Critical minerals have moved to the forefront of energy, economic and national security agendas in recent years. This reflects growing concerns about supply chain concentration and the expanding use of trade restrictions. Although the adequacy of supply remains a major concern, notably for copper, governments are now placing greater attention on resilience, diversification and the security of supply in an increasingly complex geopolitical environment.

Critical mineral prices rebounded in 2025 and early 2026 after declining in recent years. Driven by tight supply conditions, prices for base metals such as aluminium, copper and tin rose by one-third between January 2025 and April 2026, with copper prices reaching record highs. Battery material prices also recovered following a downturn in 2023 and 2024. Lithium prices more than doubled amid strong demand from energy storage applications and constrained supply, while cobalt prices rose by around 130%, largely due to export restrictions imposed by the Democratic Republic of the Congo (DRC). Prices for strategic minor minerals – those with relatively small market sizes but critical roles across the energy, high-tech, aerospace and defence sectors – had already started rising in 2024 and continued to rally through 2025 and early 2026 amid new export controls and robust demand growth. Prices for these minerals more than doubled, with prices for tungsten surging sixfold. Export controls have also led to a sharp price divergence between Chinese markets and those in other regions. In Europe, prices for gallium and heavy rare earths (dysprosium and terbium) are currently around five times higher than Chinese domestic prices, and germanium prices are almost three times higher – highlighting the challenges of securing supply outside the dominant supplier.

Supply concentration in refining continued to edge higher for most minerals in 2025, with rare earths the notable exception. Over the past two years, the top refining countries – Indonesia for nickel and China for other key energy minerals – accounted for over three quarters of total growth in refined supply. In several markets, including for manganese, nickel and graphite, virtually all supply growth came from the dominant supplier. Rare earth refining was an exception, with new projects in the United States and production increases in Malaysia leading to a modest decline in concentration, highlighting the role of targeted policy and investment support in enabling diversification. Excluding rare earths, the average share of the top refining country rose to 72% in 2025, up from 70% in 2023.

Gaps between projected demand and anticipated supply over the next decade have narrowed for copper and lithium, but new risks have emerged for cobalt due to policy shifts in major producers. Based on the project pipeline, supply deficits for copper and lithium are set to persist through 2035, although the outlook has somewhat improved. For copper, the projected supply deficit in 2035 has narrowed from around 30% in last year's Outlook to 25% as new projects advance, particularly in the DRC and Zambia. By contrast, a projected supply gap has emerged for cobalt due to the DRC's new export quota. This development underscores how policy changes by major producers can rapidly reshape the global supply outlook in markets with high levels of geographic concentration.

New export controls have turned supply concentration risks into reality. The number of mineral tariff codes subject to Chinese export controls has tripled since 2023. Other countries also introduced new restrictions, including the cobalt export quota by the DRC 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.

2025 marked the year when the economic risks of highly concentrated supply chains materialised at scale. In April 2025, the Chinese government introduced major export controls on seven heavy rare earth elements, with significant impacts across downstream industries, forcing some automakers to reduce utilisation rates or temporarily halt operations. In October 2025, they were further expanded, extending proposed restrictions to internationally-made products containing rare earths sourced from China or produced using Chinese technologies. Although the expanded measures were suspended for one year until November 2026, the vulnerabilities remain. Their full implementation could put an estimated USD 6.5 trillion per year of downstream production outside China at risk across the automotive, high-tech, defence and energy sectors. In October 2025, China also announced export controls on key battery supply chain chokepoints, including cathode materials, cathode precursors and graphite anode materials, as well as on battery manufacturing equipment and technologies. If battery-grade graphite trade were fully disrupted, over USD 300 billion per 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.

Strategic stockpiles can provide an important short-term buffer against supply disruptions. The largest-ever oil stock release by IEA Member countries in March 2026 amid the Middle East conflict helped mitigate market disruptions. While critical mineral markets differ from oil markets, strategic stockpiles can still provide an important emergency buffer, helping safeguard industrial activities during supply shocks. For the 11 high-risk materials assessed by the IEA, the net annual cost of stockpiling for countries outside the dominant supplier is estimated at less than USD 900 million, modest relative to the potentially major economic impacts of disruptions.

