Critical mineral markets are increasingly vulnerable to supply shocks due to rising industry concentration, especially in refining and processing, alongside growing export restrictions, the International Energy Agency (IEA) said in a report on Wednesday.
Driven by booming demand from energy transition technologies like electric vehicles, battery storage, renewables, and grid infrastructure, critical mineral use has surged in recent years. However, the sector remains dominated by a few key players, raising concerns over supply chain resilience.
“Even in a well-supplied market, critical mineral supply chains can be highly vulnerable to shocks, from extreme weather, technical failures, or trade disruptions,” said IEA Executive Director Fatih Birol. “Such shocks can lead to higher consumer prices and reduced industrial competitiveness.”
The IEA projects that by 2035, the top three refined material suppliers will still control around 82% of the market, a concentration level close to that of 2020. China continues to expand its refining capabilities faster than other countries and now accounts for two-thirds of global battery recycling capacity growth since 2020.
This concentration heightens risks of supply disruptions, particularly as export control measures on critical minerals multiply globally.
Mining sector concentration trends vary: copper, nickel, and cobalt are expected to remain less diversified, while lithium, graphite, and rare earths may see eased concentration.
The IEA also highlighted supply concerns for copper, forecasting a potential 30% shortfall by 2035 due to declining ore grades, rising costs, limited new discoveries, and long project lead times. In contrast, lithium demand growth is anticipated to outpace supply, pushing the market into deficit by the 2030s. However, lithium project development prospects remain more favorable compared to copper.
The report underscores the urgent need for diversification and strategic planning to secure stable critical mineral supplies critical to the global energy transition.
