Global critical mineral concentration and export controls puts USD 6.5 trillion industry outside China at risk: IEA
New Delhi, July 27
Global supply chains for critical minerals face acute economic security challenges as trade restrictions, price spikes, and heavy geographic concentration disrupt key markets, according to the International Energy Agency's Global Critical Minerals Outlook 2026 report.
"In April 2025, the Chinese government introduced major export controls on seven heavy rare earth elements, with significant impacts across downstream industries, forcing some automakers to reduce utilisation rates or temporarily halt operations," the report said.
In October 2025, China expanded measures to internationally-made products containing rare earths sourced from China or produced using Chinese technologies. Although the expanded measures were suspended for one year until November 2026, the vulnerabilities remain.
"Their full implementation could put an estimated USD 6.5 trillion per year of downstream production outside China at risk across the automotive, high-tech, defence and energy sectors," the report stated. Critical mineral prices rebounded sharply in 2025 and early 2026 following prior declines. Prices for base metals like copper, aluminium, and tin rose by a third between January 2025 and April 2026, driven by tight market conditions.
Battery materials also staged a recovery, with lithium prices more than doubling due to strong energy storage demand. Strategic minor mineral prices doubled, led by a sixfold surge in tungsten costs amid rising demand from high-tech and defense industries.
The top refining nations, led by China for key energy minerals and Indonesia for nickel, accounted for over 75 per cent of total growth in refined supply over the last two years. Excluding rare earths, the average market share of the top refining country reached 72 per cent in 2025. Meanwhile, critical mineral investment dropped 9 per cent in 2025, with capital spending in battery metals falling by more than 20 per cent.
"As critical minerals generally represent a small share of final product costs, much of the additional cost of diversification could be absorbed with limited impact on consumers, although some intermediate sectors may face greater cost pressures and require targeted support," the report noted.
Project pipelines also reveal significant imbalances, as refining and downstream capacity continue to lag behind mining developments outside dominant supplier regions.
To address these vulnerabilities, the IEA stated that strategic stockpiles provided an important short-term buffer against supply disruptions. For 11 high-risk materials assessed, the net annual cost of stockpiling for countries outside the dominant supplier was estimated at less than USD 900 million.
— ANI
Reader Comments
USD 6.5 trillion at risk? That's staggering. The West has been too complacent about supply chains. The diversification costs seem manageable though - $900 million for stockpiling is pocket change compared to the potential losses. But will governments actually act?
Our government should look at this as an opportunity. India has significant rare earth deposits in places like Odisha and Andhra Pradesh. Instead of exporting raw material, we should build downstream processing capacity. This is exactly the kind of strategic sector where PLI schemes make sense.
The suspension of expanded measures until 2026 is just kicking the can down the road. Companies won't make serious investment decisions with that kind of uncertainty. And the fact that investment in battery metals dropped 20% while lithium prices doubled tells you everything about market dysfunction.
As an Indian, I'm deeply concerned about our dependence on imports for critical minerals. The China+1 strategy is all well and good, but we need concrete steps - joint ventures with Australia and African nations, fast-tracking mining clearances, and investing in recycling technologies. We're sitting on the sidelines while this game plays out.
The IEA report highlights a fundamental truth: geographic concentration of refining is a massive vulnerability. But here's the thing - diversification won't happen overnight. It took China decades to build this capability. We need realistic timelines and serious government backing for alternative supply chains.
We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.