The conflict in the Middle East has provided another stark reminder of the vulnerabilities affecting mineral supply chains. While the key impacts of the conflict 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, notably for aluminium, sulphur and helium. The Middle East accounts for around 8% of global aluminium production, and production curtailments at several regional smelters added strain to an already tight market. The region also supplies around one-quarter of global sulphur and half of global seaborne sulphur trade passes through the Strait of Hormuz. Sulphur is a key feedstock for sulphuric acid, which is essential for fertiliser production and the processing of a range of critical minerals such as copper, lithium, cobalt, nickel and rare earths. Disrupted sulphur supplies prompted China to curb sulphuric acid exports in May 2026, creating ripple effects across both mineral and fertiliser value chains. The resulting surge in acid prices increased production costs for several critical minerals with acid costs overtaking energy costs to become the largest cost component in some cases.

Critical mineral investment declined by 9% in 2025, ending several years of growth. Amid rising geopolitical tensions and price volatility, investors became more cautious despite strong underlying demand. Battery metals saw the sharpest pullback, with capital spending falling by more than 20% – the largest decline in over a decade – and lithium companies cutting investment by around 40%. By contrast, spending by copper-focused companies increased by 8%, reflecting confidence in copper's long-term prospects.

Exploration spending also declined by more than 10%, with modest growth in spending on uranium and steady spending on copper offset by around 45% declines in lithium and nickel. Most regions recorded lower exploration spending, although Asia Pacific bucked the trend with a 20% increase. Merges and acquisitions rebounded in 2025, with strong demand for high-quality copper assets driving a 20% increase in overall deal value compared with 2024. Venture capital investment also recovered, increasingly targeting artificial intelligence (AI) technologies that could improve the efficiency of mineral exploration and resource extraction.

Public finance is increasingly being deployed to accelerate critical mineral investment. Governments are taking a more active role in reducing project risks and mobilising private capital. Public finance commitments in advanced economies reached around USD 65 billion in 2025, over four times higher than in 2023. However, a considerable gap remains between commitments and actual disbursements, which will ultimately determine their impact on supply diversification.

Analysis of project pipelines reveals a structural imbalance in efforts to promote supply chain diversification, with refining and downstream capacity lagging behind mining. Many projects are being developed outside the dominant supplier, but investment remains concentrated in upstream projects compared with refining and manufacturing capacity. In rare earth supply chains, existing and announced refining capacity in geographically diversified regions is equivalent to around two-thirds of expected mined supply by 2035, while planned magnet production represents only one-third. A similar pattern is evident in battery materials, where planned cathode production capacity is only about one-third of projected lithium mining capacity. These imbalances underscore the need for a more balanced approach to development across value chains.

There is a strong case for greater policy attention to strategic minor minerals. As semiconductors, robotics and AI drive the next wave of innovation, securing supplies of minerals such as gallium, germanium, indium and antimony is becoming increasingly important. Similarly, the aerospace and defence sectors depend on minerals including cobalt, titanium, tungsten and yttrium to meet stringent performance requirements. Based on the IEA's risk assessment framework, gallium, magnet rare earths, yttrium, graphite, tungsten, tellurium, cobalt and germanium rank among the materials most exposed to supply vulnerabilities, due to their high supply concentration, limited substitution potential and critical importance across multiple end-use applications. Many of them are already subject to some form of export restrictions.

Despite extremely high supply concentration today, strategic minor minerals offer promising opportunities to strengthen supply security at a reasonable cost, if accompanied by strong policy support. The markets for these minerals are small, but supply disruptions can carry disproportionate economic consequences. However, diversifying these supply chains typically does not require investment on the scale needed for bulk commodities, and bringing a limited number of high-quality projects online can substantially improve resilience. For example, diversifying magnet rare earth supply chains would require around USD 60 billion of investment over the next decade – modest relative to the huge potential economic cost of supply disruptions.

Greater attention is also needed on the strategic role of base metal smelters. Many strategic minor minerals are recovered as by-products of copper, zinc and lead processing, making base metal smelters essential to the security of these materials. Modern copper and zinc smelters are more than producers of refined base metals –they are strategic processing hubs that enable the recovery of numerous critical by-product minerals, support downstream manufacturing and provide recycling capacity for scrap metal. As such, they warrant greater policy attention as critical midstream infrastructure to ensure supply chain resilience.

