Cite report
IEA (2025), Global Critical Minerals Outlook 2025, IEA, Paris https://www.iea.org/reports/global-critical-minerals-outlook-2025, Licence: CC BY 4.0
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Policy mechanisms for diversified mineral supplies
Increasing cost pressures in operations outside dominant producers pose risks to diversification and sustainability efforts
Supply chains for key energy minerals are highly concentrated, creating strong incentives for policymakers to build more secure and resilient supply chains through greater diversification. This concentration is often underpinned by network efforts, lower costs, and, in many cases, by relatively energy- and emissions-intensive processes. Capital expenditures for mining and refining in regions outside the dominant player are typically 50% higher than those within the top producing country. These producers also often face higher all-in sustaining costs, making it difficult to remain profitable during commodity downturns. These cost pressures, combined with ongoing price volatility and economic uncertainty, have constrained the growth of alternative supply sources.
Illustrative cap-and-floor mechanism
thousand USD/tonne
Well-designed market-based mechanisms can accelerate diversification without requiring unsustainable public support
While public financial support is essential to unlock near-term investment, particularly for early-stage or high-risk projects, it is important to build a lasting market for more diversified supply chains through rule-based market mechanisms. Attention is therefore increasingly turning to mechanisms that can mitigate some of the key price and volume uncertainties, including standards-based incentives and demand-side structures. Price stabilisation mechanisms such as contract-for-differences and cap-and-floor models can help stabilise costs for both mineral producers and off-takers without imposing excessive fiscal impacts. Volume guarantee mechanisms can support investment by providing greater demand certainty for new projects. Standards-based market access policies (or qualification approaches) are another option, enabling only minerals that meet certain sustainability or production criteria to qualify for accessing specific market segments, such as strategic reserves or public procurement channels
Sensitivity analysis of government cost/revenue
Annual average between 2019-2024 in billion USD
Policy mechanisms should balance supply security objectives with competitive signals that incentivise efficiency
A sensitivity analysis on the potential costs and benefits of implementing a cap-and-floor model in the nickel market highlights the challenges involved in introducing market-based mechanisms. The analysis represents a range of cap and floor prices, applied to nickel production outside the top three producer countries. It underscores the importance of calibrating reference prices carefully. Setting the floor too high may provide strong investment incentives but result in unsustainable fiscal burdens. Conversely, overly conservative pricing may limit the effectiveness of the instrument in catalysing new supply.
Applying pricing mechanisms to the nickel market can also highlight the opportunities involved in introducing these market-based mechanisms. Nickel producers outside the top three players are particularly sensitive to price volatility as 80% are estimated to have all-in sustaining costs above the 2024 prevailing price. At the same time, market dominance is often linked to low costs enabled by energy- and emissions-intensive production costs, which is concentrated in China and Indonesia. Our analysis shows that targeted incentives for cleaner nickel production could unlock sizeable supply volumes outside today’s dominant producers and reduce global market concentration by 7% by 2035.
Global collaboration remains essential to diversifying supply sources, linking resource-rich countries with those possessing refining capabilities and downstream consumers. Major opportunities exist for cross-border partnerships and collaboration in highly concentrated supply chains. For example, African nations such as Madagascar, Mozambique and Tanzania hold around a quarter of global graphite resources, while the United States, Japan, Korea and Germany have the capacity and plans to produce graphite anode materials. Similarly, ample rare earth resources exist in Australia, Brazil, Viet Nam and others, while Europe, the United States and Malaysia are investing in separation facilities. Permanent magnet manufacturing capacities are being developed in Japan, Korea, Europe and the United States. Mapping out opportunities for connections across the whole supply chain, rather than focusing solely on a single part of the value chain, can help realise the potential of partnerships in diversifying supply sources. This needs to be followed by cooperative frameworks such as co-investment, offtake agreements, and shared de-risking mechanisms.