BY STEVE RANGER
In August 2026, the US Administration announced $2bn in funding for critical mineral and battery-related projects, reflecting how securing the supply chains for these essential industrial ingredients continues to climb up the political agenda.
The White House said the move was needed to ensure US supplies of critical materials, to reduce reliance on ‘hostile foreign countries’ – and strengthen the economic resilience of key industries.
‘These investments help mitigate and reverse critical supply chain vulnerabilities, bolster US industrial resilience against geopolitical disruptions, and ensure that the defense industrial base and next-generation technologies are powered by secure and domestically sourced components,’ the White House said, detailing the series of investments. The Department of War will fund over $85m to secure the supply chain of refractory-grade bauxite to support manufacturing of high-temperature-resistant materials, and another $150m in funding for a company developing and producing rare earth-free permanent magnets to support the defence industrial base.
Some $1.4bn will be invested into Sila Nanotechnologies, a California-based manufacturer, to expand production of silicon-carbon battery anodes and buildout a lithium-ion battery cell manufacturing facility, while $400m will be invested into Sunrise Energy Metals to support the scandium value chain. Alongside this comes investments to support developing a boron deposit, further domestic battery manufacturing and support for tantalum and niobium - and more investment in mining schools.
The huge sums involved make this a notable announcement, but it is not the only one: the US also plans to spend $100m on develop a skilled workforce to support production, processing, recovery and recycling of critical minerals. And back in February, the White House announced plans for a Project Vault—a plan to establishing a US Strategic Critical Minerals Reserve, which will store raw materials in facilities across the country, backed with £12 billion including $10 billion in loans from the US Export-Import bank.
And nor is the US alone in making investments: also in August 2026, the UK Government unveiled its Critical Minerals Accelerator: a £25m grant funding scheme, aimed at unlocking the commercialisation of innovation through the scaling up of innovative solutions for critical minerals, spanning extraction, processing and recycling.
All these programmes and investments are aimed at dealing with a key concern for many governments: that supply chains for a whole range of critical minerals have become deeply concentrated in a few countries (see feature "Critical shortages?").
These critical minerals are needed across everything from consumer electronics to defence and even though the quantities needed can, in some cases, be quite small, increasingly governments are worried that their industries will be at a disadvantage if they cannot guarantee supplies.
Risks to critical minerals supply chains continue to grow, with highly concentrated supply, new export restrictions and declining investment all adding to concerns, according to the International Energy Agency (IEA).
‘Vast amounts of economic value depend on relatively small volumes of critical minerals, whose supply chains remain highly concentrated and are therefore vulnerable,’ says IEA executive director, Fatih Birol.
A recent report from the agency warns that export controls have turned supply concentration from risk into reality, with increases in China’s export controls as well as cobalt export quota by the Democratic Republic of the Congo and trade restrictions by Zimbabwe for lithium and Mozambique for graphite.
‘The recent proliferation of export controls has transformed concerns around high supply concentration from a theoretical vulnerability into an immediate economic security challenge,’ the report says.
In April 2025, the Chinese Government introduced major export controls on seven heavy rare earth elements, which were expanded further in October. Although the expanded measures were suspended for one year until November 2026, the IEA says their full implementation could put $6.5tn/year of downstream production outside China at risk across the automotive, high-tech, defence and energy sectors.
China has also announced export controls on key battery elements, including cathode materials, cathode precursors and graphite anode materials, as well as on battery manufacturing equipment and technologies. The IEA has calculated that if the battery-grade graphite trade were fully disrupted, over $300bn/year of downstream production outside China would be at risk.
‘These developments underscore how small volumes of critical minerals underpin vast economic value and highlight the fragility of highly concentrated supply chains,’ it says.
A recent report from defence and security think tank Rusi notes that China’s rare earth strategy is focused on supporting its domestic manufacturing industries and encouraging them to export. At the same time, the strategy seeks full control and visibility over production and exports of certain rare earths via dual-use controls and licence systems, Rusi notes.
