China controls critical minerals supply for clean energy

In a significant report released by the International Energy Agency (IEA), it was highlighted that the global supply of critical minerals is increasingly concentrated in a few countries, with China being the foremost player. The report underscored that these minerals, essential for transitioning away from fossil fuels toward renewable energy solutions, are facing rising market dominance. Notably, the average market share of the top three producing nations for crucial minerals, such as copper, lithium, cobalt, graphite, and rare earth elements, increased from 82% in 2020 to 86% in 2024. This concentration not only highlights China's role as a leading refiner for 19 out of the 20 strategic minerals but also emphasizes the vulnerabilities associated with supply shocks, which can emerge from various factors including extreme weather and trade disruptions. Furthermore, the growing trend of export restrictions and trade disputes further complicates the situation, as the IEA warns that such issues could lead to reduced global industrial competitiveness and higher consumer prices. Executive Director of the IEA, Fatih Birol, pointed out that the historical precedent of Europe’s energy crisis, traced back to the geopolitical tensions relating to Russia, serves as a cautionary tale for the potential ripple effects of supply chain disruptions. Another example cited was the global shortage of silicon-based computer chips during and after the pandemic, which significantly impacted auto production. As calls for better policy frameworks to mitigate these vulnerabilities resonate, the current state of the market suggests that while prices have generally fallen, inequalities in mineral production and access remain pressing concerns. The consequences are evident in the U.S., where reduced access to China’s mineral reserves poses challenges for domestic manufacturers amid escalating global supply tensions. The ongoing dynamics entail not only a need for diversification for energy security but a rethinking of economic security within the context of access to these critical resources. These insights underscore the importance of government policies to promote sustainable and diverse supply chains in the face of impending demands for critical minerals essential for technological advancement.