The IEA's Global Critical Minerals Outlook 2026 finds that projected supply deficits for copper and lithium have narrowed modestly, but a new and more immediately alarming gap has opened for cobalt, driven not by geology but by deliberate policy in Kinshasa. Meanwhile, the number of mineral tariff codes subject to Chinese export controls has tripled since 2023, converting what analysts once described as theoretical concentration risk into a cascade of real-world market disruptions. The era of supply chain complacency is over.
Introduction
Sometime in late January of this year, the price of cobalt crossed $56,000 per tonne on international markets, more than doubling in the space of twelve months. In the trading rooms of London and Shanghai, the move registered as a significant commodity event. But in Kolwezi, the gritty mining capital of the DRC's Lualaba province, where the red laterite earth runs thick with cobalt hydroxide and the Sino-Congolese joint ventures that extract it operate around the clock, the price spike felt like something older and more elemental: a country asserting sovereignty over resources it had, for decades, watched leave its borders at prices set elsewhere.
The Democratic Republic of the Congo produces more cobalt than any other nation on earth, a geological fact that has shaped the global battery supply chain for a generation. For most of that time, Kinshasa's leverage was theoretical. Chinese companies, principally CMOC, had quietly acquired the dominant operational positions inside the country, processing and exporting cobalt hydroxide at volumes that made the DRC the indispensable feedstock supplier for the world's electric vehicle and consumer electronics industries. When global prices collapsed from an $82,000-per-tonne peak in 2022 to roughly $20,000 in February 2025, driven by oversupply from Indonesia and CMOC's own record Congolese output, the Congolese government decided it had seen enough.
What followed was a policy intervention as blunt as it was consequential. In early 2025, Kinshasa imposed a four-month export suspension, the first signal to global markets that Congo was prepared to accept short-term revenue sacrifice in exchange for longer-term price stabilisation. By year's end, a permanent quota system administered by the regulatory body ARECOMS was in place, capping annual exports at 96,600 tonnes against domestic production that had reached roughly 230,000 tonnes in 2024. The International Energy Agency, in its Global Critical Minerals Outlook 2026 published on July 28, has now rendered a formal verdict on what that decision means for global supply: a cobalt deficit that has widened from just over 15 percent to more than 25 percent of projected demand through 2035, a policy-driven shock in a market with almost no room to absorb one.
The IEA's Shifting Scorecard: Copper and Lithium Improve While Cobalt Deteriorates
The IEA's annual outlook has, in recent years, served as the canonical reference for policymakers wrestling with the arithmetic of energy transition. This year's edition, the most comprehensive to date, carries a new chapter on emergency preparedness and supply chain resilience that reflects how urgently governments have demanded the agency sharpen its policy prescriptions. The headline finding on copper and lithium is, by the standards of this anxious moment, relatively reassuring: the projected supply deficit for copper by 2035 has narrowed from approximately 30 percent, as measured in last year's edition, to around 25 percent, as new projects advance particularly in the DRC and Zambia. The lithium gap has similarly contracted, though both deficits remain structurally significant and the trajectory to 2040 involves lithium demand rising more than threefold.
Copper prices have already begun reflecting tightening conditions. Base metals including aluminium, copper, and tin rose by one-third between January 2025 and April 2026, with copper reaching record highs. The damage at Kamoa-Kakula, the DRC's largest copper operation, where a seismic incident in May 2025 compressed output to 388,838 tonnes against a projection of 520,000 tonnes, is a reminder that even the projects anchoring the IEA's improved copper outlook carry their own execution risks. The company projects a maximum of 420,000 tonnes for 2026, a figure that still falls well short of earlier expectations.
The lithium story has been more dramatic. Battery-grade lithium carbonate prices bottomed out at around $8,100 per tonne in June 2025 after a long and brutal correction from the $70,000 peak of 2022. Then, almost invisibly at first, the market turned. Paul Lusty, head of battery raw materials at Fastmarkets, speaking at the firm's Global Lithium, Battery and Critical Materials conference in Las Vegas, described the reversal in characteristically understated terms: "I think what has surprised the market is the strength of the demand side of the industry." What he meant was that energy storage applications, led by grid-scale battery deployment and, increasingly, power-hungry AI data centres, had begun absorbing lithium at a pace that the market's supply models had systematically underestimated.
A key supply shock accelerated the repricing. In August 2025, CATL announced it had suspended operations at its Jianxiawo lithium mine in Jiangxi province after its mining licence expired. The mine accounted for roughly 6 percent of global lithium supply. The news triggered speculative buying on the Guangzhou Futures Exchange, and prices that had languished below $10 per kilogram climbed past $25 by May 2026, more than tripling from their trough. JPMorgan Global Research now forecasts global lithium demand to grow 16 percent year-on-year in 2026, with 30 percent of incremental demand coming from storage and data infrastructure rather than electric vehicles alone. Demand for lithium in storage applications jumped approximately 71 percent in 2025; analysts expect another 55 percent growth this year.
