Report: World’s supply of critical minerals for clean energy is concentrated in fewer countries

FRANKFURT, GERMANY: The world’s sources of critical minerals are increasingly concentrated in just a few countries, most notably China, leaving the global economy vulnerable to supply cut-offs that could disrupt industry and lead to higher prices for consumers, a report said on Wednesday.

The Paris-based International Energy Agency’s report examined the availability of minerals and metals that may be small in quantity but have a significant impact in shifting the economy away from fossil fuels towards electricity and renewable energy.

It found that for copper, lithium, cobalt, graphite, and rare earth elements, the average market share of the three top-producing countries rose to 86% in 2024 from 82% in 2020.

China is the leading refiner for 19 out of 20 strategic minerals studied in the report and has an average share of around 75%. Indonesia has shown strong growth in nickel, a key component in steel production and batteries for electric vehicles.

The current trend towards export restrictions and trade disputes is increasing concerns, the IEA said.

“Critical mineral supply chains can be highly vulnerable to supply shocks, whether from extreme weather, technical failures, or trade disruptions,” said IEA Executive Director Fatih Birol. “The impact of a supply shock can be far-reaching, leading to higher prices for consumers and reducing industrial competitiveness.”

Birol cited the energy crisis in Europe after Russia cut off natural gas supplies following its invasion of Ukraine. Another cautionary example is the global shortage of silicon-based computer chips during and after the pandemic, which disrupted automobile production.

“The golden rule of energy security is diversification,” Birol told The Associated Press in an interview. “And it goes beyond energy security; it is also about economic security.”

Market forces are important in developing new sources but will not be sufficient. “There is a need for well-designed government policies,” he said, referring to financing and other measures.

China is a major global source of critical minerals required for a wide range of goods, including computer chips, robotics, electric vehicles, batteries, drones, and military equipment. It also dominates the refining and processing of many of these essential minerals, including lithium, cobalt, and graphite.

China has imposed export limits on many of these key products and tightened controls on others as President Donald Trump’s trade negotiations escalate, stifling US industry and the nation’s ability to find quick alternatives. Without access to China’s significant reserves, US manufacturers struggle to compete amid mounting global supply tensions.

Trump has made reducing US dependence on foreign critical minerals a core policy in his first 100 days back in office as part of his national security and economic resilience agenda.

This issue extends beyond China; the Trump administration recently finalised a contentious deal with Ukraine granting American access to the nation’s vast mineral resources.

Trump is also seeking to accelerate deep-sea mining in international waters, despite opposition from environmental groups. He called for a boost in domestic copper production in a February executive order, alongside directives for the federal government to fast-track new mining permits. He has also reviewed a minerals proposal from the Democratic Republic of the Congo, a nation rich in mineral reserves but plagued by conflict, and attempted to pressure Greenland into supplying more of its minerals to the US.

The IEA report stated that global markets are currently well supplied and that prices have generally fallen. However, it warned that planned production of copper, which is essential for electric wiring and power grids, would not keep pace with demand, predicting a 30% shortfall by 2030.

By RSS/AP