What a battery materials deal with the US would mean for the UK

The UK and the US have announced they are working on an agreement to open the US market to UK battery materials. The launch of negotiations was hailed by UK prime minister Rishi Sunak as “giving UK companies stronger access to the US market”, but how significant would this agreement be?

What the UK and US are working on is a “critical minerals agreement” that could enable UK battery materials to enter the US tariff free and qualify as 'local' for US vehicle makers hoping to access the very generous subsidies handed out as part of the Inflation Reduction Act (IRA).

Minerals needed for battery making are defined as cobalt, graphite, lithium, manganese and nickel. Right now, the refining of these is concentrated in China and one of US president Joe Biden’s aims with the IRA is to reduce his country’s dependence on its Asian rival while simultaneously building up a strong home-grown electric vehicle industry. 

The US recognises that doing this is going to be a slow process, and so it is inking agreements with friendly countries to establish a supply chain that bypasses and possibly even rivals China’s. 

The UK will be the latest beneficiary of this policy if an agreement is reached and would follow a similar agreement signed with Japan in March, which dropped tariffs on battery materials coming into the US.

News of the possible agreement was welcomed by Cornish Lithium, one of the most promising lithium extraction start-ups in the UK. CEO and founder Jeremy Wrathall said he was “delighted” in a statement to Autocar. “This highlights the ever growing importance of such minerals to the technologies that enable the move to renewable energy and net zero,” he said.

The problem is that the UK has precious few suppliers of raw or refined material materials. Cornish Lithium and nearby British Lithium are two, along with nickel refiner Vale in South Wales. There are other promising start-ups but, in reality, right now the UK can’t supply its own - so far small - battery industry with the materials they need, never mind someone else’s.