The prevailing wisdom in economic circles not that long ago was that the location where products were manufactured was of little importance. The main focus was on the cost of production. However, in recent years, there has been a significant shift in this mindset. Countries worldwide are now actively competing to secure the minerals and materials necessary for developing future technologies. It has become evident that where something is made does matter.
This shift in perspective was encapsulated in Rachel Reeves’ «securonomics» policy, introduced in a speech in Washington three years ago. The essence of her message was that countries like Britain need to safeguard their sources of essential ingredients for technology and energy production to avert potential future crises.
Despite this policy direction, recent developments have seen Pensana, a key player in Britain’s efforts to establish a domestic critical minerals infrastructure, abandon plans for a rare earths refinery in the UK in favor of setting up operations in the United States. Surprisingly, the Chancellor appeared unperturbed by this news, citing other investments in lithium and tin production within the UK and expressing confidence in the nation’s trade deals.
The decision by Pensana to relocate raises questions about why industrial firms are increasingly leaving the UK. While factors like high power prices in Britain contribute to this trend, Pensana’s chairman, Paul Atherley, emphasized that energy costs were not the primary reason for the move to the US. Instead, the lack of substantial financial backing from European governments for reindustrialization efforts, particularly in critical minerals like rare earths, makes it challenging for UK companies to compete with China, where 90% of refined rare earths are currently produced.
In response to this challenge, the US government has taken a straightforward approach by guaranteeing a price for rare earths from domestic producers like MP Minerals. This support is lacking in the UK and Europe, making it difficult for aspiring companies to secure funding and establish viable businesses.
The Chancellor’s apparent disinterest in matching the US’s proactive stance on this issue suggests that companies like Pensana will continue to seek opportunities where they can command competitive prices for their products. This situation underscores the significance of Pensana’s decision as an early test of the effectiveness of «securonomics» and whether it can drive real change. Thus far, the evidence suggests that more needs to be done to shift the tide.
For more insights from Sky News on related topics, such as the hidden features of AirPods and China’s tightening grip on the global rare-earth supply chain, visit the links provided.
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