The international market for critical minerals, essential for the advancement of clean energy technologies, is facing an alarming concentration of supply risks, with the International Energy Agency (IEA) highlighting China’s overwhelming dominance in its recent report, “Global Critical Minerals Outlook.” The report indicates that as of 2024, the market share of the top three producing countries for key minerals—copper, lithium, cobalt, graphite, and rare earth elements—will rise to 86%, up from 82% in 2020, underscoring a troubling centralisation of mineral sources vital for electric vehicles (EVs), batteries, and renewable energy infrastructure.
China’s supremacy is particularly evident in refining, where it oversees approximately 75% of the global market share across 19 out of 20 critical minerals. This not only poses a strategic challenge but raises significant concerns about global economic stability, especially in a world increasingly dependent on these resources for the transition to cleaner technologies. Indonesia is also carving a niche, emerging as a key supplier of nickel driven by its burgeoning role in battery production.
IEA Executive Director Fatih Birol has aptly noted the vulnerabilities associated with such concentrated supply chains, emphasising that disruptions—whether arising from extreme weather, technical failures, or international trade tensions—can have cascading effects. He pointed out recent examples of supply chain vulnerabilities—including the energy crisis in Europe following the reduction of Russian gas supplies and the global semiconductor shortage during the pandemic—as indicators of the potential chaos posed by supply shocks. “The golden rule of energy security is diversification,” Birol stated, underscoring that this principle extends beyond energy security to encompass broader economic resilience.
Amid rising geopolitical tensions and trade disputes, particularly between the United States and China, concerns about supply dependency have intensified. China’s recent export restrictions on strategic minerals have deepened fears among Western nations regarding their reliance on Chinese supplies. Former U.S. President Donald Trump’s administration, which has re-emerged under his leadership, has made reducing reliance on foreign mineral sources a national priority. Plans have been set in motion to secure mineral resources domestically and abroad, including a controversial agreement with Ukraine and efforts to accelerate mineral extraction in Greenland.
However, the IEA has issued caution that, despite a presently well-supplied market with declining prices, anticipated demand outstripping supply could lead to a significant copper shortfall—forecasted at 30% by 2030. This shortfall raises alarms for infrastructure projects, where copper is indispensable for electrical grids and renewable energy systems.
The evolving landscape of the battery market also adds complexity to the picture. A notable trend is the rapid adoption of lithium iron phosphate (LFP) batteries, which offer lower costs and improved lifespans compared to traditional nickel and cobalt-based batteries. As energy storage solutions surge, especially in Europe, LFP technology is set to account for 20% of the battery market by 2030, thereby decreasing reliance on nickel and cobalt, which are increasingly scrutinised for ethical and environmental reasons.
Conversely, China’s strategic trade moves also extend to the rare earth elements crucial for high-tech applications. With its dominance in production and processing exceeding 60% and nearly 90% respectively, there are profound implications for military and technological supplies, particularly as geopolitical tensions escalate. Although some Western firms are seeking alternative sources and recycling options, these projects remain nascent, underscoring ongoing dependence on Chinese resources.
Efforts to enhance domestic capacities in the U.S. and Europe are slowly materialising, as companies begin exploring gallium extraction from industrial waste—a vital component in semiconductors. However, significant hurdles remain, notably the time required to rebuild the necessary technology and infrastructure.
The IEA’s findings are released against the backdrop of an urgent need to balance the demand for critical minerals with sustainable practices. As the clean energy transition accelerates, mining activities, paradoxically accounting for 4-7% of global emissions, are racing ahead of efforts to decarbonise. While companies like Australia’s Fortescue are pioneering decarbonisation strategies, not all regions have the same capacity or incentives to facilitate such advancements. The dual challenge of ensuring a secure, transparent, and sustainable flow of critical minerals while innovating in mining practices highlights the complexity of navigating this pivotal industry.
In summary, as global demand for clean energy technologies grows, ensuring diversified and resilient supply chains for critical minerals is paramount. The IEA’s report serves as a crucial reminder of the strategic vulnerabilities posed by an over-reliance on a small number of countries for these essential resources.
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Source: Noah Wire Services
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