UK MPs Urge Action to Reduce Dependency on Chinese Critical Minerals
Britain's exposure to Chinese control over critical minerals has become a matter of national security. A new parliamentary report warns that commercial dependence on China for raw materials essential to defence, clean energy and advanced manufacturing now poses strategic risks the Government must address urgently.
The House of Commons Business, Innovation, Science and Trade Committee argues that sixteen years after China first used its position in rare-earth markets as economic leverage, Britain remains dangerously exposed. Without faster action, the committee warns, reducing even a prudent proportion of this dependence could take more than a decade.
Critical minerals include lithium, graphite, cobalt, nickel and rare-earth elements. These materials are essential to batteries, electric vehicles, wind turbines, electronics and defence systems. Their defining characteristic is that they are economically vital but vulnerable to supply disruption.
China dominates production and refining across multiple critical-mineral markets. The UK Government has previously acknowledged that China is the largest producer of 12 of the 18 minerals Britain identifies as critical, either as a raw-material producer or as a refiner. Consequently, even minerals mined elsewhere often pass through Chinese-controlled processing facilities before reaching British manufacturers.
Recent Chinese export controls sharpen the debate
China has introduced export controls on rare earths, related compounds and permanent magnets in recent years. These measures have reinforced concerns that Beijing could use its market position to apply economic pressure or disrupt foreign industries dependent on strategically important materials.
Rare-earth elements are particularly significant. They are used in high-performance magnets, electronics, defence systems and low-carbon technologies. Parliamentary evidence describes rare-earth supply chains as highly concentrated in China and vulnerable to export restrictions, price volatility and low recycling rates.
Britain's exposure is growing. In 2025, China accounted for 88% of UK imports of scandium and yttrium rare-earth metals, up from 57% in 2020. The same evidence indicates that Britain's strategic dependence on China for these materials was negligible in 2015, demonstrating how quickly some vulnerabilities have intensified.
The Foreign Affairs Committee has also recognised China's dominant position across several critical-mineral markets. It warned that growing global demand creates a broader security-of-supply challenge that extends well beyond rare earths alone.
Projected demand for battery materials reveals structural dependence
Government projections illustrate the scale of Britain's anticipated reliance on imports by 2030. Demand for lithium is forecast to reach 113,400 tonnes, with domestic production expected to cover only 12,000 tonnes. That leaves 90% of demand dependent on imports.
Graphite demand is projected at 137,800 tonnes, with no domestic production planned. Cobalt demand is forecast at 76,610 tonnes, also with no domestic production. Nickel demand is expected to reach 416,100 tonnes, with domestic production covering just 39,000 tonnes.
These figures represent extraordinary growth. Lithium demand is projected to reach 45 times current levels by 2030. Graphite demand could be 15 times higher, cobalt demand 12 times higher and nickel demand eight times higher.
Importantly, Britain may source some ores from countries other than China. Australia is a major lithium mining source, for example, while cobalt mining is concentrated in the Democratic Republic of the Congo. However, China dominates refining and processing. As a result, British manufacturers can remain structurally dependent on Chinese supply chains even when raw materials originate elsewhere.
The Government published its first strategy in 2022
The UK published its first Critical Minerals Strategy in July 2022. It acknowledged that supply chains were complex and opaque, markets were volatile and distorted, and China was the dominant player in several important mineral markets.
An updated strategy published in November 2025 set targets for meeting 10% of UK critical-mineral demand through domestic production and 20% through recycling. The policy approach is built around three broad objectives: accelerating domestic production and processing, collaborating with international partners, and enhancing investment, recycling and market resilience.
The strategy recognises that complete self-sufficiency is neither realistic nor necessarily desirable. Instead, the Government's stated aim is to diversify supply, strengthen domestic capabilities where strategically justified and develop partnerships with trusted countries.
MPs call for precision de-risking, not self-sufficiency
The committee's central criticism is that the Government lacks a sufficiently precise understanding of which minerals are indispensable, where the greatest vulnerabilities lie and which domestic capabilities should be protected or developed. The committee calls this approach "precision de-risking," reducing the most dangerous dependencies rather than attempting to eliminate every import relationship.
The committee argues that secure mineral supplies are necessary for three strategic priorities: rebuilding and expanding defence capabilities, delivering the UK's net-zero transition, and developing the artificial-intelligence and digital infrastructure needed for future economic growth.
Committee members said Britain cannot afford to drift. Their recommendations address mapping, finance, domestic capacity and international cooperation.
Recommendations include mapping, finance and allied partnerships
The committee wants the Government to combine public and industry data to identify mineral needs that may be hidden within broad trade statistics. Ministers should publish which mining, processing, recycling and manufacturing capabilities Britain considers strategically essential.
Expanding domestic capacity includes improving geological surveys, supporting mining and processing, and increasing the recovery of valuable materials from waste. However, high UK energy prices can make domestic refining and processing uneconomic, weakening the business case for supply-chain investment.
The committee proposes building allied "buyers' clubs" where governments and companies share the costs and risks of developing mines, refineries and smelters. Individual projects can require investments of up to three billion dollars, making shared investment attractive.
A proposed Critical Minerals Finance Facility would coordinate public-finance institutions and offer equity, loans, long-term offtake agreements and price floors to strategic projects. The committee also wants British International Investment to be able to take equity stakes in overseas mining projects and UK Export Finance to have a wider economic-security mandate.
