Britain is "dangerously" dependent on China for critical raw materials needed by the military, for renewable energy infrastructure and for artificial intelligence, a parliamentary investigation has found.
MPs on the business select committee called for an urgent centralised policy and the creation of a "critical minerals finance facility" to help fund rare earth and other critical mineral mines, deploying grants, equity and debt to accelerate a diversification programme.
"Critical minerals are the alpha of the new economy," said the committee's chair, Liam Byrne. "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." It is the second time in a week that Byrne's committee has criticised the government's policy on China.
China holds a stranglehold on the world's supply of rare earths and other critical minerals, as well as their refined byproducts, which are used in everything from military jets to car-locking systems and consumer products such as fridges and washing machines. The committee heard that "the processing stage" was where the bottlenecks lay, with China dominating the refining of seven categories of minerals, including refined lithium needed for electric vehicles and rare earths used in the fuselage and wings of military aircraft to help withstand temperature extremes.
MPs were told that demand for lithium alone would increase 45-fold between now and 2030, leaving the UK in a high-risk dependency relationship with China. Demand for the rare earths needed for permanent magnets used in military jets and other applications would rise 16-fold over the same period, just as Britain seeks to rebuild its military capabilities.
With China capable of suddenly turning off rare earth supplies, as it did in 2025, dependency on Beijing represents a strategic vulnerability for the UK economy and national security, the committee found. Separately, restrictions on legacy chips after a row over a Dutch intervention in the China-owned chipmaker Nexperia left the European car industry "days away" from stoppages in October last year.
The EU, the US and other countries face the same risk of rare earth supplies being cut off by China, and the committee said the UK was not putting enough effort into finding alternative sources. Donald Trump secured a one-year reprieve on global export restrictions on rare earths from Xi Jinping in October last year, a pause extended to January 2027 after the Chinese president's recent visit to Washington. The report suggests that arrangement leaves the UK at the mercy of US-China relations.
The most "realistic" solution, the committee said, was for the UK to work closely with G7 partners, the rest of Europe and Indo-Pacific countries to "aggregate demand" and bring in new suppliers. MPs said their investigation was frustrated by a lack of government transparency, adding: "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 committee has drawn up a 10-point plan that includes identifying domestic mining, refining and recycling opportunities and their costs, a strategy to encourage businesses to reduce procurement from China, a plan to unlock investment, and an assessment of planning and permitting processes that may prove a barrier to mining. As things stand, the committee said it could not be confident the government could satisfy any of its 10 tests, concluding: "The UK requires new institutional and financial muscle."
A government spokesperson denied it did not have a critical minerals strategy, saying it was delivering £400m "to ramp up domestic production and recycling" and forging new international partnerships. "Our strategy also sets clear goals for 2035, including meeting 10% of demand through domestic production and 20% through recycling, with no more than 60% of any critical minerals coming from any single country," they added.
