Demand for key energy minerals continued to grow strongly in 2024. Lithium demand rose by nearly 30%, significantly exceeding the 10% annual growth rate seen in the 2010s. Demand for nickel, cobalt, graphite and rare earths increased by 6‑8% in 2024. This growth was largely driven by energy applications such as electric vehicles, battery storage, renewables and grid networks. In the case of copper, the rapid expansion of grid investments in China has been the single largest contributor to demand growth over the past two years. For battery metals such as lithium, nickel, cobalt and graphite, the energy sector accounted for 85% of total demand growth over the same period.

Despite this rapid demand growth, major supply increases – led by China, Indonesia and the Democratic Republic of the Congo – exerted downward pressure on prices, especially for battery metals. The swift increase in battery metal production highlighted the sector’s ability to scale up new supply more quickly than for traditional metals like copper and zinc. Since 2020, supply growth for battery metals has been twice the rate seen in the late 2010s. As a result, following the sharp price surges of 2021 and 2022, prices for key energy minerals have continued to decline, returning to pre-pandemic levels. Lithium prices, which had surged eightfold during 2021-22, fell by over 80% since 2023. Graphite, cobalt and nickel prices also dropped by 10 to 20% in 2024.

Despite strong expectations for future demand growth, investment decisions today face significant market and economic uncertainties. Investment momentum in critical mineral development weakened in 2024, with spending rising by just 5%, down from 14% in 2023. Adjusted for cost inflation, real investment growth was just 2%. Exploration activity plateaued in 2024, marking a pause in the upward trend seen since 2020. While exploration spending continued to rise for lithium, uranium and copper, it declined notably for nickel, cobalt and zinc. Start-up funding is also showing signs of a slowdown. Today’s low mineral prices are not providing the signal to invest, and projects involving new entrants have been most affected by the uncertainty.

Diversification is the watchword for energy security, but the critical minerals world has moved in the opposite direction in recent years, particularly in refining and processing. Between 2020 and 2024, growth in refined material production was heavily concentrated among the leading suppliers. As a result, the geographic concentration of refining has increased across nearly all critical minerals, particularly for nickel and cobalt. The average market share of the top three refining nations of key energy minerals rose from around 82% in 2020 to 86% in 2024 as some 90% of supply growth came from the top single supplier alone: Indonesia for nickel and China for cobalt, graphite and rare earths.

Our detailed analysis of announced projects suggests that progress towards more diversified refining supply chains is set to be slow. Looking ahead to 2035, the average share of the top three refined material suppliers is projected to decline only marginally to 82%, effectively returning to the concentration levels seen in 2020. China’s stronghold extends beyond refining; two-thirds of global battery recycling capacity growth since 2020 has been in China.

Mining activity shows a similar trend, though it remains somewhat less concentrated than refining. Most recent growth in mining output stemmed from established producers such as the Democratic Republic of the Congo (DRC) for cobalt, Indonesia for nickel, and China for graphite and rare earths. As a result, the average market share of the top three mining countries for key energy minerals rose from 73% in 2020 to 77% in 2024. Lithium was a notable exception, with a major portion of supply growth coming from emerging producers like Argentina and Zimbabwe. Looking ahead, some diversification is coming into view for the mining of lithium, graphite and rare earths. However, geographical concentration is expected to intensify for copper, nickel and cobalt. Overall, the share of the top three producers is projected to decline slightly to the levels seen in 2020, similar to trends observed in refining.

Projected supply-demand balances through to 2035 are improving compared with a few years ago, but major concerns remain, especially for copper. The growing number of mining and refining project announcements promises a notable increase in future production volumes. For nickel, cobalt, graphite and rare earths, expected supplies are catching up with projected demand growth under today’s policy settings, if planned projects proceed on schedule. However, copper and lithium are major exceptions. Despite strong copper demand from electrification, the current mine project pipeline points to a potential 30% supply shortfall by 2035 due to declining ore grades, rising capital costs, limited resource discoveries and long lead times. For lithium, near-term markets appear well-supplied, but rapidly growing demand is expected to push the market into deficit by the 2030s; however, the prospects for developing new lithium projects are much more favourable than for copper.

Today’s markets may appear well-supplied, but export restrictions and risks to security of supply are proliferating. Amid rising supply concentration, an expanding number of export control measures on critical minerals have been introduced, particularly since 2023. In December 2024, China restricted the export of gallium, germanium and antimony, key minerals for semiconductor production, to the United States. This was followed by further announcements in early 2025, including restrictions on tungsten, tellurium, bismuth, indium and molybdenum and on seven heavy rare earth elements. In February 2025, the DRC announced a four-month suspension of cobalt exports to curb falling prices. Currently, more than half of a broader group of energy-related minerals are subject to some form of export controls. These restrictions are not only increasing in number but also expanding in scope to cover not just raw and refined materials but also processing technologies, such as those for lithium and rare earth refining.

High market concentration increases vulnerability to supply shocks, particularly if, for any reason, supply from the largest producing country is disrupted. When the largest supplier and its demand is excluded, the overall market balances become starkly different. For battery metals and rare earths, supplies outside the leading producer meet on average only half of the remaining demand in 2035. This means that, 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.

The impact of a critical minerals supply shock can be far-reaching, bringing higher prices for consumers and reducing industrial competitiveness. A sustained supply shock for battery metals could increase global average battery pack prices by as much as 40-50%. There is already a major battery manufacturing cost gap across regions. Prolonged supply disruptions could widen cost disadvantages for other battery manufacturers vis-à-vis China, potentially hindering efforts to diversify manufacturing supply chains.

