Concentrated Supply: Critical Minerals as a Strategic Chokepoint

Governments speak of diversifying critical mineral supply chains, yet refining has become more concentrated, not less. Drawing on the International Energy Agency's Global Critical Minerals Outlook 2025, this paper examines the trend, the spread of export controls, and why market forces alone are unlikely to reverse it.

Key points

• The average market share of the top three refining nations for key energy minerals rose from around 82% in 2020 to 86% in 2024 [1].
• Some 90% of refining supply growth between 2020 and 2024 came from the single top supplier: Indonesia for nickel and China for cobalt, graphite and rare earths [1].
• China is the dominant refiner for 19 of 20 strategic minerals analysed by the IEA, with an average share of around 70% [1].
• More than half of a broader group of energy-related minerals are now subject to some form of export control [1].
• Projects in diversified regions typically face capital costs around 50% higher than incumbent producers [1].

1. The problem

Critical minerals such as lithium, nickel, cobalt, graphite, copper and rare earths underpin batteries, grids, electronics and defence manufacturing. The International Energy Agency (IEA) describes diversification as "the watchword for energy security", but finds that the market has moved in the opposite direction, particularly in refining and processing [1]. This paper asks why concentration is rising, how states are using it, and what responses are available.

2. The evidence

Demand is growing; prices are not. Lithium demand rose by nearly 30% in 2024, and demand for nickel, cobalt, graphite and rare earths by 6–8% [1]. Yet rapid supply growth led by China, Indonesia and the Democratic Republic of the Congo (DRC) pushed prices down: lithium prices have fallen by more than 80% since 2023 [1]. Investment growth in critical minerals slowed to 5% in 2024, from 14% in 2023, or about 2% in real terms [1].

Refining is concentrating. Between 2020 and 2024 the average share of the top three refiners of key energy minerals rose from around 82% to 86% [1]. Mining is somewhat less concentrated, but the top-three share there also rose, from 73% to 77% [1]. On the basis of announced projects, the IEA expects the top-three refining share to fall only to about 82% by 2035, roughly back to 2020 levels [1].

Dominance in the wider set. Across 20 energy-related, multisectoral minerals used in high-tech, aerospace and advanced manufacturing, China is the dominant refiner for 19, with an average market share of around 70% [1]. Three-quarters of these minerals have been more price-volatile than oil, and around half are produced as by-products, which limits supply response [1].

A second count. The US Geological Survey (USGS) estimates that China mined about 270,000 tonnes of rare earths (rare-earth oxide equivalent) of a world total of about 390,000 tonnes in 2025, roughly 69%, and holds about 44 million tonnes of a world total of more than 75 million tonnes of reserves [2]. For cobalt, the USGS estimates that the DRC accounted for about 73% of world mine output in 2025 [3]. These mining figures broadly corroborate the IEA's picture of concentrated supply; the refining shares above rest on the IEA.

New chemistries, new chokepoints. Lithium iron phosphate (LFP) batteries now account for nearly half of the electric car market, up from less than 10% in 2020. China produces 75% of the world's purified phosphoric acid and 95% of high-purity manganese sulphate, both key inputs for newer battery chemistries [1].

Export controls are spreading. The IEA records a growing number of export control measures since 2023 [1]. In December 2024 China restricted exports of gallium, germanium and antimony to the United States; early 2025 announcements added tungsten, tellurium, bismuth, indium, molybdenum and seven heavy rare-earth elements [1]. In February 2025 the DRC announced a four-month suspension of cobalt exports to curb falling prices [1]; in October 2025 the suspension was replaced by export quotas [3]. In November 2025 China suspended its October 2025 rare-earth and related export controls until 10 November 2026 (Ministry of Commerce and General Administration of Customs Announcement No. 70 of 2025) [4; 5]. The rare-earth controls China introduced in April 2025 were not suspended [2]. Controls increasingly extend to processing technologies, such as those for lithium and rare-earth refining [1].

3. Analysis

Concentration is a lever. When one country dominates refining, supply decisions become instruments of policy. The IEA's stress test illustrates the point: excluding the largest supplier and its demand, supplies from elsewhere would meet on average only half of remaining demand for battery metals and rare earths in 2035 [1]. A sustained supply shock for battery metals could raise global average battery pack prices by as much as 40–50% [1].

Low prices deter diversification. Falling prices are welcome to buyers but do not signal new investment, and projects by new entrants have been hit hardest [1]. Combined with capital costs around 50% higher in diversified regions, this explains why concentration persists despite policy intent [1].

States are responding. The IEA notes executive orders in the United States to expedite permitting and investment, 47 strategic projects designated under the EU Critical Raw Materials Act, new funding programmes in Australia, Canada and elsewhere, and resource-rich countries seeking to retain more value at home [1]. The IEA's own proposals include price stabilisation mechanisms such as contracts-for-difference and cap-and-floor models, volume guarantees, and standards-based market access [1].

Partnership geography. The IEA highlights complementarities across borders: Madagascar, Mozambique and Tanzania hold around a quarter of global graphite resources, while Germany, Japan, Korea and the United States have capacity and plans to produce graphite anode materials [1]. Such links make critical minerals a growing subject of economic diplomacy for producers and consumers alike, including resource-rich states in Africa, Latin America and Asia.

4. Assessment

• Diversification rhetoric has outpaced reality: refining concentration rose between 2020 and 2024 and is projected only to return to 2020 levels by 2035 [1].
• Export controls have become a normal tool of statecraft in this sector, and their scope is widening from materials to technologies [1].
• Market forces alone are unlikely to deliver diversification; the IEA argues that policy support and partnerships are essential [1].
• Indicators to watch: new export control announcements, whether Announcement No. 70 of 2025 lapses on 10 November 2026 or is amended [4], final investment decisions on refining outside dominant suppliers, and the IEA's next annual outlook.

References

1. International Energy Agency, Global Critical Minerals Outlook 2025, Executive summary (Paris: IEA, 2025). https://www.iea.org/reports/global-critical-minerals-outlook-2025/executive-summary (accessed 26 October 2026).
2. US Geological Survey, "Rare Earths", Mineral Commodity Summaries 2026 (Reston, VA: USGS, 2026). https://pubs.usgs.gov/periodicals/mcs2026/mcs2026-rare-earths.pdf (accessed 27 October 2026).
3. US Geological Survey, "Cobalt", Mineral Commodity Summaries 2026 (Reston, VA: USGS, 2026). https://pubs.usgs.gov/periodicals/mcs2026/mcs2026-cobalt.pdf (accessed 27 October 2026).
4. Ministry of Commerce and General Administration of Customs of the People's Republic of China, Announcement No. 70 of 2025, 7 November 2025 (in Chinese). https://www.mofcom.gov.cn/zfxxgk/fdzdgknr/ztfl/dwmygl/art/2025/art_00667414c0524b018985abd28b8847a5.html (accessed 27 October 2026).
5. Trade and Industry Department, Hong Kong SAR Government, Commercial Information Circular No. 977/2025, 10 November 2025. https://www.tid.gov.hk/en/tradecircular/2025/ci9772025.html (accessed 27 October 2026).