Critical minerals have shifted to the forefront of energy, economic and national security agendas, reflecting concerns about supply chain restrictions and expanding use of trade restrictions
Geopolitics and trade wars are increasingly shaping the critical mineral landscape in 2026. Not only has the crisis in the Strait of Hormuz exposed the vulnerability of maritime chokepoints that underpin global energy and commodity trade, it has also disrupted movement of key industrial outputs that are essential for mineral processing. Escalating tariffs and export restrictions have further accelerated the fragmentation of global supply chains, forcing countries to treat critical minerals as strategic assets.
Add to this China’s dominance in this new landscape, thanks to its overwhelming dominance in processing and refining of rare earths that helps Beijing leverage export controls. The convergence of all these factors, like China’s processing dominance, trade disputes and recurring geopolitical disruptions, have prompted countries to re-think their critical mineral strategies, starting from scouting for mining assets globally to domestic recycling.
The latest Global Critical Minerals Outlook 2026 by the International Energy Agency (IEA) highlights some of the key challenges and opportunities brought fore by these developments. It acknowledges that critical minerals have shifted to the forefront of “energy, economic and national security agendas” in recent years, reflecting concerns about supply chain restrictions and expanding use of trade restrictions.
“Governments are now placing greater attention on resilience, diversification and the security of supply in an increasingly complex geopolitical environment,” it said, adding that the crisis in West Asia serves as a stark reminder of the vulnerabilities affecting the supply chains. The report acknowledged that while the major impact was on oil and gas markets, there was “considerable” impact on mineral and metal markets from the closure of the Strait of Hormuz, especially for Aluminium, sulphur and helium.
Fig 1: A mining machine is seen at the Bayan Obo mine containing rare earth minerals, in Inner Mongolia, China July 16, 2011. REUTERS/Stringer
Noting that the Middle East accounts for around 8% of global aluminium production, it said curtailments at several regional smelters added strain to an already tight market. Another key ingredient – Sulphur – a feedstock for sulphuric acid used in fertilizer production and processing a range of critical minerals is also supplied in large quantities from this region and almost half of global seaborne sulphur trade passes through the crisis affected Strait of Hormuz.
“Disrupted sulphur supplies prompted China to curb sulphuric acid exports in May 2026, creating ripple effects across both mineral and fertiliser value chains. The resulting surge in acid prices increased production costs for several critical minerals with acid costs overtaking energy costs to become the largest cost component in some cases,” the report noted.
Amid rising geopolitical tensions and price volatility, “investors became more cautious” despite strong underlying demand. “Critical mineral investment declined by 9% in 2025, ending several years of growth,” the report noted, adding that exploration spending also declined by more than 10%, with modest growth in spending on uranium and “steady spending on copper offset by around 45% declines in lithium and nickel”.
At the same time, governments globally seemed to have been taking a more proactive role in reducing project risks and mobilising private capital. “Public finance commitments in advanced economies reached around USD 65 billion in 2025, over four times higher than in 2023. However, a considerable gap remains between commitments and actual disbursements, which will ultimately determine their impact on supply diversification,” the report noted.
The report also stressed the importance of minor minerals, especially when there is renewed focus on semiconductor, robotics and AI driven innovation. It said securing supplies of minerals such as gallium, germanium, indium and antimony is becoming increasingly crucial and made a strong case for greater policy attention towards these minerals. Owing to the use of some of these minerals like gallium, magnet rare earths, yttrium, graphite, tungsten, tellurium, cobalt in critical industries, the report said that these minerals were exposed to supply vulnerabilities due to their high supply concentration.
Owing to the supply chain disruptions, the report maintained that recycling could play an increasingly important role in the coming years. “Under today’s policy settings, average recycling rates across key energy minerals could rise from around 10% today to close to 20% by 2040. Cobalt and copper already have relatively established recycling streams, with rates expected to increase further to 2040, while rare earth magnet recycling could benefit from growing end-of-life volumes from early generations of EVs and wind turbines,” it said.
“Lithium and nickel recycling remain at an early stage but are expected to expand rapidly. Battery recycling capacity has expanded significantly, but remains highly concentrated, with China accounting for over three-quarters of global pre-treatment capacity and 90% of material recovery capacity. Outside China, Korea is the leading player in material recovery. Realising the full potential of secondary supply will require continued investment in collection and recycling infrastructure and sustained demand for recycled materials,” it added.
About the Author
