IEA warns critical mineral investment fell 9% in 2025

The International Energy Agency released its Global Critical Minerals Outlook 2026 on Thursday, warning that investment in critical mineral development fell by 9% in 2025 — the first contraction after several consecutive years of growth — as price volatility and geopolitical tensions undercut efforts by Western nations to diversify supply chains away from China.

Investment Reversal Threatens Energy Transition

The IEA said price volatility and geopolitical tensions weighed on investment, ending what had been a sustained period of spending growth in the sector. The decline marks a sharp turn from 2024, when investment was already slowing — rising just 5% that year compared with 14% in 2023. The report arrives as demand for minerals essential to batteries, power grids, and defense applications continues to accelerate, with lithium demand alone projected to rise by more than 350% between 2024 and 2040.unctad+4

The findings underscore a widening gap between political pledges and market reality. While governments have signed dozens of critical mineral partnerships since 2022 and introduced nearly 100 new export-related measures since 2020, the IEA's data suggests that private capital has retreated in the face of depressed mineral prices and uncertain trade conditions.unctad

Export Restrictions and the Sulphuric Acid Chokepoint

The report flagged growing export controls as a standout risk to supply chains. Among the most acute vulnerabilities is China's decision, announced in April, to halt exports of sulphuric acid beginning in May 2026. Sulphuric acid is a foundational chemical in the processing of copper, cobalt, and lithium, and China had been a major global supplier. Beijing had already cut its export quota to 700,000 tonnes for early 2026, down from 1.3 million tonnes in the same period the prior year.exiger+2

IEA Executive Director Fatih Birol has repeatedly warned that the world's dependence on a single country for critical minerals poses a serious risk to both energy and economic security. At the IEA's February 2026 ministerial meeting, member nations endorsed expanded cooperation on emergency preparedness and supply diversification.aa+2

Policy Response and What Comes Next

The report lands at a sensitive moment for U.S. policy. In January 2026, President Donald Trump issued a proclamation directing the negotiation of agreements with trade partners to address national security risks from imports of processed critical minerals, with negotiators instructed to report back by July 13. Whether those negotiations yielded results sufficient to forestall tariffs remains an open question as the deadline has now passed.whitecase+1

The IEA's message is clear: without a sustained increase in investment and faster diversification, shortages of copper, lithium, and rare earth elements will constrain the energy transition and expose nations to supply disruptions with broad economic consequences.