Critical mineral demand to surge through 2040, supply gaps to persist: IEA
A report projects that meeting future critical mineral demand will require more than $750 billion in mining and refining investment between now and 2040 under the Stated Policies Scenario (STEPS).
Copper is projected to require the largest share of this investment, at about $310 billion, followed by nickel at about $280 billion.
Lithium demand is projected to more than triple by 2040, graphite demand to double, nickel demand to rise 65%, rare earth demand to rise about 50%, and copper demand to grow by more than 25% (adding roughly 7 million tonnes).
Persistent supply gaps are projected for copper and lithium through 2035, and for cobalt, due in part to an export quota introduced by the Democratic Republic of the Congo (DRC).
Critical Minerals and Supply Chain Concentration
Critical minerals are minerals that are both economically essential (for clean energy technologies, electronics, and defence applications) and subject to significant supply-risk, often because their extraction or, more commonly, their refining is geographically concentrated in a small number of countries. The report highlights that refining capacity, not raw ore extraction, is where concentration is most acute.
Key Details
- China accounts for just under 50% of global copper refining, about 70% of lithium refining, about 75% of cobalt refining, about 85% of magnet rare-earth separation, and over 90% of battery-grade graphite production.
- This concentration means that even where raw mineral deposits are geographically diverse, the mid-stream refining and processing bottleneck creates single-country dependency risk for importing nations, including India.
- The IEA's Stated Policies Scenario (STEPS) reflects currently adopted and announced government policies, as distinct from its more ambitious Net Zero Emissions (NZE) scenario, which would imply even steeper mineral demand growth.
The projected $750 billion investment gap and persistent 2035 supply shortfalls for copper and lithium stem directly from this refining concentration, since expanding mining alone does not resolve the mid-stream processing bottleneck.
India's National Critical Mineral Mission and MMDR Act Amendment
India has responded to global critical mineral supply-risk with its own domestic framework. A Ministry of Mines committee (constituted November 2022) identified 30 minerals as "critical" for India, spanning battery metals, rare earths, and platinum group elements. In 2023, Parliament amended the Mines and Minerals (Development and Regulation) Act, 1957 to bring 24 of these critical and strategic minerals under the exclusive auctioning authority of the Central Government (Part D of the First Schedule), removing them from state government jurisdiction to speed up exploration and auctions. The National Critical Mineral Mission (NCMM) was subsequently approved with an outlay of ₹34,300 crore over FY2024-25 to FY2030-31.
Key Details
- India's list of 30 critical minerals includes lithium, cobalt, nickel, copper, graphite, rare earth elements (REE), and platinum group elements (PGE), among others.
- Khanij Bidesh India Ltd (KABIL), a joint venture of NALCO, Hindustan Copper, and MECL, was set up to secure overseas critical mineral assets; it signed a lithium exploration agreement with Argentina's Catamarca provincial enterprise CAMYEN in January 2024.
- Under the NCMM, the Geological Survey of India (GSI) has been tasked with roughly 1,200 exploration projects between 2024-25 and 2030-31.
The global investment and supply-gap projections in the report underline the strategic logic behind India's NCMM and MMDR amendment — both are attempts to secure a share of global critical mineral supply chains before the projected 2035 shortfalls materialise.
Cobalt Supply Risk and the DRC Export Quota
Cobalt is a key input for lithium-ion battery cathodes, and its supply is unusually concentrated: the Democratic Republic of the Congo (DRC) accounts for the majority of global cobalt mine production. Export or production quotas imposed by a single dominant producer can therefore have an outsized effect on global cobalt availability and prices, illustrating the vulnerability created by geographic concentration in mineral supply.
Key Details
- The DRC is by far the world's largest cobalt-producing country, supplying the majority of global mined cobalt.
- Government-imposed export quotas, such as the one referenced in the report, are a form of resource nationalism that can restrict global supply even when underlying reserves are not depleted.
- Cobalt is one of the 30 minerals identified as critical by India's Ministry of Mines committee, given its role in battery manufacturing.
The cobalt supply gap flagged in the report is attributed specifically to the DRC's export quota, making it a case study in how single-country policy decisions can disrupt diversified global demand for a critical mineral.
- Investment required in mining and refining by 2040 (STEPS): over $750 billion.
- Largest investment shares: copper (~$310 billion), nickel (~$280 billion).
- Demand growth by 2040: lithium more than triples; graphite doubles; nickel up 65%; rare earths up ~50%; copper up more than 25% (~7 million tonnes added).
- Supply gaps projected to persist through 2035 for copper and lithium; a cobalt gap linked to the DRC's export quota.
- China's refining share: ~50% copper, ~70% lithium, ~75% cobalt, ~85% magnet rare-earth separation, >90% battery-grade graphite.
- India's National Critical Mineral Mission: ₹34,300 crore outlay, FY2024-25 to FY2030-31; 30 minerals identified as critical, 24 brought under central auctioning via the 2023 MMDR Act amendment.