IEA: New risks in critical minerals markets

Gaps between projected demand and anticipated supply over the next decade in critical minerals markets have narrowed in some cases (copper and lithium), but widened in others (inc cobalt), the IEA 2026 Critical Minerals Outlook report, released today, reveals.

Gaps between projected demand and anticipated supply over the next decade in critical minerals markets have narrowed in some cases (copper and lithium), but widened in others (inc cobalt), the IEA 2026 Critical Minerals Outlook report, released today, reveals. The report is interesting because it takes us through the trends of the last year but then measures the impact further ahead. It shows the implications of policy reconfigurations, for example in nickel and cobalt, and supply shifts in other markets that have experienced emergency shocks (seismic events in copper).

In lithium, 2025 saw disruptions in both supply and demand side stories, which is also investigated. Meanwhile, with export controls, rising prices and supply uncertainty, 2025 was one of the most turbulent years for rare earth element markets since the 2010s, the report outlines. "2025 marked the year when the economic risks of highly concentrated supply chains materialised at scale," the report outlined.

"In recent years, the number of announced projects targeting key energy minerals has continued to increase, signalling the potential for a notable expansion in future mining and refining capacity. "Nonetheless, expected supply from existing and announced projects suggests that supply gaps for copper and lithium persist through 2035, while the gap for nickel is slightly tighter than in last year's Global Critical Minerals Outlook. "A supply gap also emerges for cobalt in this year's assessment, driven almost entirely by the export quota introduced by the Democratic Republic of the Congo," it expanded.

It also pointed to the fact that critical mineral investment declined by 9% in 2025, ending several years of growth. This investor caution will mean that supply is ever more uncertain as the projects of scale needed to support the energy transition could be delayed, or worse, not materialise. "Amid rising geopolitical tensions and price volatility, investors became more cautious despite strong underlying demand.

Battery metals saw the sharpest pullback, with capital spending falling by more than 20% – the largest decline in over a decade – and lithium companies cutting investment by around 40%. By contrast, spending by copper-focused companies increased by 8%, reflecting confidence in copper's long-term prospects. "Critical minerals prices have spiked amid supply uncertainty | Credits:

IEAThe renewed expansion of nuclear power is driving a need for significant investment across the uranium and nuclear fuel cycle also, the report outlines. "Uranium markets have strengthened sharply since 2020, reflecting expectations of substantial growth in demand for nuclear fuel and the need to expand supply. As global uranium requirements rise, new mine projects will need to be successfully developed and brought online.

"However, the most immediate constraints are emerging further downstream, particularly in uranium conversion, where global capacity is already tight and additional investment will be needed to avoid bottlenecks." Exploration spending also declined by more than 10%.Copper For copper, the projected supply deficit in 2035 has narrowed from around 30% in last year's Outlook to 25% as new projects advance, particularly in the DRC and Zambia. The report posted to increases in demand from India, Saudi Arabia and Malaysia, as well as Vietnam.

It added, however, that, although volumes remain relatively low, Africa was the fastest-growing region of demand. Demand in China grew by almost 5%, led by particularly strong demand from the industrial and manufacturing sector. The base metal smelting sector is showing increasing signs of stress, the report outlined.

Despite rising base metal prices, smelter fees have fallen to historic lows. Benchmark copper smelter fees were settled at USD 0 per tonne in 2026, the lowest level ever agreed in annual negotiations, while spot charges have remained negative since 2024; zinc and lead smelter fees have also turned negative. Despite record copper prices, smelter fees have fallen to record lows, underscoring deepening risks for the midstream sector | Credits:

IEAThe report also underlined the impact of the conflict in the Middle East in 2026.This, the report outlined, "provided another stark reminder of the vulnerabilities arising from geopolitical tensions and dependence on a limited number of suppliers and trade routes." Highlighted in particular was the stress on copper markets because of the lack of sulphuric acid passing through the Strait of Hormuz. In copper, sulphuric acid is a critical input to primary copper leaching, affecting production through SxEw methods.

Over 15% of global primary copper output is produced via this route. Copper SxEw production based on sulphuric acid leaching, 2025 | Credits: IEA"At the global level, reduced acid availability from a prolonged acid ban or sustained high prices would result in global SxEw production curtailments, adding considerable supply stress to an already tight copper supply market. Copper prices are already near record highs, and further supply strains are likely to drive prices higher, with impacts on a range of strategic sectors and electrical technologies that depend on copper, including grids, energy technologies, transport, data centres, industrial equipment, defence and construction," The IEA saidRare earths 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.

In October 2025, they were further expanded, extending proposed restrictions 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. The response to this action has seen governments step in to boost projects, where private equity was lacking, the report outlines.

"Demand for magnet rare earth elements in regions outside the dominant supplier is set to grow by 50% over the next decade," it said. "Many new projects have been announced across geographically diverse regions, but even if these come online as scheduled, their sustained operations will depend on consumer motivation to buy materials from diversified suppliers."