Businesses that import critical minerals to the UK will be given access to state-backed loans in a move to counter China’s dominance in the market.
The chancellor, Rachel Reeves, is expected to announce extra government support to encourage the import of critical minerals such as lithium, graphite and cobalt in her budget next week. Companies that bring supplies of critical minerals into the UK will be able to access state-backed loans under the UK export finance mechanism.
Critical minerals are key raw materials for technologies used in the supply of renewable energy and production of electric car batteries. They are also used in the defence and aerospace industries.
The move is intended to make it easier for UK businesses to import critical minerals from Commonwealth countries such as Australia, which has huge deposits of lithium and other raw materials.
Demand for critical minerals is expected to far exceed supply over the next decade. Countries are increasingly reliant on imports from China, which has bought up critical mineral reserves around the world. China controlled 72% of the world’s supply of lithium and 68% of cobalt in 2022, according to figures from the Chatham House thinktank.
Australia has huge deposits of lithium. Photograph: Altura
The announcement was to be made on the margins of the Commonwealth summit in Samoa. Asked whether western countries should be countering China’s influence in Commonwealth countries in the Indo-Pacific, a UK government spokesperson said it was “an incredibly important strategic area”.
They said: “The Pacific is a crucial area for geopolitics, security and economic interests. By 2050 over half of global growth will come from the wider Indo-Pacific and 60% of global shipping trade already transits in this region.”
Ministers have also announced an investment of up to £1bn in UK property by an Australian superannuation fund. They said Australia’s biggest pension fund, AustralianSuper, was planning to increase its international investment team in London more than tenfold over the next decade.
AustralianSuper expects to manage £250bn from its London office by 2035, up from £15bn currently, the UK government said.
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The investments were unveiled after Keir Starmer met company bosses at the summit. “These investments are a major vote of confidence in the UK, and in this government,” the prime minister said.
“By attracting strong, sustained investment, we will also build the expertise we need to drive innovation, stay ahead of the global game and support economies around the world with British backed projects.”