Supply concentration, especially in refining, as well as proliferating export controls, declining investment, and supply chain and work force bottlenecks are putting critical mineral security at risk for most countries, the International Energy Agency warns in its latest annual Global Critical Minerals Outlook.

The IEA’S 2026 report [pdf] on global critical mineral supply, and where it is likely heading, contains its customary analysis of demand, supply, prices, and investment trends for key energy minerals including copper, lithium, nickel, cobalt, graphite, and rare earths, as well as strategic minerals like tungsten, tellurium, and geranium.

Prominent in this year’s edition, however, is an emphasis on critical mineral supply chain vulnerabilities in the face of heightened geopolitical risks, and what it will take to diversify and strengthen them.

Middle East Conflict a ‘Stark Reminder’

Accounting for roughly 25% of global sulphur production—and a conduit for 50% of global seaborne sulphur trade through the Strait of Hormuz—the Middle East is a critical link in the supply chain that produces sulphuric acid. In addition to its essential role in fertilizer production, the material is needed for processing many critical minerals, including cobalt, copper, lithium, nickel, and rare earths.

China’s consequent move to curb sulphuric acid exports in May, 2026 led to its cost overtaking energy costs in the production of several critical minerals, the IEA says.

Supply Chains Concentrate

The past two years have seen dominant suppliers of key energy minerals including copper, graphite, and manganese further deepen their capacity, with Indonesia ahead on nickel and China leading on most other minerals.

Rare earth refining is bucking the trend, “with new projects in the United States and production increases in Malaysia leading to a modest decline in concentration,” says the report, a shift that “highlights the role of targeted policy and investment support in enabling diversification.”

Citing the example of the “largest-ever oil stock release” by IEA member countries in March in response to the American/Israeli war on Iran, the IEA urges strategic stockpiling to buffer against supply disruptions.

“For the 11 high-risk materials assessed by the IEA, the net annual cost of stockpiling for countries outside the dominant supplier is estimated at less than $900 million, modest relative to the potentially major economic impacts of disruptions,” the report says.

Demand Grows, Export Controls Bite

“Tight supply saw prices for base metals like aluminium, copper, and tin rise by 33% between January 2025 and April 2026, with copper prices reaching record highs,” says the report’s executive summary. Lithium prices “more than doubled” due to strong demand, especially from the energy storage sector.

Many strategic minor minerals—heavily used in the high tech, aerospace, and defense sectors—saw their prices more than double. The price of tungsten increased six-fold.

Export curbs intensified in 2025, with China leading the way. Its introduction of controls on seven heavy rare earth minerals in April produced “significant impacts across downstream industries, forcing some automakers to reduce utilization rates or temporarily halt operations.”

While China has delayed wider controls until November, the report states, vulnerabilities remain. An estimated “US$6.5 trillion per year of downstream production outside China is at risk across the automotive, high-tech, defence, and energy sectors” should full implementation come into effect.

A further $300 billion per year of downstream production outside China is also at risk from export controls on key battery supply chain materials, equipment, and technologies.

The Democratic Republic of Congo, Zimbabwe, and Mozambique also imposed export controls in 2025 on cobalt, lithium, and graphite, respectively.

Public Financing Up (on Paper), Private Investment Wavers

Geopolitical tensions and price volatility conspired to generate investor caution despite burgeoning demand. Investment was down by an average 9% across most critical mineral investment in 2025, excluding copper, with battery metals hardest hit. Lithium companies cut investment by roughly 40%.

But as private capital shrinks, public finance is stepping up—at least with pledges.

“Public finance commitments in advanced economies reached around $65 billion in 2025, over four times higher than in 2023,” writes the IEA, although the agency points to a  “considerable gap” between commitments and actual disbursements.

There’s also a widening gap between mined and refined supply.

Efforts to promote supply chain diversification risk being held back by the fact that “investment remains concentrated in upstream projects compared with refining and manufacturing capacity.”

The IEA cites multiple instances of this “structural imbalance,” including in battery materials, where “planned cathode production capacity is only about one-third of projected lithium mining capacity.”

One obstacle is capital costs that range from 20% to 150% higher than for the dominant suppliers. Driven by feedstocks and energy prices, operating costs are currently roughly 50% higher.

“These cost disadvantages are compounded by technical and skills constraints, infrastructure gaps, and lengthy permitting processes, making it more difficult for market forces alone to bring forward new projects,” the IEA writes.

Well-designed and carefully tailored policy tools (copper’s “large, liquid market”  and rare earths’ “small, opaque” one will require very different policies, for example), as well as moves to combine supply-side support with demand-side measures, will help reduce investment risks, the report states.

Focus on Strategic Minor Minerals

“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,” IEA Executive Director Fatih Birol said in a release.

But the IEA says diversified supply chains for strategic minor minerals like gallium, magnet rare earths, yttrium, tellurium, and germanium will deliver a lot of bang for the buck.

Diversifying the magnet rare earths supply chain, for example, “would require around US$60 billion of investment over the next decade—modest relative to the huge potential economic cost of supply disruptions.”

Critical to shoring up strategic minor mineral supply will be a refurbishment of the global base metal smelter sector, which has been languishing in the face of China’s dominant position.

Benefits of Diversification Outweigh Costs

Diversifying critical mineral supplies will raise prices, but those costs should be seen “as the price of enhanced economic resilience—a security premium that provides insurance against the risks associated with concentration,” the IEA writes. And while higher mineral prices can “substantially increase the cost of intermediate products such as battery cells and permanent magnets, the impact on final products is often limited.”

The price of an electric vehicle, for example, would increase just 0.1% if rare earth prices tripled.

But successful diversification won’t be easy, the report says.

“From lithium chemicals and graphite to rare earths and gallium, processing and refining stages rely on complex technologies, specialized equipment, and highly-skilled expertise that remain concentrated in a small number of countries,”  the IEA warns, citing China’s dominance in ultra-high-purity gallium refining and compound semiconductor manufacturing as illustrations.

“Recent export controls targeting not only critical minerals but also processing technologies and equipment underscore the importance of closing these capability gaps,” the report adds.

Latin America and the Caribbean are poised to play a larger role in diversified global critical mineral supply chains—–provided they keep refining and processing largely at home. The regions are major producers of base metals, as well as strategic minor minerals like molybdenum and rhenium (used to make superalloys for jet engines).

“If lithium, nickel, cobalt, graphite, and rare earths were refined locally and two-thirds of copper production were processed within the region,” of Latin America and the Caribbean, the IEA writes, “the economic value generated could increase by nearly 50% from today, reaching around US$220 billion by 2035.”