As the Brexit international game of chess slowly starts to take shape, the effect on industrial minerals producers and exporters will hinge on trade and immigration negotiations with the EU. Although official negotiations to break up from the bloc have not yet started – and, when they do, they are bound to take a long time to delineate what new trade partnerships will shape the economic relationship between Europe and the UK – the main contingency that operators could be facing is trade barriers in the shape of duties. If the UK fails to strike a free-trade agreement with Brussels in the two-year timeframe following the triggering of Article 50 under existing EU regulations, the consequences for trade could be severe. In practice, standard duties applied to members of the World Trade Organization (WTO) could be levied to British exports, including industrial minerals. European Commission (EC) documents show that 6.5% duties are charged on solid fertilisers (ammonium nitrate content exceeding 80%t, phosphorus content evaluated as P2O5 and K2O content less than 3% by weight); 5.5% on exports of nitrates/nitrites and potassium hydroxide (caustic potash); 1.7% on cement clinker, aluminous cement, other hydraulic cements and refined sulphur (bar sublimed sulphur, precipitated sulphur and colloidal sulphur). At the same time, shipments of salts, clays, talc, chalk, barites, witherite and gypsum – all minerals produced in the UK – enter the EU duty-free for WTO members. UK potash production in 2014 stood at 600,000 tonnes according a world mineral production report published by the British Geological Survey (BGS). The country also produced 134,000 tonnes sulphur and pyrites that year. The US Geological Survey (USGS) noted that the UK produced 1m tonnes potash in 2013; 1.1m tonnes nitrogen and 8.2m tonnes hydraulic cement. All of these might attract EU duties when exported in a post-Brexit scenario. The UK exported £30m ($38.8m*) worth of phosphate fertilisers to EU countries in 2015. It also exported £53m ($68.6m) worth of cement and £29.6m ($38.3m) worth of sulphur to the EU in 2015, according to UK government figures. People or trade The key to preventing such duties being imposed will almost certainly be an agreement by the UK government to free movement of EU workers into the country – a necessary condition to being part of the European single market. If a deal is not struck on this point, the UK risks being barred from the European Economic Area (EEA) halfway house EU membership used by Norway and Iceland, which involves duty-free trade in industrial goods. The UK would then have to negotiate a bilateral free-trade deal with the EU, such as is currently enjoyed by Switzerland but, to do so, it may again have to allow unrestricted immigration – thus going against the electorate vote indicating a desire to see immigration curtailed. Despite being an integral part of Europe, although it remains outside the EU and the EEA, Switzerland has allowed EU citizens to move to and live in its territory, and negotiated a special free-trade deal with Brussels, meaning its industrial minerals can sell into the EU with duty-free status. But these trading rights could have been put at risk by a Swiss referendum held in 2014, when voters asked the government to impose annual immigration quotas on all non-Swiss nationals. The move sparked a negative reaction from the EU. An EU Council of Ministers policy statement said: "The EU expects Switzerland to honour its obligations arising from the agreement on the free movement of persons concluded with the EU […] and reserves its right to put an end to the abovementioned institutional negotiations and other internal market related negotiations." In other words, immigration controls could mean trade duties on industrial minerals. A Brexited UK is likely to face the same choice. Editor's note: This article was edited 18 July 2016 to correct the order of magnitude given for the quantity of cement produced in the UK in 2013. The correct figure is 8.2m tonnes.
British producers of fertilisers could face the prospect of export duties being imposed after the UK leaves the European Union, if no free-trade agreement is reached. Current EU duties on solid fertilisers from outside the trading area are set at 6.5%, with 5.5% on nitrates and potassium hydroxide (caustic potash). Imports of minerals, such as salts, clays, talc, chalk, barites, witherite and gypsum, are currently tariff-free from members of the World Trade Organisation. The UK exported £30m ($38.8m) of phosphate fertiliser to the EU in 2015, along with ££29.6mm ($68.6m) of cement and 53 of sulphur.