MPs warn Britain's defence and AI plans rest on a Chinese minerals chokehold

Britain's hopes of rearming, building AI and hitting net zero are dangling from a Chinese supply chain. A parliamentary investigation by the business select committee found the UK is dangerously dependent on China for the critical raw materials underpinning defence, renewable energy and artificial intelligence, and MPs want action fast.

The committee is pushing for a centralised strategy and a new 'critical minerals finance facility' that would funnel grants, equity and debt into rare earth and other mineral mines, speeding up a diversification drive. Its chair, Liam Byrne, didn't mince words: critical minerals are 'the alpha of the new economy'. Without secure supply, he said, Britain cannot rearm, build AI or deliver net zero — and 16 years after China first used its rare earth grip as a weapon, the country remains dangerously exposed. It is the second time in a week the committee has taken a swing at the government's China policy.

The choke point isn't digging, it's refining. MPs heard China dominates the processing of seven categories of minerals, including the refined lithium that powers electric vehicles and the rare earths that keep military aircraft fuselages and wings from buckling in extreme temperatures. Demand for lithium is set to jump 45-fold by 2030, while rare earths for permanent magnets used in fighter jets are projected to rise 16-fold over the same stretch. China has shown it can flip the switch, as it did in 2025, and the committee called that dependency a strategic vulnerability for both the economy and national security.

The risk isn't abstract. Separate curbs on legacy chips, triggered by a Dutch intervention in China-owned Nexperia, left Europe's car industry days away from halting production last October. The EU and the US are just as exposed, and the committee said Britain is not trying hard enough to line up alternative suppliers. Donald Trump won a one-year reprieve on global rare earth export restrictions from Xi Jinping last October, later extended to January 2027 after the Chinese president's recent Washington visit — which leaves the UK hostage to the ups and downs of US-China relations.

The report's most realistic fix: team up with G7 partners, the rest of Europe and Indo-Pacific countries to aggregate demand and pull in new suppliers. MPs also complained the government's lack of transparency frustrated their investigation, saying parliament has no visibility into the capabilities being protected, the vulnerabilities identified or the projects being backed. Their 10-point plan covers mapping domestic mining, refining and recycling opportunities, nudging businesses to cut Chinese procurement, unlocking investment and untangling planning and permitting barriers. As things stand, the committee said it cannot be confident the government passes any of its 10 tests. 'The UK requires new institutional and financial muscle,' it concluded.

A government spokesperson rejected the idea that no critical minerals strategy exists, pointing to £400m to scale up domestic production and recycling and to build international partnerships. The strategy sets 2035 targets: 10% of demand met domestically, 20% through recycling, and no single country supplying more than 60% of any critical mineral.