The UK government's National Wealth Fund is set to pump £71 million into miner Tungsten West in a bid to help reopen the Hemerdon mine in Devon.

The funding package combines a £36 million share purchase — which will hand the government a 7.4 per cent stake in Tungsten West and a seat on the board of directors — with a £25 million loan facility.

The project is expected to boost the local economy of the South West of England through the creation of 350 direct jobs. In addition to the financial backing, the government will gain the option to buy up to half of the mine's future tungsten output, underscoring the mine's role in supplying a metal used in defence, energy and aerospace supply chains.

Chancellor John Healey said: “This investment will supply vital minerals to British defence, energy and aerospace businesses – and keep good, well-paid jobs in the UK.”

Tungsten West, which is headquartered in Plympton in Devon, specialises in the mining and extraction of tungsten, tin and secondary aggregates — the by-products of other industrial processes.

“It is extremely important to us that we prioritise UK requirements for this critical metal to support domestic demand, including strategic initiatives across defence and next-generation energy,” said Jeff Court, chief executive of Tungsten West.

Mining operations to restart in the third quarter

The Hemerdon Mine, which previously operated as Drakelands Mine, was closed in October 2018 after its previous operator, the Australian firm Wolf Minerals, went into liquidation. Tungsten West acquired the site in 2019 and subsequently spent years completely redesigning the processing layout and securing new environmental permits.

The fresh capital is set to help the firm rebuild and upgrade processing equipment on-site, cover day-to-day project costs, and fund labor and operations needed to reach full metal production. The company said the investment comes as it works through the operational steps required to bring the site back into service after several years of closure and redevelopment.

The London-listed firm said the UK government's shares would be formally listed on the stock market on 27 August, with mining operations restarting in the third quarter.

Latest National Wealth Fund deployment

It marks the latest utilisation of the National Wealth Fund to advance the government's agenda in key markets, including defence and energy. During Rachel Reeves' stint as Chancellor, the policy bank revealed a £599 million financing package for Rolls-Royce Small Modular Reactors (SMR) in a bid to kick-start delivery of its project with Great British Energy.

The capital injection from the taxpayer-backed wealth fund is designed to de-risk the project for private lenders, effectively using public money to “crowd in” billions in additional investment from the City and international markets.

Around a thousand jobs are tipped to be created at Rolls-Royce SMR, which is co-owned by the FTSE 100 giant and Czech power company CEZ, through the funding.

Reporting by City AM, via OilPrice.com.