The UK has traditionally- for better or worse- been the freest of free markets, a PLC Harrods welcoming international investors from all over the world to bid for and win ownership of the most cherished British companies. 

But as we enter a global scramble for the critical minerals desperately needed to deliver energy transition, there are a few signs that there are now some jewels that will take a little more prising out of the UK's crown:

  1. The New UK National Security and Investment Act: Impact on Mining & Minerals Deals, Guy Winter (fasken.com)  - as I wrote here, if you are planning an acquisition of a "qualifying entity" (QE) in one of 17 defined "sensitive areas" of the UK economy, you may now need to get approval from the UK Government before you can complete it under the National Security and Investment Act 2021 (NSIA). Completing a notifiable acquisition of a QE without approval will mean the acquisition is void, and may mean that the acquirer is subject to civil or criminal penalties. The wider "Advanced Materials" sensitive area includes the activities in relation to "Critical materials" specified in Schedule 1 of The National Security and Investment Act 2021 (Notifiable Acquisition) (Specification of Qualifying Entities) Regulations 2021). These include rare earths, cobalt, graphite and lithium- all hugely important materials for the electric vehicle supply chain.
  2. The UK’s critical minerals strategy: Resilience for the future: The UK’s critical minerals strategy - GOV.UK (www.gov.uk) - published by the Department for Business, Energy & Industrial Strategy (BEIS) on 22 July 2022 (Critical Minerals Strategy), this is a vital statement of the UK's intention to fight its corner in a new world of resource constraints: "Critical minerals will become even more important as we seek to bolster our energy security and domestic industrial resilience – in light of Russia’s illegal invasion of Ukraine – and as we move away from volatile, expensive fossil fuels... Critical mineral supply chains are complex and opaque, the market is volatile and distorted, and China is the dominant player. This creates a situation where UK jobs and industries rely on minerals vulnerable to market shocks, geopolitical events and logistical disruptions, at a time when global demand for these minerals is rising faster than ever." The Critical Minerals Strategy explicitly references the NSIA, and HM Government's ability to intervene in acquisitions of control over entities and assets in or linked to the UK economy, including those in critical mineral value chains, which might cause national security concerns. 
  3. On 20 July 2022, BEIS made its first blocking order under the NSIA, preventing a proposed transaction between the University of Manchester and Beijing Infinite Vision Technology Company Ltd. by way of a licence agreement that would have enabled the Chinese acquirer to use intellectual property relating to SCAMP-5 and SCAMP7 vision sensing technology to develop, test and verify, manufacture, use, and sell licenced products. The order has the effect of preventing the proposed acquisition of the intellectual property from proceeding.    

It will not be lost on readers of the Critical Minerals Strategy that one of its key limbs is to:

"3. Carry out cutting-edge research and development to solve the challenges in critical minerals supply chains",

building on the strength of the UK's educational and research establishments. The Critical Minerals Strategy explicitly references the fruits of university IP (rather like the University of Manchester's vision sensing technology, in the case of the BEIS blocking order described above). 

We therefore expect that M&A transactions involving the UK's critical minerals resources- both physical and intellectual- will be closely scrutinized going forward, especially where they involve acquirers in jurisdictions which fall outside the UK's key critical minerals alliances (Australia, Canada, Japan, the US and the European Union / EEA). 

At the same time, the Critical Minerals Strategy also contemplates that the UK will "collaborate with international partners"- which must be correct if finite resources are to be used most efficiently and sustainably across the world. All of this points to an increasing number of NSIA notifications in this sector. 

Market participants will also have to be alive to the evolving nature of the minerals that are deemed to be increasing in criticality. As the Critical Minerals Strategy notes, "such movement may happen very quickly in the event of an unexpected market or supply shock, or may happen over a longer period, due to evolving demand or supply trends."

The first UK critical minerals watchlist includes another clutch of battery minerals in manganese, nickel and phosphates. As the battery industry shuffles its hand (manganese is increasingly in demand for lithium ion manganese oxide (LMO) batteries, lithium iron phospate (LFP) batteries can help reduce reliance on already stressed resources such as nickel and cobalt), the reach of the NSIA's net and the UK critical minerals M&A landscape are likely to evolve accordingly.