UK Government's Vision 2035: Critical Minerals Strategy – Opportunities And FDI Implications

The UK Government recently published its "Vision 2035: Critical Minerals Strategy" (the Strategy), setting out a 10-year framework to secure access to the critical minerals that are considered integral to our modern way of life and supporting the Industrial Strategy launched by the Government in July 2025. The Strategy's success will be defined as achieving the following objectives by 2035 in respect of annual UK demand for critical minerals:

• diversifying supply chains so that no single country provides more than 60% of the UK's annual demand;
• meeting 10% of annual UK demand through domestic production (and in support of this target, the Government is aiming to domestically produce at least 50,000 tonnes of lithium (or lithium carbonate equivalent) by 2035); and
• meeting 20% of annual UK demand through recycling.

This reflects the growing recognition that critical minerals are not only an economic necessity but also strategic assets, and mirrors some of the measures taken by a number of other jurisdictions, including the EU and the US (read more about the EU and US approaches here).

Below, we explore the key themes of the Strategy and consider a number of its implications, including from a foreign direct investment (FDI) perspective.

Supply chain diversification and resilience

In the global market, there has been an increase in concentration of processing and mining supply chains in recent years. The UK is a net importer of critical minerals, and as a result faces strategic vulnerability. Diversification and resilience of supply chains is therefore a key part of the Strategy, in particular in relation to the UK defence sector. To this end, the UK will map and secure its supply chains. Potential ways to achieve this are noted as being, for example, via mandated industry-held stockpiles or ensuring that critical minerals for defence equipment are always sourced from more than one country.

Recognising that future demand for critical minerals cannot be met by domestic production alone, the UK will also aim to deliver diversification by developing international growth partnerships with resource-rich countries and technology partners to secure the long-term supply of critical minerals. Priority partners include, amongst others, the United States, the EU, Canada, Australia, Saudi Arabia, India and Japan.

Domestic capability and infrastructure development

The Strategy emphasises the development of domestic extraction, processing and recycling capacity, and notes the UK's existing critical mineral strengths in areas such as Devon, Cornwall and County Durham. There are currently over 50 critical mineral projects based in the UK, but it is recognised that there are key challenges facing many of the UK's domestic businesses, in particular high energy costs, planning, permitting, skills and access to finance – all of which need to be addressed.

To further develop the sector, the UK will focus on both mining and processing critical minerals as well as recycling, repurposing and reusing critical minerals in a circular economy. Recycled sources of critical minerals are expected to ramp up from 2030 and become a significant source of critical minerals by 2040. Investors can therefore expect an evolving regulatory landscape and changes to the necessary standards over this period, particularly around environmental planning, permitting and the sustainable use of critical minerals.

New category of growth minerals

A notable development within the Strategy is the introduction of a new category of "growth minerals" to sit alongside (and in certain cases overlap with) the critical minerals list. These growth minerals (which include copper, lithium, cobalt, graphite and other rare earth elements) are identified as being critical to the future requirements of the UK economy's growth sectors.

In practice this means the extension of certain government public finance support schemes to some minerals that are not already on the critical minerals list (i.e. beryllium, chromium, copper, uranium and synthetic graphite). As a result, businesses and projects will be able to seek government support to pursue opportunities in these additional minerals. For example, support is now available for growth minerals in the form of additional eligibility for financing (such as access to the National Wealth Fund) and also the ability to use the Environment Agency's priority tracked services for permitting for early development projects.

Future support for critical & growth minerals is also being explored in the form of funding of up to £50 million in bespoke critical minerals support to be made available by the Department for Business and Trade, as well as the expansion of UK Export Finance's (the UK's export credit agency) mandate to support both critical and growth minerals and overseas growth mineral projects for UK industry.

ESG and responsibile sourcing

Businesses will be expected to demonstrate responsible practices throughout their supply chains in support of the Strategy. The UK will also continue to promote enhanced environmental, social and governance (ESG) standards through global initiatives and multilateral forums such as the G7, G20, International Energy Agency, Minerals Security Partnership and NATO.

ESG credentials will be a key differentiator for investors seeking to enter the UK market. For critical mineral adjacent transactions, this is likely to result in enhanced due diligence obligations and continued compliance with ESG reporting requirements under UK and EU frameworks.

FDI and NSIA implications

Critical minerals have always been an area of focus under the UK's investment screening regime, governed by the National Security and Investment Act 2021 (NSIA). Activities relating to critical minerals including extraction, refinement, processing, production and end of life recovery are captured in the advanced materials sector definition. This means that investments passing through 25%, 50% or 75% of the shares or voting rights in UK target businesses that undertake such activities in the UK require mandatory notification under the NSIA.

Transactions in the advanced materials sector have faced considerable scrutiny – such transactions having consistently been some of the most likely to be subject to in-depth review. To date, though, only one such transaction has been subject to remedies (to the best of our knowledge). Critical minerals are likely to soon have their own distinct mandatory sector definition under the NSIA (being carved out of the existing advanced materials category, although any resulting changes to the definition itself are likely to be minor).

If the UK is to meet its goals under the Strategy (i.e. meeting 10% of annual UK demand through domestic production and 20% of annual UK demand through recycling), significant inward investment is likely to be required from UK and foreign investors. Such investments are likely to necessitate reviews under the NSIA.

Investors should be aware of the potential need for mandatory or voluntary notifications or conditions attached to approvals, particularly where foreign ownership intersects with such relevant assets. Investments under the NSIA and other FDI regimes are overwhelmingly approved without conditions being imposed but these regimes need to be factored into transaction timetabling. Certain investors, such as those with significant interests in the critical minerals supply chain outside the UK, will also need to plan carefully to identify and, if applicable, address any UK national security risks.

Conclusion

Increased regulatory oversight can be expected going forwards alongside the development of the UK's critical mineral industry through to 2035 and beyond, given the wider range of minerals that can be classified as strategic assets and in light of the government's targets in respect of satisfying their annual demand. Proactive legal planning, including early NSIA assessments, ESG due diligence and careful structuring of transactions, will continue to be key to navigating this evolving landscape.

As other countries increase their focus on critical minerals supply, and take increasingly proactive measures to secure such supplies (in particular the US, which has seen an increase in Government entities taking direct equity investments in critical minerals projects or entering into strategic offtake arrangements), the UK Government will need to pay particular attention to implementation of the Strategy and consider whether further, more direct, actions may be required.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.