The definition of exactly what counts as a critical mineral varies depending on who you ask. In November 2025, the US Geological Survey, published a list of 60 critical minerals (including all the rare earth elements) vital to the country’s economy and national security that face potential risks from disrupted supply chains. In contrast, the European Union’s Critical Raw Materials Act lists 34 materials essential to the functioning and of its industrial ecosystems, as does the UK’s 2024 Criticality Assessment.
Many of these materials are essential to the transition to more sustainable industry; electric vehicles require around six times more mineral inputs than conventional cars while offshore wind facilities require around 13 times more mineral resources than gas-fired power plants.
As a result, governments are now placing greater emphasis on national resilience and finding new sources of these materials – and tightening up controls over their own supplies – in an increasingly complex geopolitical environment. Earlier in 2026, for example, the US signed critical minerals deals with the EU, Japan and other countries in an effort to create a more reliable supply chain.
The IEA has found that critical mineral prices increased across 2025 and 2026. Lithium prices more than doubled amid strong demand from energy storage applications and constrained supply. Prices for strategic minor minerals – with critical roles across energy, aerospace and defence – have also more than doubled.
Export controls have had an impact. In Europe, prices for gallium and heavy rare earths dysprosium and terbium are five times higher than Chinese domestic prices, and germanium prices are almost three times higher, which the IEA says highlights the challenges of securing supply outside the dominant supplier.
While supply concentration in refining continued to edge higher for most minerals in 2025, rare earths were an exception because of new projects in the US and production increases in Malaysia.
The report says there are a number of ways to mitigate the risk of these concentrated supply chains. It says that strategic stockpiles are one option: for 11 high-risk materials, the IEA finds the net annual cost of stockpiling for countries – outside of the dominant supplier – would be less than $900m, ‘modest relative to the potentially major economic impacts of disruptions,’ it says.
Governments are taking a more active role in reducing project risks and mobilising private capital. Public finance commitments in advanced economies reached around $65bn in 2025, over four times higher than in 2023, the report says.
However, a considerable gap remains between commitments and the reality; the lack of alignment between what governments are asking public financing institutions to do and what their mandates and risk tolerances actually allow ‘is a far greater obstacle than anyone anticipated,’ says a recent report from SAFE’s Center for Critical Minerals Strategy.
Getting these projects up and running outside of the traditional supplier locations can be challenging. Capital costs for critical minerals refining projects can be 20% to 150% higher, while operating costs are, on average, around 50% higher, driven by feedstock and energy prices.
Critical minerals generally account for a small share of final product prices. They represent around one-quarter of battery cell costs - but only about 3% of the price of an average electric vehicle, while rare earths represent around 40% of permanent magnet costs but less than 1% of a vehicle’s value. The IEA notes that a tripling of rare earth prices would increase the cost of a car by just 0.1%, while a tripling of battery material prices would increase the final price of EVs and storage systems by around 5%.
As such, it argues that the additional cost of supply diversification could be viewed as a ‘mineral security premium’, effectively economic insurance against major supply risks.
‘Diversified supply often comes at a higher cost, raising the question of how these additional costs should be addressed. These costs could be justified as the price of enhanced economic resilience,’ it says, suggesting that a shared approach involving governments, industry and consumers could help finance this premium and unlock the investment needed to build more diversified and resilient supply chains.
Building out the local supply chain and creating stockpiles are both likely to be on the agenda. The UK’s Critical Minerals Strategy, for example, sets a target of meeting 30% of critical mineral needs domestically by 2035 and limiting reliance on any single foreign supplier at 60% for each mineral. And while local suppliers of some rare earths do exist, which makes broadening the supply chain possible, as Rusi points out there are other challenges to deal with, too.
‘More fundamentally, the UK suffers from high energy prices, infrastructure constraints and the decline of its chemical industry, which is required to provide chemical feedstocks for cracking and separation and to participate in chemical recycling loops.’
Beyond the critical minerals themselves, there can be secondary hidden vulnerabilities affecting mineral supply chains. For example, while the key impacts of the Iran conflict have centred on oil and gas markets, there has also been considerable impact on mineral and metal markets from the closure of the Strait of Hormuz, particularly aluminium, sulphur and helium. Sulphur is a key feedstock for sulphuric acid, which is essential for fertiliser production – but also for processing critical minerals including copper, lithium, cobalt, nickel and rare earths.
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