The International Energy Agency (IEA) warned in its annual report "Global Critical Metals Outlook 2026" that the risks associated with the supply of strategic metals are no longer a future issue, but have turned into a direct economic threat, as a result of the concentration of refining operations in a limited number of countries, the expansion of export restrictions, and the decline in investments in the sector.
And the global debate is no longer limited to the expected volume of production of critical metals, but is focused on the ability of global industries to obtain a stable and reliable supply of these materials, which have become a key element in the digital economy and modern industries.
Critical Metals: The Backbone of Modern Industries
And today, critical metals are involved in the manufacture of most modern products and technologies, from smartphones, computers and TVs, through cars, medical equipment and electricity networks, to data centers that support the global digital economy.
And he pointed out that many of these industries rely on specialized metals that do not have practical alternatives, while their production and refining chains are concentrated in a limited number of countries, which makes any disruption in mines, refineries or export operations quickly reflected on global industries, through high costs, production delays and lack of components.
Record highs in metal prices
And the report monitored a sharp rise in the prices of a number of metals during the period between January 2025 and April 2026, as:
Aluminum, copper and tin prices rose by about 33%.
Lithium prices have more than doubled due to strong demand for energy storage systems.
Cobalt prices jumped 130% after the Democratic Republic of Congo imposed restrictions on its exports.
Tungsten prices have risen nearly six-fold as a result of tighter trade restrictions and declining supplies.
Despite these rises, the report explained that production growth during 2025 maintained a relative surplus in most energy metals markets, but the main concern is the continued flow of these supplies to global industries and not only in the volume of production.
China and Indonesia dominate refining operations
The report confirmed that China and Indonesia have consolidated their dominance over the critical metals refining sector over the past two years.
Indonesia accounted for most of the growth in nickel refining, while China accounted for the majority of other metal refining operations, including manganese, graphite and rare earth elements, accounting for more than 75% of global refined supply growth.
And Western policies and investments launched in recent years have so far failed to reduce dependence on China and Indonesia, and their share of the global market has continued to rise.
The report excluded the rare earth elements sector, where new projects in the United States and increased production in Malaysia contributed to a limited reduction in China's share.
Export Restrictions Threaten Trillion Dollar Industries
The report warned that restrictions on mineral exports were already beginning to overwhelm global industries.
And he explained that Chinese restrictions on the export of seven rare earth heavy items during 2025 have prompted some automakers to reduce production or temporarily suspend operations.
The agency estimates that continued restrictions could jeopardize $6.5 trillion in annual industrial production outside China, while a halt in the trade in battery-grade graphite could threaten more than $300 billion in annual industrial production.
Geopolitical conflicts increase pressure
And the report pointed out that the risks are not limited to trade policies, as tensions and conflicts in the Middle East contributed to disrupting the supply of aluminum, sulfur and helium, which was reflected in the costs of refining operations and manufacturing industries.
Future gaps in copper and lithium
And the International Energy Agency expects demand for all metals used in the energy sector to continue to grow until 2040.
And while new projects are coming into force, the report predicts a continued copper and lithium supply deficit through 2035, albeit at a slower pace, as the DRC’s decision to impose export quotas has created a new gap in the cobalt market.
Declining investment is worrying.
And global investment in the critical metals sector fell by 9% in 2025, ending several years of continued growth.
Exploration budgets have fallen by more than 10%, battery-metal companies have cut their capital spending by more than 20%, and cuts for lithium producers have reached about 40%.
The agency attributed the decline to price volatility, mounting geopolitical risks, and unclear government policies, along with rapid developments in battery technologies.
Governments close the funding gap
And with private investment declining, governments have stepped up their intervention in financing the sector, with public finance pledges in advanced economies reaching nearly $65 billion in 2025, more than four times the 2023 levels.
However, the report indicated that a large part of these pledges had not yet been translated into actual investments on the ground.
The need for refineries and manufacturing
The report confirmed that most of the new projects are concentrated in mining, while investments in refineries and industrial facilities needed to convert crude into usable products are still far below what is required.
And the planned capacity to produce rare earth magnets and battery cathodes is only a third of the mine’s projected production capacity by 2035.
Strategic stocks and recycling
And the International Energy Agency considered the creation of strategic stocks as one of the short-term solutions to mitigate the risks of interruption, noting that the establishment of reserves for 11 high-risk substances will cost countries outside the dominant countries less than $ 900 million annually.
In the longer term, the agency predicted that the contribution of recycled metals to meeting global demand would almost double by 2040, provided that investment in waste collection and recycling systems and infrastructure development continues.
Ensuring the security of critical metals supplies will become one of the most prominent economic and industrial challenges in the coming decades, in light of the increasing global dependence on technology and clean energy, which requires diversifying supply chains and enhancing investment in refining, manufacturing and recycling, to reduce geopolitical risks and ensure the stability of global industries.
comments