Extending our analysis to a broader range of 20 energy-related, multisectoral minerals highlights additional vulnerabilities. These minerals play a vital role across sectors such as high-tech, aerospace and advanced manufacturing. While the market sizes for these minerals are relatively small, supply disruptions can have outsized economic impacts.

Major risk areas for this broader group of strategic minerals include high supply chain concentration, price volatility and by-product dependency. China is the dominant refiner for 19 of the 20 minerals analysed, holding an average market share of around 70%. Three-quarters of these minerals have shown greater price volatility than oil, and half have been more volatile than natural gas. Around half are produced as by-products, limiting the flexibility of supply to respond to market signals. Substitution options are also limited; many minerals, such as tantalum, titanium and vanadium, have few viable alternatives without major cost or performance trade-offs.

Policy makers have woken up to these energy security challenges with a wave of new policy initiatives. Governments around the world are intensifying efforts to secure critical mineral supplies through public funding, strategic partnerships and domestic policy reforms. The United States issued a series of executive orders to expedite permitting and increase investments in domestic projects. The European Commission designated 47 strategic projects under the EU Critical Raw Materials Act to fast-track development and enhance financing access. The International Energy Agency has launched a new Critical Minerals Security Programme to address key vulnerabilities. Australia, Canada and other nations have launched major funding programmes. Meanwhile, resource-rich countries are implementing policies to retain greater economic value from their mineral resources.

Diversification will not materialise through market forces alone; well-designed policy support and partnerships are essential. Capital costs for projects in diversified regions are typically around 50% higher than for incumbent producers. These higher costs, combined with price volatility and economic uncertainty, are making it difficult to build up diversified supply. Public financing support can help to bring forward new projects, but rule-based market mechanisms are also required to support their operation. Well designed price stabilisation schemes, such as contract-for-differences and cap-and-floor models, can help smooth out price volatility and mobilise private investment without imposing excessive fiscal burdens. Volume guarantee mechanisms can also support investment by providing greater demand certainty for new projects. Standards-based market access policies 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. For instance, 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 Germany, Japan, Korea and the United States 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, Malaysia and the United States are investing in separation facilities. Permanent magnet manufacturing capacities are being developed in Europe, Japan, Korea 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.

New technologies in mining, refining and recycling hold major potential to scale up diversified supplies. A range of emerging innovations have the potential to transform mineral production. In mining, these include AI-based exploration, direct lithium extraction, the processing of ionic adsorption clays, and the re-mining of tailings and mine waste. In refining and recycling, advances such as novel synthetic graphite production, sulphide ore leaching and advanced sorting technologies could represent promising breakthroughs. For example, innovations such as AI-based geological exploration could reduce drilling costs by up to 60% and as much as quadruple discovery success rates. Technologies that enable rare earth extraction from ionic adsorption clay deposits could significantly reduce capital intensity and waste generation, opening up new production opportunities in countries such as Australia, Brazil and Uganda. International collaborations can also play a vital role in addressing technology bottlenecks in building diversified supplies.

Emerging battery technologies are challenging the incumbent nickel-based lithium-ion batteries, and these are not immune to high supply concentration and volume risks. Lithium iron phosphate (LFP) batteries have surged in recent years, covering nearly half of the electric car market, up from less than 10% in 2020, and emerging technologies like sodium-ion and manganese-rich lithium-ion batteries are also gaining traction. However, the supply chains for these technologies are significantly more concentrated than those for nickel-based batteries. China produces 75% of the world’s purified phosphoric acid, essential for LFP batteries, and 95% of high-purity manganese sulphate, a key input for manganese-rich and sodium-ion battery chemistries. These two materials are emerging as key chokepoints, with current project pipelines indicating the potential for major supply gaps. Planned projects for purified phosphoric acid are insufficient to meet projected demand from around 2030. High purity manganese sulphate supplies from announced projects meet only 55% of expected 2035 demand under today’s policy settings. Sodium-ion batteries offer some upstream diversification potential, with the United States and Europe playing active roles in soda ash, caustic soda and biomass supplies. Yet the downstream supply chain – for cells, cathodes and hard carbon anodes – remains dominated by China. Given the growing competitiveness and market share of LFP and other emerging technologies, it is becoming increasingly important for policy makers to pay close attention to supply chain vulnerabilities in these new technologies.

Sustainability reporting continues to gain traction across major producers. Around 85% of the 25 major mining companies disclosed performance across 10 key environmental and social indicators in 2023, rising from 60% in 2020. While environmental indicators such as emissions, water usage and waste have started to improve after several years of stagnation, advances in social metrics, such as worker safety, appear to be slowing. Water and climate risks present a major issue; in 2024, 7% of global copper supply was at risk of disruption due to floods or droughts, a figure that is set to rise in the future. Traceability systems can help meet various policy goals, including contributing to the development of sustainable, responsible and secure mineral supply chains.

In a world of high geopolitical tensions, critical minerals have emerged as a frontline issue in safeguarding global energy and economic security. The wave of recent export restrictions highlights the strategic urgency of strengthening the resilience and diversity of critical mineral supplies as the world moves towards a more electrified, renewables-rich energy system. Through its Critical Minerals Security Programme, the IEA is scaling up efforts to bolster mineral security by building systems to enhance resilience against potential disruptions, supporting the acceleration of project development in diverse regions, and deepening market monitoring capabilities.