While today’s critical mineral markets may appear well-supplied, with prices well down from the highs seen in 2021 and 2022, a new IEA report finds that a combination of increasing supply concentration in a small number of countries and the spread of export restrictions is raising the risk of ‘painful disruptions’.

‘In a world of high geopolitical tensions, critical minerals have emerged as a front line issue in safeguarding global energy and economic security,’ comments IEA Executive Director Fatih Birol. ‘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.’

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 policymakers 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,’ Birol notes. ‘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 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.

The report also explores mineral supply chains for emerging battery technologies, such as lithium-iron-phosphate 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.