such as lithium, graphite and silicon.
The document did not provide for any new funding, but said the government would use existing funds to support domestic mining projects and to work with development banks to use the aid to support mining projects overseas.