Separately, the report highlights concerns that the National Wealth Fund's 25 million pound minimum equity investment can exclude early-stage or smaller projects. Access to finance for smaller ventures therefore needs improvement.
Supply risks extend beyond outright embargoes
Dependence creates risks beyond an outright embargo. Supply disruptions could arise through export licensing, diplomatic tensions, production bottlenecks, price manipulation, transport interruptions or preferential treatment for domestic Chinese industries. Concentration in one country therefore leaves British companies exposed to decisions over which they have little influence.
Disruption could affect battery production, renewable-energy equipment, telecommunications, aerospace and defence manufacturing simultaneously. Critical minerals sit at the intersection of economic policy, national security and climate policy, meaning disruption would have cascading consequences across multiple sectors.
Diversification will be expensive and slow. New mines and processing plants can take years to permit, finance and construct. Recycling systems require sufficient volumes of end-of-life products and appropriate collection infrastructure. The committee's warning that meaningful de-risking could take more than a decade underscores the need for early investment rather than emergency intervention after a disruption has begun.
Key facts businesses should know
- China is the largest producer of 12 of the 18 minerals identified as critical by the United Kingdom, either as a raw-material producer or as a refiner.
- In 2025, China accounted for 88% of UK imports of scandium and yttrium rare-earth metals, up from 57% in 2020.
- Demand for lithium is projected to reach 45 times current levels by 2030, with graphite demand 15 times higher, cobalt demand 12 times higher and nickel demand eight times higher.
- The Government has set targets for meeting 10% of UK critical-mineral demand through domestic production and 20% through recycling.
- The Business, Innovation, Science and Trade Committee warns that reducing even a prudent proportion of Britain's dependence could take more than a decade.
- High UK energy prices can make domestic refining and processing uneconomic, weakening the business case for supply-chain investment.
What this means for businesses with exposure
Manufacturers relying on batteries, magnets, electronics or low-carbon technologies should assess their supply-chain exposure now. Companies tendering for public-sector contracts or defence work may face increasing scrutiny over the origin of critical materials in their products.
Businesses involved in electric-vehicle production, renewable-energy equipment or advanced manufacturing need to understand whether their suppliers depend on Chinese refining capacity. This applies even where raw materials are mined outside China.
Price volatility is likely to increase as governments compete for limited supplies outside Chinese control. Consequently, businesses should consider long-term supply agreements where possible and monitor geopolitical developments that could affect export licensing or trade restrictions.
Recycling and recovery of critical minerals from end-of-life products may become more economically attractive as primary supply chains face disruption. Companies with access to waste streams containing lithium, cobalt, rare earths or other critical materials should evaluate whether recovery is commercially viable.
Energy-intensive refining and processing operations in the UK face a cost disadvantage compared to competitors in regions with lower energy prices. Businesses planning domestic processing capacity should factor in energy costs and consider whether support mechanisms or long-term offtake agreements could improve project economics.
For companies with operations in sectors identified as strategically important, there may be opportunities to access public finance through proposed mechanisms such as the Critical Minerals Finance Facility. However, the committee's report suggests that smaller or early-stage projects may struggle to meet current investment thresholds.
Public procurement rules may evolve to favour supply-chain resilience alongside cost and environmental criteria. Businesses able to demonstrate diversified sourcing or domestic processing capabilities may gain a competitive advantage in future tenders.
The committee's emphasis on allied partnerships suggests that companies with operations or supply relationships in trusted partner countries may be better positioned than those dependent solely on Chinese processing. Diversification will take time, but businesses that begin now will be ahead of competitors who wait for government intervention.
SBS supports businesses managing supply-chain risk
We work with manufacturers and suppliers navigating sustainability compliance, supply-chain due diligence and tender requirements. Our sustainable procurement support helps businesses assess and mitigate supply-chain risks, including dependencies that could affect contract eligibility or tender competitiveness.
As public procurement increasingly weighs supply-chain resilience alongside carbon and environmental criteria, businesses need to understand where their exposure lies. We help companies map their supply chains, identify vulnerabilities and develop responses that satisfy both commercial and compliance requirements.
For businesses affected by critical-mineral dependence, early action creates strategic options. Waiting until disruption occurs or new regulations take effect reduces flexibility and increases costs. Our approach is to help businesses understand their position, identify practical steps and implement changes at a pace that aligns with their commercial realities.
The Government's targets for domestic production and recycling will shape market conditions over the next decade. Companies that anticipate these shifts and adjust their sourcing, processing or product design accordingly will be better positioned than those that react only when forced to change.
Where to find further information
The UK Critical Minerals Strategy sets out the Government's policy approach, domestic-production targets and international partnerships. It includes detail on priority minerals and strategic objectives.
The House of Commons Business, Innovation, Science and Trade Committee published its report on UK dependence on China for critical minerals in 2025. The report includes evidence, analysis and detailed recommendations.
The Department for Energy Security and Net Zero leads policy on critical minerals and publishes updates on implementation of the strategy.
Businesses seeking guidance on supply-chain resilience and public-procurement requirements can refer to Procurement Policy Note 06/21, which sets out carbon-reduction and supply-chain expectations for major government contracts.