Britain’s hopes of becoming a critical mining superpower have been hit hard after one of its major companies abandoned plans to build a rare earth refinery near Hull.
Pensana had committed to building a £250m refinery on the banks of the Humber, to process rare earths which would then be used to make magnets for electric cars and wind turbines.
The factory promised to create 126 jobs and was set to receive millions of pounds in government funding.
However, Sky News has learned that Pensana has decided to remove the Hull plant and will instead move its refining operations to the United States.
Pensana Chairman Paul Atherley said the company made the decision after the Trump administration committed to buying rare earths from a US mine, Mountain Pass, at a guaranteed price – something no government in Europe had done.
“This has re-priced the market – and Washington is looking to do more such deals, moving at an absolute rate of knots,” he said.
“Europe and the UK have been talking about critical minerals for ages. But when the Americans do it, they go at it hard and make it happen. We don’t do that; we just talk about it.”
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The decision comes at a crucial time in minerals and geopolitics. China produces approximately 90% of all finished rare earth metals – exotic elements essential to the manufacture of many technology, energy and military products.
Last week, Beijing imposes restrictions on rare earth exportsinciting Donald Trump threaten new 100% tariffs on China.
Pensana was seen as Britain’s answer to periodic panics over the availability of rare earths. The Saltend Chemicals Park site has been chosen by the government to launch its critical minerals strategy in 2022.
Visiting for the official inauguration, the then Secretary of Business and Energy Kwasi Kwarteng said: “This incredible facility will be the only one of its kind in Europe and will help ensure the resilience of UK supplies into the future. »
He promised a government grant to support the project. This grant was never received because Pensana never built its plant.
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Paul Atherley and Kwasi Kwarteng at a factory inauguration ceremony in July 2022. Photo: Pensana
Mr Atherley said he was optimistic about another project he is involved in, aimed at bringing lithium refining to Teesside through another company, Tees Valley Lithium.
But, he added, rare earth processing is much more complex, energy-intensive and expensive, making it unviable in the UK at the moment.
The move is another blow to Britain’s chemical industry, which has faced a series of closures in recent months. including that of Vivergoa biofuel refinery based in the same chemical park where Pensana planned to locate its refinery.
Producers warn that Britain’s record energy costs – higher than most other major economies – are stifling its economy and triggering an exodus of businesses.