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).
“Our latest analysis shows that vast amounts of economic value depend on relatively small volumes of critical minerals, whose supply chains remain highly concentrated and are therefore vulnerable,” said IEA executive director Fatih Birol.
The report warns that new 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 said their full implementation could put $6.5 trillion/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.
The definition of a critical mineral varies. In November 2025, the US Geological Survey, published a list of 60 critical minerals 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 in an increasingly complex geopolitical environment.
Earlier this year, the US Government signed critical minerals deals with the European Union, Japan and other countries in an effort to create a more reliable supply chain in a market dominated by China.
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, high-tech, aerospace and defence sectors – have more than doubled, with prices for tungsten jumping sixfold.
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 said highlights the challenges of securing supply outside the dominant supplier.
While supply concentration in refining has continued to edge higher for most minerals in 2025, rare earths was 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 found 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 said. 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.
This means that some supply chains may be more able to absorb cost increases: 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.
Recycling is another option that could help – although similar supply chain concentrations exist here, for example, in battery recycling with China accounting for over three-quarters of global pre-treatment capacity and 90% of material recovery capacity.
The report also notes there can be hidden vulnerabilities affecting mineral supply chains. 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.
Further reading on critical materials
- Science at scale: Tackling challenges in critical materials and chemical manufacturing
- Demand for rare earth elements is growing, supply chains can't keep up (Premium)
- Lithium: Remaking the global supply chain
- Why the US wants to remake the critical minerals supply chain
- Critical minerals: Harnessing AI to improve discovery and supply
- Are we running out of sand?
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