The base metal smelting sector is showing increasing signs of stress. Despite rising base metal prices, smelter fees have fallen to historic lows. Benchmark copper smelter fees were settled at USD 0 per tonne in 2026, the lowest level ever agreed in annual negotiations, while spot charges have remained negative since 2024; zinc and lead smelter fees have also turned negative. As this revenue stream has effectively disappeared, smelters have become increasingly reliant on by-product sales, which are inherently more volatile. Tight concentrate supplies, combined with rapid smelter capacity expansion in China, have driven this trend. Since 2005, China has accounted for over 90% of growth in global copper smelting, increasing its share of global capacity from around 15% to 50% by 2025. Smelter utilisation rates have also diverged sharply since 2020, falling below 70% outside China by 2025 while remaining around 85% in China. If these conditions persist, many custom smelters outside China could face growing economic pressure, further increasing supply concentration in strategic midstream capacity.

New projects in geographically diverse regions often face higher costs than incumbent suppliers, complicating investment decisions. Capital costs for refining projects are 20% to over 150% higher outside the dominant supplier, due to higher equipment and construction costs. Operating costs are, on average, around 50% higher, driven by feedstock and energy prices. These cost disadvantages are compounded by technical and skills constraints, infrastructure gaps, and lengthy permitting processes, making it more difficult for market forces alone to bring forward new projects.

Diversification requires well-designed policy tools to reduce investment risks. Measures such as grants, equity participation, concessional loans and loan guarantees can lower upfront financing barriers for capital expenditures. Contracts for difference, price cap-and-floor, offtake backstops and strategic reserves can support operating expenditures and boost project viability by reducing price and volume risks. Price-based mechanisms are particularly well suited to strategically important supply chains with a limited number of viable projects, provided they are carefully designed to balance investment incentives with fiscal exposure, such as through competitive tenders and performance-based eligibility.

Policy tools should be tailored to the characteristics of each mineral market and supply chain segment. Large, liquid markets such as copper are generally best supported through measures that reduce upfront investment risks, complemented by support for enabling infrastructure. By contrast, small, opaque and highly concentrated markets such as rare earths may require targeted measures to mitigate price and volume risks. Across the value chain, mining is typically capital-intensive, making upfront capital support more relevant. Refining projects are more sensitive to cost and margin pressures and may require operational risk-mitigation tools to improve competitiveness.

Countries can combine supply-side support with demand-side measures to strengthen the commercial viability of diversified supply chains. While supply-side policies can help bring new projects online, they may not by themselves create sufficient incentives for manufacturers to source from these suppliers. Demand-side measures can provide predictable demand, improving the bankability of projects and incentive to invest in them. Available tools include diversified sourcing requirements, potentially complemented by fiscal incentives such as tax credits, to encourage procurement from non-dominant suppliers; demand aggregation and facilitated offtake arrangements to build a stable and sizeable customer base; and trade-based measures to narrow price gaps between incumbent and diversified supply. Their effectiveness depends on careful design to balance investment incentives, market efficiency and trade considerations.

Critical minerals generally account for a small share of final product prices, although their cost contribution varies significantly across value chains, with important implications for policy design. While higher mineral prices can substantially increase the cost of intermediate products such as battery cells and permanent magnets, the impact on final products is often limited. For example, critical minerals account for around one-quarter of battery cell costs but only about 3% of the price of an average electric vehicle (EV), while rare earths represent around 40% of permanent magnet costs but less than 1% of a vehicle’s value. By contrast, materials such as copper represent a larger share of equipment costs, accounting for around 10–15% of transformer and power cable prices. These differences suggest that, in some supply chains, downstream users may be able to absorb higher material costs more readily, providing scope for diversified sourcing without materially affecting end-product prices. For example, 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%.

The additional cost of supply diversification can be viewed as a mineral security premium – a form of 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 – a security premium that provides insurance against the risks associated with concentration. As critical minerals generally represent a small share of final product costs, much of the additional cost of diversification could be absorbed with limited impact on consumers, although some intermediate sectors may face greater cost pressures and require targeted support. 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.

