Researchers says diversification is the cornerstone of energy security, yet critical minerals are moving in the opposite direction.
A new report by International
Energy Agency (IEA) finds that while today’s critical mineral markets may
appear well supplied, their prices are far down from the highs seen in 2021 and
2022.
The researchers find
that a combination of increasing supply concentration in a handful of countries
and the spread of export restrictions is raising the risk of painful
disruptions.
Uganda and many of
the neighboring countries maintain a ban in exports of raw minerals. The same trend
has been observed in other countries where the so-called transition or critical
minerals needed in electrification are found.
The 2025 edition of
the IEA’s annual
Global Critical Minerals Outlook, released today,
presents the latest data and analysis on supply, demand, investment and more
for key energy-related minerals, including copper, lithium, nickel, cobalt,
graphite and rare earth elements.
It is accompanied by
an updated
Critical Minerals Data Explorer,
an interactive online tool that allows users to explore the latest IEA
projections.
For the first time,
the report also includes analysis of a broader range of energy-related
strategic minerals that play vital roles in the high-tech, aerospace and
advanced manufacturing sectors.
IEA Executive Director Fatih Birol said this new analysis reviews what is at
stake and what needs to be done to improve the resilience and diversity of
critical mineral supply chains – a key concern for ensuring the reliability,
affordability and sustainability of energy in the 21st century.
“In a world of high
geopolitical tensions, critical minerals have emerged as a frontline issue in
safeguarding global energy and economic security. With our world-leading data,
analysis and policy recommendations, the IEA provides crucial support to
countries across the globe as they develop their medium- and long-term
strategies,” said Fatih Birol.
The report finds that
critical mineral markets have become more concentrated, not less, particularly
when it comes to refining and processing.
For copper, lithium,
nickel, cobalt, graphite and rare earth elements, the average market share of
the top three producers rose to 86% in 2024 from around 82% in 2020, with
almost all supply growth coming from the single top supplier: Indonesia for
nickel, and China for all other minerals.
While policy makers
have woken up to the challenges, a detailed IEA analysis of announced projects
indicates that progress towards more diversified critical mineral supply chains
is set to be slow.
Based on today’s
policy settings and investment trends, the average share of the top three
suppliers is projected to decline only marginally over the next decade,
effectively returning to the concentration levels seen in 2020.
“Even in a
well-supplied market, critical mineral supply chains can be highly vulnerable
to supply shocks, be they from extreme weather, a technical failure or trade
disruptions,” Dr Birol said.
He said the impact of a supply shock can be far-reaching,
bringing higher prices for consumers and reducing industrial competitiveness.
Demand growth for key
energy minerals has been strong in recent years.Lithium demand rose
by nearly 30% in 2024, significantly exceeding the 10% annual growth rate seen
in the 2010s.
However, major supply
increases – led by China, Indonesia and parts of Africa – have put downward
pressure on prices, especially for battery metals. Since 2020, supply growth
for battery metals has been twice the rate seen in the late 2010s.
Yet looking at supply
and demand balances over the next decade, the report also sees risks.
Investment momentum
in critical minerals has weakened: spending grew by just 5% in 2024, down from
an increase of 14% in 2023.
Exploration activity
plateaued in 2024, marking a pause in the upward trend seen since 2020, and
start-up funding showed signs of a slowdown.
In particular, the
report highlights major risks facing copper markets. With demand set to surge
as countries look to expand their electricity networks, the current copper mine
project pipeline points to a 30% supply deficit by 2035.
Growing export
restrictions could also impact the security of supply. Of the energy-related
strategic minerals covered by the report, 55% are now subject to some form of
export control. In addition, the scope of restrictive measures is widening to
encompass not just raw and refined materials but also processing technologies.
The report’s expanded
analysis of 20 energy-related strategic minerals finds that while market sizes
may be small for some, disruptions could have outsized economic impacts. China
is the leading refiner for 19 of the 20 minerals analysed and has an average
market share of around 70%. And 15 of the minerals have exhibited greater price
volatility than oil.
This year’s
Outlook
also explores mineral supply chains for emerging battery technologies, such
as LFP and sodium-ion, which are challenging the incumbent nickel-based
lithium-ion batteries.
The report notes that
these technologies still face high concentration risks, with China controlling
the supply chains for vital material components such as manganese sulphate and
phosphoric acid.
Since the IEA
published its
landmark report on critical
minerals in 2021 and received
new ministerial mandates
from Member governments in March 2022, the Agency has significantly expanded
and deepened its work on critical minerals to support policy makers.
The IEA began
publishing its annual analysis of markets in 2023 and recently held an
emergency preparedness exercise as part of its expanding Critical Minerals
Security Programme.
Critical minerals
were also a major focus at the
Summit on the Future of Energy
Security hosted in London in partnership with the UK government.
