Pensana exits UK rare earths scheme, eyes US government funding

(Alliance News) - Pensana PLC is backing out of plans to build a GBP250 million rare earths refinery in the UK as it shifts focus to the US.

The London-based mineral developer targets rare earths for use in electric vehicles and wind turbines.

Back in 2020, Pensana hired John Wood Group PLC to look into the feasibility of establishing a rare earth processing site in the UK. At the end of 2020, Pensana confirmed plans for a separation facility at Saltend Chemicals Park in Yorkshire, part of the Humber Freeport near Hull.

The firm described the planned site as the "world's first" rare earth processing hub, with minerals sourced from third-party developers, as well as Pensana's own mine in Angola. At the time, Pensana estimated an annual production of 12,500 tonnes of rare earth oxides. It began construction in 2022 with John Wood as principal contractor.

Chair Paul Atherley had said the facility would "establish a sustainable supply chain for the manufacture of powerful permanent magnets critical for the offshore wind and electric vehicle industries in the UK and Europe."

However on Thursday, Sky News reported that the project will no longer go ahead, which Atherley confirmed to Alliance News.

Pensana instead will move its rare earth refining operations to the US and is in talks with both the US government and other potential partners to fund a US-based facility.

Pensana shares were up 5.1% at 175.50 pence on Thursday morning in London.

This follows last month's announcement that Pensana is considering listing on the Nasdaq Stock Market, for which Atherely noted strong investor interest.

He said the decision was based primarily on financing, rather than on concerns that the company could lose out on US customers.

"Neither the capital market nor the government support is currently available in the UK," Atherley noted.

In 2023, the UK government offered Pensana a GBP4.0 million grant to develop Saltend. However last week, Las Vegas, Nevada-based MP Materials Corp, operator of the Mountain Pass rare earths mine in California, announced that the US Department of Defence will become its largest shareholder, "with a multibillion-dollar package of investments and long-term commitments".

The US military's goal is to reduce dependency on foreign imports of rare earth magnets, MP Materials said, with China currently the largest producer.

US Treasury Secretary Scott Bessent on Wednesday said the US and its allies "should work together to de-risk and diversify our supply chains away from China as quickly as possible."

In June this year, Pensana signed a memorandum of understanding with American Resources Corp and its subsidiary ReElement Technologies, a US critical mineral refiner, to establish a "sustainable, independent rare earth supply chain" which would meet demand from US and allied defence and commercial industries.

Atherley said Pensana does not expect a negative cost impact from work already done at Saltend, noting: "The technology that we've developed in the UK we will take to America."

He added: "We're still very positive on the UK."

Atherley is also the founder and chair of Alkemy Capital Investments PLC, which owns Tees Valley Lithium Ltd. He was confident in the project's development, and according to a statement from Alkemy in June, TVL is on track to reach a final investment decision by the end of 2025, with production scheduled to begin in 2027.

By Holly Munks, Alliance News reporter

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