The government has set out plans to back a new lithium extraction plant in Cornwall, with Geothermal Engineering Limited receiving an Offer in Principle worth almost £10 million through the DRIVE35 Automotive Transformation Fund. Ministers said the support would sit alongside a wider industrial strategy aimed at reducing exposure to imported battery materials and strengthening domestic production capacity. For Policy Wire readers, the immediate point is that this is not yet a final grant award. The department’s offer remains subject to due diligence and formal approvals, but it places the Cornwall project inside the government’s preferred pipeline for EV and battery supply-chain investment.
GEL said it will invest about £43 million in the site, with the project expected to create nearly 50 direct jobs and support around 80 more across contractors and suppliers. Commercial production is scheduled for 2029, with annual output of roughly 1,500 tonnes of technical-grade lithium carbonate recovered from geothermal brine. The government said that volume would be enough for more than 180,000 typical EV car batteries each year. On current numbers, this is not a national solution on its own, but it does give the UK a domestic source of a mineral that sits near the start of the battery manufacturing chain.
That matters because lithium remains a pressure point for the automotive transition. Ministers said demand could rise by 1,100 per cent by 2035, and official messaging now links critical minerals policy not only to electric vehicles but also to AI, advanced manufacturing and clean energy systems. The Cornwall announcement therefore serves two policy aims at once. It supports a regional industrial project in the South West, and it gives government a clearer answer to a national question: whether more battery material can be sourced, processed and secured within the UK rather than purchased through longer and more concentrated overseas supply routes.
This is also part of a larger package rather than a standalone decision. The government said the Cornwall proposal, together with support for Tees Valley Lithium, is intended to draw almost £230 million of private investment into two lithium projects in Cornwall and Teesside. Tees Valley Lithium has already announced a £185 million plan to develop a refinery in Teesside, backed by an Offer in Principle worth £18.3 million through DRIVE35. Taken together, the two projects show how ministers are trying to cover different stages of the battery materials chain: extraction in Cornwall and refining capacity in the North East. Those offers also sit alongside earlier DRIVE35-backed R&D work involving Cornish Lithium, Watercycle Technologies, Weardale Lithium and Northern Lithium, showing that ministers are trying to build a route from extraction research to commercial-scale assets.
The structure of the intervention matters as much as the headline sums. DRIVE35 is the government’s main automotive funding programme, with £4 billion available to 2035 across capital and R&D support, delivered with APC and Innovate UK. In this case, ministers are using conditional public funding to crowd in company spending, rather than fully financing the assets themselves. That approach reduces immediate fiscal exposure, but it also means delivery risk stays live until due diligence is complete and the projects move into construction and production. For manufacturers, the practical value will depend less on the announcement day and more on whether these sites can supply battery material at the volumes, quality and timetable the sector needs.
The government has tied the Cornwall project to its Modern Industrial Strategy and to a broader reindustrialisation agenda, pointing to more than £1 billion of automotive investment announced this month from Bentley, McLaren and Nissan. That framing matters politically because ministers want to show that industrial policy is producing visible assets, skilled jobs and domestic supply capacity rather than only research grants or strategy documents. Cornwall is a useful test case for that argument. The county has a long mining history, but this proposal is tied to present-day manufacturing needs: EV batteries, secure raw materials and a South West materials cluster that officials and industry bodies say is growing quickly.
APC and Zenzic have said the project fits the Critical Minerals Strategy 2035 by expanding domestic output and reducing reliance on imported supply chains, including markets where processing is heavily concentrated. GEL has argued that geothermal brine gives the UK a lower-footprint domestic route to lithium production and greater control over a material that is becoming more strategically important. What follows next is straightforward but significant. If the Cornwall award clears due diligence and reaches commercial production in 2029, ministers will have a working example of how DRIVE35 can move from policy statement to operating industrial plant. If it stalls, the episode will be a reminder that supply-chain security depends on delivery, not announcements alone.