The global supply of critical minerals is vulnerable to several geopolitical risks, threatening the speed of the transition to clean energy, warns the International Renewable Energy Agency (IRENA).

While there is no shortage of critical mineral reserves, the global capabilities for mining and refining them remain limited, Kallanish learns from a new report by the intergovernmental organisation.

According to the Geopolitics of the Energy Transition: Critical Materials report, the dependency risks and supply dynamics of critical materials fundamentally differ from those of fossil fuels, owing to their “vastly different characteristics and patterns.” It says the current patterns of production and processing will remain largely unchanged in the coming years. Thus, it stresses the importance of international cooperation and “prudent policy choices” to ensure that the energy transition advances at the necessary speed worldwide.

Currently, the mining and processing of critical materials is concentrated in a handful of countries such as Australia, China, Chile, the Democratic Republic of Congo (DRC), Indonesia and South Africa. 

The DRC, for example, mines 70% of the world’s cobalt. Similarly, Australia mines 47% of the world’s lithium deposits. On the processing front, China accounts for well over half of the global refined supply of natural graphite, dysprosium, cobalt, lithium, and manganese. Additionally, a few major companies dominate the mining industry, with the top-five companies controlling 61% of lithium output and 56% of cobalt output.

Supply disruptions are subject to external shocks, export restrictions, mineral cartels and market manipulation, the report notes.

“The risk of supply chain disruptions is less about energy security and more about the potential slowdown of the transition, which must be avoided,” IRENA’s director-general Francesco La Camera says in a statement. “On the road to COP28, my message is to urgently strengthen collaboration on critical materials to minimise the geopolitical risks of concentrated supply chains and accelerate the deployment of renewables to limit rising temperatures to 1.5°C.”

The renewable energy body says that higher investments in R&D for alternative solutions, minimising the use of critical minerals, and recycling materials can mitigate geopolitical risks. It also urges the development of “transparent markets with coherent standards and norms, grounded in human rights, environmental stewardship and community engagement.”

A recent report by the International Energy Agency (IEA) also highlighted the risks associated with a lack of diversification of critical minerals supply. (See related story)