IEA: fragile critical minerals supply chains threaten the energy transition
As the world races to decarbonise, a new bottleneck has emerged — one buried deep in the Earth. The International Energy Agency’s ‘Global Critical Minerals Outlook 2025’ warns that the global clean energy transition is under threat due to unreliable, unsustainable, and geopolitically risky supplies of critical minerals.
Why critical minerals matter more than ever
Critical minerals are the backbone of technologies driving the net zero transition, including electric vehicles, wind turbines, solar panels, and battery storage — the essentials for powering low-carbon economies. All of which depend on a select group of minerals — lithium, cobalt, nickel, copper, graphite, and rare earth elements.
However, these minerals are not evenly distributed. Supply chains are highly concentrated in just a few countries, leaving the world dangerously exposed to market volatility, political interference, and underinvestment.
Demand is surging, but supply can’t keep up
The demand for critical minerals has more than doubled in the past five years and is expected to double again by 2030 under the current policy pathways. If governments pursue their full climate pledges, demand could grow even faster.
Lithium demand is projected to rise four to six times over current levels by 2030. Nickel and cobalt will also see sharp increases due to their central role in battery production. Meanwhile, copper, an essential element to almost all clean energy systems, is heading for a supply deficit by the mid-2030s unless significant new projects are developed.
A fragile, geopolitically risky supply chain
At present, China processes the majority of the world’s critical minerals, with its control over refining capacity ranging from 50% to over 90% depending on the material.
This creates a dangerous overdependence on a single supplier.
Furthermore, just three countries are responsible for the bulk of mining output for most critical minerals — China, the Democratic Republic of the Congo (DRC), and Indonesia. This geographic concentration increases the risk of supply disruptions, particularly in light of recent trade tensions and resource nationalism.
Prices may have fallen but so have incentives to invest
Despite rising demand, prices for many critical minerals fell in 2023 due to temporary oversupply. While this has brought some short-term relief to manufacturers, it has also dampened enthusiasm for investing in new mining and processing projects.
The IEA warns that this slowdown could be damaging. It estimates that $800 billion investment is needed by 2040 to align supply with the world’s net zero goals. Without this capital, energy transitions could stall for lack of raw materials.
Recycling, innovation, and circular economy must step up
Recycling is one of the most promising solutions to the looming supply crunch. If properly supported and scaled, recycled sources could meet up to 40% of the future demand for metals like cobalt and copper.
For lithium and nickel, the figure could reach 25%. Advances in battery chemistry and mineral substitution will also play a crucial role. Building a circular economy — where materials are reused and recovered efficiently — can significantly reduce reliance on freshly mined resources.
What needs to happen now
To avoid critical mineral shortages derailing climate action, the IEA stresses the need for a global, coordinated response. Supply chains must be diversified to include more producing countries and companies. Governments need to streamline approval processes for mining and refining projects, without compromising on environmental and social standards.
Investment in refining infrastructure must increase significantly, especially outside of China. Recycling systems should be expanded rapidly, and policies must support the development of new technologies that reduce dependence on scarce minerals. International collaboration will be essential to ensure supply security and market stability.
