Growing geopolitical tensions underscore the need for stronger action on critical minerals security

Critical minerals markets have been through a tumultuous few years, with a relentless surge in prices during 2021-2022 followed by major price declines. Lithium prices have fallen by over 80% since 2023 after increasing eightfold in the previous two years, while nickel, cobalt and graphite prices have halved over the same period.

Demand growth has remained fairly constant over this period. Lithium demand has risen by 25% per year since 2021, while demand for nickel, cobalt and graphite has also increased by 7-10% per year over the same period. However, a combination of even stronger supply growth – particularly from Africa, Indonesia and China – and an overhang of downstream technology inventory, such as battery cells and cathodes, has produced considerable downward pressure on prices.

Today's markets may be relatively well supplied, but security of supply is far from guaranteed. Trade restrictions affecting critical minerals have proliferated, notably in the form of export controls applied by China. Moreover, our detailed analysis of future supply-demand balances suggests that markets for some key minerals, particularly copper and lithium, could tighten considerably in the coming years. For example, projected lithium demand in 2035 is 50% higher than our baseline expectations for supply from existing and announced projects.

Nickel, cobalt and graphite, may not face the same volume supply risks under today’s policy settings, given a larger number of announced projects in the pipeline, but they exhibit much higher market concentration with heavy reliance on a small number of producers.

Some 75% of planned projects for refined lithium, nickel and cobalt, and over 90% for battery-grade graphite projects, are being developed in today’s top three producers. This high market concentration means there is a risk of significant shortfalls in supply if, for any reason, supply from the largest producing country is disrupted.

In natural gas markets and across energy systems as a whole, resilience analysis, often called “N-1” assessment, is used as a tool to understand potential vulnerabilities in the system. We conducted such an assessment in the critical mineral context to examine how the system looks when the largest supplier is excluded from global supply and demand balances. The supply remaining after excluding the largest supplier is known as the N-1 supply. We compared this with N-1 demand, which excludes the consumption of the largest supplier.

Nickel, cobalt and graphite appear to have sufficient supply on a global basis. However, if the largest supplier and its demand is excluded (China for lithium, cobalt and graphite; and Indonesia for nickel), the remaining N-1 supplies would fall significantly below N-1 demand. For cobalt and graphite, the remaining supplies would only cover 25-30% of N-1 demand in 2035, entirely insufficient to meet the mineral needs. The N-1 supply covers 55% of N-1 demand for nickel, but the ratio could be much lower if battery-grade nickel sulphate supplies (mostly from China) are also disrupted. For lithium the gap is less stark, but the remaining N-1 supply still covers only 60% of N-1 demand. This emphasises that, even where the overall global balance is reasonably well supplied, critical mineral supply chains can be highly vulnerable to supply shocks, whether from extreme weather, trade disruptions or geopolitics.

A wide range of export control measures on critical minerals have been announced in recent months. In December 2024, China restricted the export of gallium, germanium and antimony – key minerals for semiconductor production – to the United States. At the same time China announced further export controls for graphite, building on the export controls on specific graphite products implemented in December 2023. Exporters must apply for permits to ship graphite materials, including those essential for EV and storage batteries. This was followed by additional export control announcements in February 2025 on a range of materials including tungsten, tellurium, bismuth, indium and molybdenum – key minerals primarily used in defence and high-tech applications. These developments underscore that today’s well-supplied markets should not mask the considerable security risks arising from high supply concentration. Disruptions in critical mineral supply can have major impacts on technology prices, inflation, manufacturing competitiveness and the broader economy. 

We assessed the potential impacts of a critical mineral supply disruption, taking battery-grade graphite as an example. Sharp spikes in critical mineral prices can drive up the cost of both batteries and EVs, potentially slowing the pace of electrification and causing significant economic consequences. In 2010, the price of rare earth elements spiked by as much as 10 times when China held back exports. If a graphite supply disruption were to occur, causing a tenfold price surge, average battery pack prices globally would increase by 45%, substantially reducing their competitiveness.

Battery prices already vary considerably by region, with average prices in 2024 much higher in the United States (by 30%) and in Europe (by 50%) than they were in China. A tenfold increase in battery pack prices would widen this gap to 60-70% in both regions. These higher battery prices result in more expensive EVs for consumers, reducing affordability and slowing adoption. For instance, a sharp rise in graphite prices would further widen the price gap between new EVs sold in the United States or Europe and those sold in China, making them nearly twice as expensive in the United States and 75% more costly in Europe.

Supply disruptions can also deal a heavy blow to the ambitions of building diversified domestic manufacturing. Higher critical minerals prices could widen the manufacturing cost gap between today’s leading producer and other players. The battery manufacturing cost competitiveness gap between economies is already stark, with the levelised cost of production of battery cells 40-50% higher in the United States and Europe than in China. A fivefold increase in graphite prices from a supply shock would further increase this cost gap to 70% for both economies, making their battery manufacturing significantly less competitive, with strong potential implications for employment. Prolonged disruptions could also result in significant revenue and job losses for manufacturers, with major economic consequences for economies with growing battery manufacturing bases, such as the United States, Europe, Korea and Japan.

This analysis highlights the urgency of strengthening and stepping up efforts to ensure the future security of supply for critical minerals. The IEA Critical Minerals Security Programme was established in 2022 to support governments in strengthening critical mineral security, providing a platform for countries to share best practices, coordinate actions in response to risks and emergencies, and develop strategies to promote supply diversification. The programme builds on the IEA’s longstanding experience safeguarding energy market security.

As part of the programme, the IEA held a first-of-its-kind critical minerals security exercise in December 2024. The exercise focused on enhancing emergency preparedness, expediting diversification and accelerating the implementation of strategic policy measures to mitigate critical mineral supply risks. Critical Minerals will also be one of the major focuses of the international Summit on the Future of Energy Security that the IEA is holding in partnership with the UK government in April in London.

The IEA has also been strengthening its market monitoring and outlook activities covering latest market developments and investment, technology and policy trends, through the annual Global Critical Minerals Outlook report. In the coming months, the Global Critical Minerals Outlook 2025 will be published, providing analysis on the latest market developments and identifying where the bottlenecks exist along the supply chain.

Looking ahead, the IEA will continue to expand activities to strengthen critical minerals security including in areas such as resilience against potential disruptions, tools to accelerate project developments in geographically diverse regions, and deepening work on market monitoring and early warning mechanisms.