Major rare earth firm scraps plans for £190m UK plant in favour of US

Britain's hopes of breaking free from Chinese dependence to become a critical minerals superpower were dashed yesterday when plans for a rare earth refinery were axed.

UK-listed firm Pensana had planned to build the £190million Saltend site near Hull, employing 126 people, to process raw materials used in technologies such as electric cars and wind turbines.

But the prospect of huge subsidies from Donald Trump's administration prompted it to ditch the idea and move its refining operations to the US.

Pensana's founder and chairman Paul Atherley told the Daily Mail: 'The Treasury doesn't appear to be able to offer the right level of financial support.

'Whereas the US is serious, actually deploying large amounts of capital so that's the environment where we want to be.' The Conservative business spokesman Andrew Griffith said that the move was 'incredibly bad news for the UK'.

He added: 'It's not just jobs but our security that's at stake. With rising red tape and ruinous energy costs almost every day brings similar news under Labour.'

The decision comes after a number of notable pharmaceutical firms including AstraZeneca and Merck paused investments in the UK. It will deepen worries about Britain's economy becoming increasingly dependent on imports from China or the US.

Pensana's decision came after Mr Trump's government signalled its willingness to pay a guaranteed price for rare earths from an American mine, Mountain Pass, protecting producers from the prospect of cheap Chinese imports pushing prices down.

Mr Atherley said that if Pensana can reach a similar deal with the US, it could be worth more than a billion US dollars (£740million). He said that the UK had offered a £5million grant.

He warned that the countries able to set up rare earth supply chains would end up being those able to make electric cars or robots 'and we'll end up buying the product from the US or China'.

China currently produces roughly 90 per cent of finished rare earth materials – used in technology, energy and military products – and has introduced restrictions on their export as part of the trade war with the US.

Pensana's UK site at Saltend had been chosen by the previous Tory government to launch its critical minerals strategy in 2022.

A Department for Business and Trade spokesman said: 'It is disappointing Pensana has decided not to proceed with this development, but it is ultimately a commercial decision for the company.'