Critical Minerals

What are critical minerals?

Much of the modern world depends on a set of materials that rarely make headlines. Lithium, cobalt, graphite, rare earth elements - these and other critical minerals form the backbone of technologies that power our lives, from smartphones and electric vehicles to renewable energy systems and advanced defense tools.

As countries invest in cleaner energy and more resilient economies, demand for these minerals is spiking. But the supply picture is anything but simple. Securing access to these essential resources is now a global priority.

What makes a mineral "critical"?

The term "critical mineral" isn’t just a catchphrase. It refers to materials that are both economically essential and vulnerable to supply disruptions.

In the U.S., the Department of the Interior and the U.S. Geological Survey define critical minerals as those vital to national security and economic prosperity, particularly if the country is highly dependent on imports. These minerals have few substitutes and are often tied to technologies with strategic importance.

A mineral typically makes the critical list if it:

• Plays a vital role in key industries or infrastructure
• Has limited or concentrated sources of supply
• Presents a supply risk due to geopolitical or economic instability

More than 50 countries maintain similar lists to monitor vulnerabilities in their supply chains and develop mitigation strategies.

Where do critical minerals come from?

Critical mineral production is anything but evenly distributed. A few countries dominate extraction and refining, creating major chokepoints in the global supply chain:

• China processes over 80% of the world’s rare earth elements and natural graphite
• The Democratic Republic of Congo supplies more than 70% of global cobalt
• Chile and Argentina are key players in lithium production
• Indonesia and the Philippines are major sources of nickel

These minerals often travel thousands of miles before reaching manufacturers. The result? Long, complex, and fragile supply chains that can be easily disrupted.

Explore StoneX Supply Chain Solutions.

Why critical minerals matter for the energy transition

Decarbonizing the global economy requires new infrastructure, and that infrastructure requires minerals. A lot of them.

• Electric vehicles (EVs) need lithium, nickel, cobalt, and graphite for batteries
• Solar panels rely on rare earths, silicon, and silver
• Wind turbines depend on neodymium and dysprosium for high-efficiency magnets
• Electric grids require copper, aluminum, and specialized electrical steel

Unlike fossil fuels, which are consumed when burned, critical minerals can be reused and recycled. But getting them into circulation requires extensive mining, refining, and processing—each with its own environmental and social challenges.

Learn more about Battery Passport solutions at StoneX.

The accelerating demand for critical minerals

The International Energy Agency projects that to meet global climate goals, the demand for minerals like lithium could grow by over 4,000% between now and 2040. Similar surges are expected for cobalt, nickel, and rare earth elements.

This surge is being driven by multiple forces:

• National commitments to net-zero emissions
• Growth in electric mobility and renewable power
• Rising demand for digital and defense technologies

It’s not just governments that are feeling the pressure. Automakers, energy firms, and tech companies are racing to lock in long-term supply agreements to avoid shortages or price volatility.

Strategic reserves and government responses

Governments worldwide are taking steps to reduce dependence on imports and boost domestic capabilities:

• The U.S. has launched the Defense Production Act and critical minerals strategy to support mining, recycling, and innovation.
• The EU introduced the Critical Raw Materials Act to diversify supply and increase self-sufficiency.
• Japan is investing in recycling and building partnerships in mineral-rich nations.

These efforts include everything from funding early-stage exploration to incentivizing downstream processing and battery manufacturing.

Risks facing critical mineral supply chains

As supply becomes more strategic, the risks surrounding critical minerals are getting harder to ignore:

• Environmental impacts from mining and refining
• Social and human rights concerns in high-risk jurisdictions
• Export restrictions that reduce market access or create price shocks
• Delays in permitting and project approvals

Traceability is now a major focus. Companies are under increasing pressure to disclose sourcing practices, conduct due diligence, and prove compliance with ESG standards. Explore StoneX's role in energy markets and see how we can help.

How China built a dominant position

China’s leadership in the critical minerals space isn’t accidental. It stems from decades of investment in mining, refining, and manufacturing infrastructure.

Rather than just exporting raw materials, China built a vertically integrated system that controls everything from raw extraction to finished battery components. That dominance now gives it outsized influence over pricing, availability, and the pace of innovation in energy and tech.

Western governments are working to catch up, but replicating China’s scale and coordination won’t happen overnight. Read more about geopolitical risk and how it impacts markets.

Innovation and circular economy solutions

If we want to secure critical minerals sustainably, we can’t rely on mining alone.

• Recycling of EV batteries and electronics is improving, helping recover lithium, cobalt, and rare earths
• Substitution research is exploring new battery chemistries that rely on more abundant elements
• Design for reuse is helping products stay in use longer and reducing total material needs

Circular economy models are especially promising. By extending product lifespans and capturing value at end of life, we can lower environmental impacts and reduce dependency on virgin extraction.

The role of critical minerals in national defense

Beyond green energy and digital tools, critical minerals are essential to national defense. Rare earths and specialty metals are used in:

• Guided missile systems
• Advanced radar and sonar
• Jet engine turbines
• Space-based communications

Interruptions in these supply chains could compromise readiness. That’s why defense agencies are now involved in sourcing strategies and long-term stockpiling plans.

What happens if we fall behind?

Failing to secure stable supplies of critical minerals could have ripple effects across industries. We could see:

• Delays in renewable energy deployment
• Shortages of EV batteries
• Rising prices for essential tech products
• Reduced competitiveness in defense and aerospace

More broadly, supply shocks could slow the transition to clean energy, undermining climate targets and increasing reliance on fossil fuels.

Final thoughts: making minerals part of the plan

Critical minerals may not be visible to the average consumer, but they are central to everything from climate strategy to economic resilience.

Governments, companies, and consumers all have a role to play in supporting responsible sourcing, boosting transparency, and investing in the future of resource management. Not because building a better energy system is about innovation, but rather it's about the materials that make it possible. How well those materials are secured will shape what comes next. Access expert insights and market reports for commodities including critical minerals that focuses on trends, fundamental analysis, estimates, weather, and more.