IEA Warns Critical-Mineral Risks Are Widening

Critical-mineral supply chains became more vulnerable in 2025 and early 2026 even as governments increased financing for new mines and processing projects, the International Energy Agency said in its Global Critical Minerals Outlook 2026, published July 16.

The IEA found that investment across the sector fell 9% in 2025. Capital spending on battery metals dropped by more than 20%, while lithium companies cut investment by about 40%. Prices for several minerals rebounded as supply conditions tightened and export restrictions expanded.

The report matters beyond mining markets. Critical minerals support batteries, power grids, electric vehicles, wind turbines, semiconductors, aerospace and defense equipment. The IEA’s central warning is that new mines alone will not solve supply-chain risks if countries lack the refining, manufacturing, equipment and skilled workforce needed to turn ore into usable industrial materials.

Refining remains the main concentration point

Over the previous two years, Indonesia accounted for most growth in refined nickel, while China led growth for other key energy minerals. Together, the leading refining countries accounted for more than three-quarters of total growth in refined supply.

Excluding rare earths, the average share held by the top refining country rose to 72% in 2025 from 70% in 2023. In markets including manganese, nickel and graphite, virtually all recent supply growth came from the dominant supplier.

The IEA ranks gallium, magnet rare earths, yttrium, graphite, tungsten, tellurium, cobalt and germanium among the materials most exposed to supply vulnerabilities because they combine concentrated production, limited substitution and strategic importance.

Export controls can turn concentration into disruption

China introduced major export controls on seven heavy rare-earth elements in April 2025. The IEA says the measures had significant effects across downstream industries, with some automakers reducing utilization or temporarily halting operations.

China announced broader measures in October 2025 covering additional materials, products containing rare earths sourced from China and products made with Chinese technology. Those expanded measures were later suspended for one year, through November 2026. The IEA’s estimate that full implementation could put $6.5 trillion in annual downstream production outside China at risk is a modeled exposure scenario, not a measure of losses already incurred.

The exposure spans automotive, high-tech, defense and energy production. The IEA also identified battery-supply-chain chokepoints involving graphite, cathode materials, cathode precursors, equipment and technology. A full disruption of battery-grade graphite trade could place more than $300 billion in annual downstream production outside China at risk, according to the agency’s model.

The OECD’s 2026 inventory provides a longer historical comparison. It covers export restrictions through 2024 and found that restrictions on critical raw materials increased fivefold between 2009 and 2024. During 2022-2024, about 70% of global cobalt and manganese exports were covered by at least one restriction, along with 47% of graphite exports and 45% of rare-earth exports.

Diversification is producing progress, but the pipeline is uneven

There is measurable progress. New U.S. rare-earth projects and increased Malaysian production reduced the leading supplier’s share of global rare-earth refining from more than 90% in 2023 to 85% in 2025. If planned projects come online as scheduled, the share could fall to 70% by 2035.

Governments are also committing more public finance. The IEA says commitments in advanced economies reached about $65 billion in 2025, more than four times the 2023 level. But the agency cautions that actual disbursements, rather than announced commitments, will determine how much new capacity is built.

Planned capacity remains structurally unbalanced. Diversified rare-earth refining capacity is only about two-thirds of expected mined supply by 2035, while planned magnet production represents about one-third of expected mined supply. A similar imbalance exists in battery materials, where planned cathode capacity is roughly one-third of projected lithium-mining capacity.

That means a new mine may still depend on a concentrated foreign processor, specialized equipment or a limited pool of skilled workers before its output can reach manufacturers. Mining capacity should not be treated as equivalent to usable supply.

What businesses and consumers should watch

Supply disruptions do not automatically mean immediate shortages or sharp price increases for finished products. Critical minerals often represent a small share of final consumer prices, although they can account for a much larger share of intermediate products such as battery cells and permanent magnets.

The more immediate effects can be higher input costs, delayed production, licensing uncertainty and pressure to secure alternative suppliers. The IEA estimates that critical minerals account for about one-quarter of battery-cell costs but only around 3% of the price of an average electric vehicle. Rare earths represent about 40% of permanent-magnet costs but less than 1% of a vehicle’s value.

The next indicators are whether governments turn financing commitments into actual disbursements, whether refining and magnet projects advance, how China’s suspended measures evolve before November 2026, and whether major producers such as the Democratic Republic of the Congo change export policies.

The IEA’s message is not that diversification has failed. It is that resilience requires complete supply chains—from mines to refineries, magnets, cathodes, equipment and recycling—not just a larger list of extraction projects.

Sources

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