FRANKFURT, Germany (AP) – The global supply of critical minerals is increasingly being dominated by a handful of countries, particularly China. This concentration raises significant concerns regarding the vulnerability of the global economy to potential supply cutoffs, which could lead to disruptions and consequently higher prices for consumers, according to a report released by the International Energy Agency (IEA) on Wednesday.
The IEA's report delves into the availability of minerals and metals crucial for transitioning from fossil fuels to electricity and renewable energy sources. The findings indicate that the average market share of the top three producing countries for key minerals like copper, lithium, cobalt, graphite, and rare earth elements has surged to 86% in 2024, up from 82% in 2020.
China stands out as the foremost refiner of 19 out of 20 strategic minerals examined, possessing an average market share of approximately 75%. Indonesia has emerged as a strong player in the nickel market, which is vital for producing steel and electric vehicle batteries. These trends are exacerbated by ongoing export restrictions and trade disputes, prompting further apprehensions about supply chain vulnerabilities, as noted by IEA executive director Fatih Birol.
Birol emphasized that critical mineral supply chains are prone to disruptions caused by extreme weather, technical failures, or trade issues. He highlighted the potential impact of such supply shocks, which can lead to increased consumer prices and diminished industrial competitiveness. He cited examples such as the energy crisis in Europe following Russia's natural gas supply cuts after the invasion of Ukraine, and the recent global shortage of silicon-based computer chips that hampered auto production during and after the pandemic.
Birol stressed the importance of diversification for energy security, stating that it extends beyond energy to encompass overall economic security. While market dynamics are crucial in developing alternative sources of critical minerals, he insisted that well-structured government policies in the form of financing and other supportive measures are essential as well.
China's dominance in the global supply of critical minerals—integral to a variety of products including computer chips, electric vehicles, batteries, drones, and military equipment—puts pressure on U.S. manufacturers, particularly as China has implemented export limits on various key products. This situation is compounded by the Trump administration’s push to reduce U.S. reliance on foreign critical minerals as part of its national security and economic resilience agenda, a focus that began in Trump’s first 100 days back in office.
The administration’s efforts also include establishing agreements to access mineral resources from countries such as Ukraine while looking to expedite deep-sea mining operations, provoking concerns among environmental groups. Trump’s initiatives have focused on bolstering domestic copper production and fast-tracking new mine permits, with particular attention to proposals related to mineral resources from conflict-prone regions like the Democratic Republic of the Congo and Greenland.
The IEA report concludes that while current global markets are adequately supplied and the overall prices have fallen, there are significant concerns regarding future availability. Specifically, it warns that the planned production of copper—which is essential for electrical wiring and power grids—will fall short of demand, projecting a potential shortfall of 30% by 2030.
