Critical Mineral Supply Concentration and Export Curbs Threaten Global Energy Security, IEA Warns

Paris | EcoPulse24

The International Energy Agency (IEA) has warned that increasing concentration in critical mineral supply chains, expanding export restrictions and declining investment are creating growing risks for global energy, economic and national security, underscoring the need for stronger policy action to diversify supplies.

In its 2026 Global Critical Minerals Outlook, the agency said prices for critical minerals rebounded in 2025 and early 2026 after several years of declines as supply conditions tightened. The recovery in prices has been reinforced by a series of new export restrictions imposed by leading producing countries.

At the same time, price volatility and geopolitical tensions contributed to a 9% decline in investment during 2025, ending several consecutive years of investment growth across the sector.

Supply Chains Becoming More Concentrated

The report found that the geographic concentration of critical mineral supply chains has increased further, particularly in refining activities.

Over the past two years, the leading refining countries - Indonesia for nickel and China for other major energy minerals - accounted for more than three-quarters of global growth in refined supply.

In several mineral markets, including manganese, nickel and graphite, virtually all supply growth came from the dominant supplier.

The IEA said this concentration has heightened vulnerability across global supply chains at a time when demand for strategic minerals continues to grow.

Governments Increase Support for Diversification

Despite the risks, the report highlighted signs of progress as governments expanded financial support for new critical mineral projects.

Public financing commitments increased more than fourfold between 2023 and 2025, reaching $65 billion.

The agency also pointed to improvements in rare earth refining, where new projects in the United States and increased production in Malaysia reduced the leading supplier's market share from more than 90% in 2023 to 85% in 2025.

If currently planned projects are completed on schedule, the IEA projects that this share could decline further to 70% by 2035.

Meanwhile, continued development of new copper and lithium projects has narrowed the projected supply gap over the next decade.

Refining Capacity Still Lags Mining Investment

The IEA cautioned that diversification efforts remain structurally unbalanced.

While investment outside dominant suppliers is expanding in mining projects, refining and downstream processing capacity continues to lag.

For rare earth supply chains, planned refining capacity is expected to reach only around two-thirds of projected mine output by 2035, while planned magnet production would account for only about one-third of expected output.

Export Controls Become an Immediate Security Challenge

According to the report, expanding export controls have transformed concerns over supply concentration from a theoretical issue into an immediate economic security challenge.

The IEA said China's rare earth export controls, introduced in April 2025, forced some automakers to reduce production or temporarily suspend operations.

The measures were expanded again in October 2025. Although implementation was delayed by one year, the agency estimates that $6.5 trillion in annual downstream production outside China could be placed at risk if the restrictions are fully enforced.

Strategic Minor Minerals Need Greater Attention

The report also urged policymakers to focus more closely on strategic minor minerals - materials with relatively small markets but potentially significant economic consequences if supply is disrupted.

According to the IEA, despite today's high supply concentration, these minerals offer promising opportunities to strengthen long-term supply security through targeted policy support and international cooperation.

"Our latest analysis shows that vast amounts of economic value depend on relatively small volumes of critical minerals, whose supply chains remain highly concentrated and are therefore vulnerable," said IEA Executive Director Fatih Birol.

Birol added that while diversified supply chains may involve higher costs, the additional expense should be viewed as a "mineral security premium" that provides economic insurance against future supply disruptions during periods of geopolitical uncertainty.

Limited Impact on Consumer Prices

The report noted that critical minerals generally account for only a small share of final product prices, suggesting that the cost of diversification could be absorbed without significantly affecting consumers.

For example:

• Critical minerals represent around one-quarter of battery cell production costs but only about 3% of the price of an average electric vehicle.

• Rare earth elements account for around 40% of permanent magnet costs but less than 1% of a vehicle's total value.

Technology and Skills Remain Bottlenecks

The IEA emphasized that supply diversification requires more than opening new mines.

Governments and industry must also address shortages in processing technology, specialized equipment and skilled labor.

Outside China, only a limited number of suppliers manufacture key equipment used in battery-grade graphite and rare earth processing, often at substantially higher costs and with longer delivery times.

To help policymakers strengthen critical mineral security, this year's report introduces new policy recommendations covering emergency preparedness, investment support and measures to address gaps in technology, equipment and workforce capabilities.

Birol said the IEA will continue supporting governments through its Critical Minerals Security Programme, helping improve emergency preparedness and accelerate supply chain diversification.

Key Figures

EcoPulse24 Analysis

The IEA's latest outlook highlights that critical minerals have become a strategic geopolitical asset rather than simply industrial commodities. As governments race to secure supplies for electric vehicles, renewable energy technologies, advanced manufacturing and defense industries, refining capacity - not mining alone - is emerging as the principal bottleneck.

While increased public investment and diversification initiatives are beginning to reduce dependence in some segments, particularly rare earth refining, the report suggests that export restrictions and concentrated processing capacity continue to pose significant risks to global supply chains. The findings reinforce the growing importance of critical mineral security as a central component of energy transition strategies and national economic resilience.