Supply increases in critical minerals exerted downward pressure on prices last year, despite high demand: Report

Increases in supply of critical minerals in 2024 led to a decrease in prices despite rapid growth in demand, according to a new report released on May 21, 2025.

Major supply increases, led by China, Indonesia and the Democratic Republic of the Congo (DRC), led to low prices, especially for battery metals, the Global Critical Minerals Outlook 2025 stated.

“The swift increase in battery metal production highlighted the sector’s ability to scale up new supply more quickly than for traditional metals like copper and zinc,” the document noted.

Interestingly, the growth in supply for battery metals since 2020 has been twice the rate seen in the late 2010s. Consequently, prices for key energy minerals have continued to decline, returning to pre-pandemic levels, in a departure from the sharp price surges of 2021 and 2022.

For instance, lithium prices, which had surged eightfold during 2021-22, fell by over 80 per cent since 2023. Graphite, cobalt and nickel prices also dropped by 10 to 20 per cent in 2024.

Growth in demand

The demand for key energy minerals continued to grow strongly in 2024, according to the report.

Lithium demand rose by nearly 30 per cent, significantly exceeding the 10 per cent annual growth rate seen in the 2010s.

Demand for nickel, cobalt, graphite and rare earths increased by 6-8 per cent last year. This growth was largely driven by energy applications such as electric vehicles, battery storage, renewables and grid networks.

In the case of copper, the rapid expansion of grid investments in China has been the single largest contributor to demand growth over the past two years. For battery metals such as lithium, nickel, cobalt and graphite, the energy sector accounted for 85 per cent of total demand growth over the same period.

Supply shocks

However, the report also warned that while supply is currently stable, risks to its security are proliferating.

“Amid rising supply concentration, an expanding number of export control measures on critical minerals have been introduced, particularly since 2023,” it said.

In December 2024, China restricted the export of gallium, germanium and antimony, key minerals for semiconductor production, to the United States, according to the report.

This was followed by further announcements in early 2025, including restrictions on tungsten, tellurium, bismuth, indium and molybdenum and on seven heavy rare earth elements.

In February 2025, the DRC announced a four-month suspension of cobalt exports to curb falling prices.

Currently, more than half of a broader group of energy-related minerals are subject to some form of export controls. The report noted that these restrictions are not only increasing in number but also expanding in scope to cover not just raw and refined materials but also processing technologies, such as those for lithium and rare earth refining.

“High market concentration increases vulnerability to supply shocks, particularly if, for any reason, supply from the largest producing country is disrupted. When the largest supplier and its demand is excluded, the overall market balances become starkly different,” it read.

For battery metals and rare earths, supplies outside the leading producer meet on average only half of the remaining demand in 2035. According to the analysis, this means that, even in a well-supplied market, critical mineral supply chains can be highly vulnerable to supply shocks, be they from extreme weather, a technical failure or trade disruptions.

“The impact of a critical minerals supply shock can be far reaching, bringing higher prices for consumers and reducing industrial competitiveness. A sustained supply shock for battery metals could increase global average battery pack prices by as much as 40-50 per cent. There is already a major battery manufacturing cost gap across regions. Prolonged supply disruptions could widen cost disadvantages for other battery manufacturers vis-à-vis China, potentially hindering efforts to diversify manufacturing supply chains,” it stated.