At a critical juncture in the fight against climate change, the Labour Party’s landslide electoral victory has breathed new life into the UK’s stagnating green agenda. Leading environmental groups such as Greenpeace have welcomed the country’s political sea change, decrying the Tories’ environmental backtracking while heralding the new government’s clear mandate to advance ambitious Net Zero policies and fuel sustainable, competitive growth.

As a major global economy, the UK can be a guiding light for the green transition— yet it will need to secure vast quantities of the right minerals to unlock its industrial ambitions in this space. Like the US and EU, the UK has its own Critical Minerals Strategy; however, London wisely recognises the need for continued collaboration with countries already producing large volumes, particularly China.

Delivering on Prime Minister Keir Starmer’s bold vision to make the UK a green energy powerhouse will require a dual approach of working constructively with major global mining players like China to meet soaring critical minerals demand while diversifying supply chains to shield against unforeseeable global shocks.

Green winds rising in Whitehall

In the wake of Labour’s triumph at the polls, Ed Matthew of the climate change think tank E3G has emphasised the importance of Starmer fulfilling his campaign pledge to make the UK a “clean energy superpower.” Hailing that the “the UK is back in the race to net zero,” Matthew further maintains that the new Labour administration must now capitalise on strong public backing to accelerate climate action, invest in future industries, and reclaim the UK’s climate leadership.

Given climate change’s increasingly apparent impacts, Edward Davey of the World Resources Institute has called on Starmer’s government to fuel an ambitious programme of energy reform at home while seeking to inspire change on the global stage. As a top-10 green product exporter with existing industrial strengths, the UK is already well-positioned to capitalise on rising global demand for green products to  expand its manufacturing capabilities in key sectors, including wind energy and green transport.

From planning reforms enabling the construction of new onshore wind farms and a significant expansion of solar farms to a detailed Net Zero 2050 strategy, the UK must strategically wield public policy and regulatory reform to build the necessary foundation for attracting massive levels of sustainable finance needed to decarbonise the economy and unlock the vast opportunities presented by renewable energy and green industrial jobs.

Ensuring minerals supply vital to green ambitions

As E3G rightly noted after July’s election, “without finance, nothing that needs to get done will get done,” notably adding that the UK is fortunately blessed with a “world-class private sector” steadfast in its belief that UK green growth is the economic opportunity of the 21st century. The Confederation of British Industry’s (CBI) recent report affirms this vision, revealing that the UK’s green economy grew by 9% in 2023, supporting hundreds of thousands of high-quality jobs.

While the economic potential of the net zero transition is undeniable, an airtight collaboration between policymakers, investors and industrialists will only succeed in fuelling green growth and decarbonisation if the UK secures sufficient volumes of critical minerals – particularly copper, cobalt, nickel and lithium – over the long term. Demand for these vital inputs in foundational clean energy technologies such as solar panels, wind turbines and electric vehicle (EV) batteries, has skyrocketed in recent years, with this trend only set to accelerate.

As the International Energy Agency (IEA) recently spotlighted, lithium demand rose by 30% last year, while nickel and cobalt saw significant increases ranging from 8% to 15%. Yet, with new mining projects not keeping pace, the IEA projects major gaps between supply-demand gaps for vital minerals, including 70% and 50% for copper and lithium by 2035.

The long-term outlook

Mining companies are naturally endeavouring to boost production to meet this demand and help keep green transitions on track, with copper and nickel production rising considerably over the past year in the key producing countries of the Democratic Republic of the Congo (DRC) and Indonesia, respectively.

In the former, Chinese mining giant CMOC has boosted its cooper output by over 120%, bringing its expanded Tenke Fungurume Mining (TFM) into the global top 10 for this critical clean energy mineral, while the company’s new Kisanfu (KFM) mine will help the mining firm double copper production by 2028. Meanwhile, Indonesia seems primed to double down on recent jumps in nickel output. Earlier this year, the Indonesian government became the controlling shareholder of PT Vale Indonesia, a major mining player and owner of the country’s third-largest nickel mine, Sorowako.

As a result, cobalt – 98% of which is mined as a by-product of copper and nickel according to the Cobalt Institute – has seen market supply soar in recent months, with the associated reduction in cobalt prices receiving significant, yet incomplete media coverage. Published in May, the Cobalt Institute’s ‘Cobalt Market Report 2023,’ provides vital insight and nuance into the current state of play for this crucial green transition mineral, and more importantly, a long-term view of the evolving supply-demand picture.

Looking beyond last year’s market surplus, the Cobalt Institute forecasts that cobalt will remain oversupplied in the short term, as supply growth from the DRC and Indonesia continues to outpace demand. Yet, crucially, the 2030 projection sees cobalt growing at a compound annual growth rate (CAGR) of 11% and supply trailing at 6%, with the mineral’s current supply-demand dynamic set to shift from the mid to late 2020s, leading to a market deficit as rising demand surpasses current supply plans from miners, refiners, and recyclers.

In short, while the short-term surplus will keep cobalt prices low, prices are expected to rebound as the supply deficit approaches, meaning that the short-term prices will facilitate cobalt’s use in cost-competitive sectors like EV batteries, while longer-term demand and price rises will incentivise new mining and refining investments needed to build up the net zero industries and stay on track for 2050.

Global collaboration is way forward

Equipped with a resounding mandate, the newly-elected UK Government must prioritise international climate diplomacy to ramp up critical minerals supplies while using its domestic green industrial growth agenda to inspire a global shift towards a just, clean economy that will help tackle climate change while supporting prosperous, inclusive communities.

Recognising that international cooperation is essential in progressing a fair and ambitious green transition, the UK under Keir Starmer’s leadership has considerable potential to forge global alliances, including major mining and green industry players like China and emerging nations in the Global South. Given the latest projections on the building blocks of the “race to net zero,” this undertaking must start now.