S&P Global Market Intelligence has released a report that looks at a new deal signed by the U.S. and the U.K., titled “Critical relationship: Supply chain implications of U.S.-U.K. Atlantic Declaration.”

The declaration includes provisions to negotiate a Critical Minerals Agreement. S&P Global Market Intelligence says that, if ratified, the declaration could give U.K. exporters of cobalt, graphite, lithium, manganese and nickel eligibility under the U.S. Inflation Reduction Act (IRA) funding for electric vehicle components.

U.K. exports of the five minerals were worth £150 million (U.S.$186 million) in the 12 months to March 31, 2023. Mainland China has been the leading buyer, with 27% of shipments after growth of 681%. The U.S. received just 17% and saw shipments fall, potentially motivating the deal.

Lithium carbonates and hydroxides lead the U.K.’s exports of the five minerals, but face considerable competitive challenges the market analyst firm says. U.K. export prices for lithium carbonate were 36% higher than Chile’s and 9% higher than the ex-works price in mainland China.

Chile and Australia (another major lithium exporter) already have full trade deals with the U.S. and thus have a head start in eligibility for the IRA.

The U.K. has lower legal and contractual risks than Chile, which has recently announced plans to restructure state ownership of lithium reserves. However, the U.K. has higher labor and infrastructure risks.