Successful diversification requires addressing critical gaps in technology, equipment and skilled workforce across the value chain. Diversification is not simply a question of developing new projects; it requires building a broader ecosystem of capabilities. From lithium chemicals and graphite to rare earths and gallium, processing and refining stages rely on complex technologies, specialised equipment and highly skilled expertise that remain concentrated in a small number of countries. Outside the dominant supplier, equipment providers are limited, lead times can be lengthy, and accumulation of technical know-how often takes time and resources. For example, outside China, only a handful of suppliers provide key battery-grade-graphite processing equipment, while ultra-high-purity gallium refining and compound semiconductor manufacturing rely on only one or two specialised equipment suppliers. In rare earth magnet production, grain boundary diffusion – a key technology to enhance magnet performance – is highly patented, with only one equipment supplier outside China and equipment costs that are reportedly more than ten times higher, alongside longer lead times. Recent export controls targeting not only critical minerals but also processing technologies and equipment underscore the importance of closing these capability gaps. Addressing these challenges will require a holistic approach combining innovation, workforce development, policy support and international co-operation to build the technological foundations for diversified and resilient supply chains.

Recycling could play an increasingly important role in easing supply strains, with secondary supply potentially doubling its contribution by 2040. Under today’s policy settings, average recycling rates across key energy minerals could rise from around 10% today to close to 20% by 2040. Cobalt and copper already have relatively established recycling streams, with rates expected to increase further to 2040, while rare earth magnet recycling could benefit from growing end-of-life volumes from early generations of EVs and wind turbines. Lithium and nickel recycling remain at an early stage but are expected to expand rapidly. Battery recycling capacity has expanded significantly, but remains highly concentrated, with China accounting for over three-quarters of global pre-treatment capacity and 90% of material recovery capacity. Outside China, Korea is the leading player in material recovery. Realising the full potential of secondary supply will require continued investment in collection and recycling infrastructure and sustained demand for recycled materials.

The renewed expansion of nuclear power is driving a need for significant investment across the uranium and nuclear fuel cycle. Uranium markets have strengthened sharply since 2020, reflecting expectations of substantial growth in demand for nuclear fuel and the need to expand supply. As global uranium requirements rise, new mine projects will need to be successfully developed and brought online. However, the most immediate constraints are emerging further downstream, particularly in uranium conversion, where global capacity is already tight and additional investment will be needed to avoid bottlenecks. Enrichment capacity will also need to expand over the medium term, driven by both nuclear capacity growth and rising demand for higher-assay fuels, such as high-assay low-enriched uranium (HALEU), in some next-generation reactors. Fuel fabrication capacity is generally adequate for conventional fuels, although reactor-specific requirements could create challenges for some technologies. Supply security risks are heightened by concentration across the fuel cycle, with the top three countries accounting for almost three-quarters of uranium mining and around 70% of conversion and enrichment capacity.

Latin America and the Caribbean is well positioned to play a larger role in diversified global critical mineral supply chains. The region is a major producer of base metals, accounting for over 20% of global tin and zinc production and around 40% of global copper mine output. It is also a key producer of strategic minor minerals such as molybdenum, niobium and rhenium. The region is strengthening its position in energy minerals, producing around one-quarter of global lithium supply, with output expected to grow by nearly 50% by the end of the decade. It also holds substantial reserves of silver, graphite, rare earths and other strategic minerals.

However, the region refines only around one-fifth of its mined output of key energy minerals, with the exception of lithium where integrated chemical processing has developed. If lithium, nickel, cobalt, graphite and rare earths were refined locally and two-thirds of copper production were processed within the region, the economic value generated could increase by nearly 50% from today, reaching around USD 220 billion by 2035. Realising this opportunity requires addressing high financing costs, infrastructure gaps in power and water, technology and skills constraints, and strengthening engagement with local stakeholders.

The IEA Critical Minerals Security Programme will continue to serve as a key international platform for advancing global efforts on mineral security. Recent market developments have elevated mineral supply security, placing it at the forefront of energy and economic policymaking. As the Agency’s flagship framework, the Programme supports countries in strengthening emergency preparedness and accelerating supply diversification. Building on mandates from IEA Ministers in February 2026 and G7 Leaders in June 2026, the IEA will continue to expand Programme activities to help deliver more resilient and diversified supply chains.