A parliamentary investigation has found the UK is 'dangerously' reliant on China for critical minerals essential to military rearmament, artificial intelligence infrastructure, and net zero delivery, with lithium demand projected to surge 45-fold by 2030. The Business and Trade Committee urged immediate creation of a critical minerals finance facility and a centralised strategy to diversify supply chains away from Beijing's refining dominance.
Key Takeaways
- UK parliamentary committee declares 'dangerous' dependency on China for critical minerals vital to defence, AI, and net zero.
- Lithium demand forecast to rise 45-fold and rare earths 16-fold by 2030; China dominates refining of seven mineral categories.
- Committee demands 'critical minerals finance facility' and 10-point diversification plan; says government fails all 10 tests currently.
- Government cites £400m funding and 2035 targets: 10% domestic production, 20% recycling, max 60% single-country dependency.
- US-China rare earth export reprieve expires January 2027, creating hard deadline for supply-chain resilience.
Executive Intelligence Brief
Committee Findings: Strategic Chokehold at the Processing Stage
The Business and Trade Committee, chaired by Liam Byrne, concluded that China maintains a stranglehold over the refining of seven categories of critical minerals, including the refined lithium required for electric vehicle batteries and rare earths used in military aircraft fuselages and wings to withstand temperature extremes. The committee heard that demand for lithium alone would increase 45-fold between 2024 and 2030, while rare earths needed for permanent magnets in military jets would rise 16-fold in the same period.
'Critical minerals are the alpha of the new economy,' Byrne stated. 'We cannot rearm Britain, build AI or deliver net zero unless we secure the minerals these technologies depend on. Yet 16 years after China first weaponised its chokehold over rare earths, Britain remains dangerously exposed.'
The report highlights the 2025 episode when China suddenly restricted rare earth exports, demonstrating Beijing's willingness to wield supply as a geopolitical lever. Separate restrictions on legacy chips following a dispute over the Chinese-owned Dutch firm Nexperia left the European car industry 'days away' from stoppages last October, illustrating the immediacy of supply-chain fragility.
Government Transparency and the 10-Point Plan
The committee said its investigation was frustrated by a lack of government transparency. 'Parliament has no visibility of the capabilities the government is seeking to protect, the vulnerabilities it has identified, or the projects it is backing to reduce risk,' the report states. The committee has drawn up a 10-point plan that includes identifying domestic mining, refining and recycling opportunities and their costs; a strategy to encourage business to reduce procurement from China; a plan to unlock investment; and an assessment of planning and permitting barriers to mining.
As it stood, the committee said it could not be confident the government could satisfy any of its 10 tests. 'The UK requires new institutional and financial muscle,' it concluded, specifically recommending a 'critical minerals finance facility' to deploy grants, equity and debt to accelerate diversification.
Government Response and 2035 Targets
A government spokesperson denied the absence of a critical minerals strategy, citing £400m committed 'to ramp up domestic production and recycling' and forge new international partnerships. The strategy sets explicit 2035 goals: meeting 10% of demand through domestic production, 20% through recycling, and ensuring no more than 60% of any critical mineral comes from a single country.
However, the committee's assessment suggests current efforts fall short of what is required to meet these targets, particularly given permitting delays and the absence of a dedicated financing vehicle.
Geopolitical Context: The US-China Reprieve and G7 Coordination
The report notes that Donald Trump secured a one-year reprieve on global rare earth export restrictions from Xi Jinping in October 2025, extended to January 2027 after the Chinese president's recent visit to Washington. This reprieve means the UK remains at the mercy of US-China relations. The committee argues the most 'realistic' solution is for the UK to work closely with G7 partners, Europe, and Indo-Pacific countries to 'aggregate demand' and bring new suppliers online.
Forward Outlook: Implementation and Monitoring
Key milestones ahead include the government's formal response to the 10-point plan, the design and capitalisation of the proposed critical minerals finance facility, and progress on G7/EU coordinated procurement initiatives. The January 2027 expiry of the US-China rare earth reprieve represents a hard deadline for supply-chain resilience measures. Parliament will also monitor whether planning reforms unlock domestic mining projects and whether the £400m allocation translates into operational refining capacity.