Congo's Quota Machine: Policy Design Meets Operational Reality
The cobalt story is where the IEA's 2026 Outlook most clearly departs from its predecessors in analytical register. The report's finding that a projected supply gap has emerged specifically due to the DRC's new export quota treats policy design by a sovereign government as a first-order supply risk, on a par with geological depletion or infrastructure failure. That framing matters: it signals that the IEA now considers political economy in mineral-rich developing nations an integral variable in global supply modelling, not a footnote.
The mechanics of the Congolese quota system are intricate. ARECOMS, the regulatory body created to administer it, has set a 96,600-tonne annual export cap for both 2026 and 2027. Within that ceiling, the base quota for all producers stands at 87,000 tonnes, with an additional 9,600 tonnes held as a strategic reserve that ARECOMS can release at its discretion. Against 2024 production of approximately 230,000 tonnes, the arithmetic is stark: more than 130,000 tonnes of annual output now has, in theory, nowhere to go, accumulating in Congolese stockpiles while the ex-DRC market runs increasingly short.
But the quota's formal ceiling turns out to be considerably more permissive than its effective operation. Fastmarkets reporting on export clearance data reveals what the publication described as "massive discrepancies" between allocated quota volumes and actual shipments. Between December 2025 and February 2026, only 7,800 tonnes received export clearance despite allocated quota availability significantly exceeding that figure, implying a monthly clearance rate of roughly 2,600 tonnes. Cobalt hydroxide exports in the fourth quarter of 2025 were described by sources as "less than a half" and in some accounts "approximately one third" of allocated volumes, largely due to paperwork delays and logistics bottlenecks. Bridge collapses on Katanga trucking routes compounded the disruption. By mid-year 2026, the effective supply gap, accounting for execution failures rather than just the nominal quota ceiling, had reached an estimated 50,000 to 53,000 tonnes in the first half alone.
CMOC, China's dominant cobalt miner in the DRC and the company whose record output was itself a primary driver of the earlier price collapse, illustrates the quota's distributional logic. The company maintains production guidance of 100,000 to 120,000 tonnes for 2026, following a 2025 record of 117,549 tonnes. Its export quota for the year stands at 31,200 tonnes: less than a third of what it is capable of producing. The chokepoint, as Argus Media's analysis put it, sits inside Congo's own export bureaucracy, and it can fail without triggering any signal that a standard risk screen is built to catch.
Analysts are divided on how long the squeeze will last and how severe it will become. Benchmark Mineral Intelligence projects that the quota system will reduce ex-DRC cobalt stocks to approximately one month of demand by the fourth quarter of 2026, maintaining them at that precarious level through most of 2027. Even if ARECOMS releases the entirety of its 9,600-tonne strategic reserve, Benchmark expects demand destruction to emerge in late 2027 unless quota levels are revised upward. Fastmarkets, somewhat more optimistic, anticipates a 10,700-tonne supply deficit for 2026 as a whole. The Cobalt Institute's June 2026 analysis maps two boundary scenarios: a 16,000-tonne shortfall under full global mine supply assumptions, and a substantially larger gap if DRC-specific restrictions are applied at their intended severity.
China's Tripled Tariff Codes: From Theoretical Risk to Immediate Economic Shock
If Congo's cobalt quota is the year's most dramatic single policy intervention, the IEA's finding on Chinese export controls represents the more structurally transformative development. The number of mineral tariff codes subject to Chinese export controls has tripled since 2023. That statistic, crystallised in a single sentence in the Outlook's executive summary, encapsulates a geopolitical trajectory that has moved faster than most allied government contingency planners anticipated.
The chronology is worth reconstructing. In 2023, Beijing implemented export controls on gallium, germanium, graphite, and antimony, moves widely interpreted at the time as calibrated responses to U.S. semiconductor restrictions. In April 2025, the Chinese government escalated sharply, imposing controls on seven heavy rare earth elements with immediate downstream consequences: several automakers were forced to cut production or temporarily halt operations due to shortages in the magnetic components that rare earths enable. In October 2025, Beijing expanded the measures to internationally manufactured products containing rare earths sourced from China or produced using Chinese technologies, a move with an estimated downstream exposure of $6.5 trillion per year in global production across the automotive, high-tech, defence, and energy sectors. Those expanded measures were subsequently suspended for one year until November 2026 as part of the Xi-Trump trade agreement that followed the rolling back of tariffs and various bilateral trade barriers. But the vulnerability they revealed has not been resolved; it has merely been deferred.
Into 2026, China's Ministry of Commerce announced strict export licensing rules for tungsten, antimony, and silver, requiring applicants to meet high credit thresholds and demonstrate substantial export volumes between 2022 and 2024, conditions that effectively limit access to state-favoured trading companies. The full list of materials now subject to some form of Chinese export restriction encompasses antimony, bismuth, gallium, germanium, refined graphite, indium, molybdenum, rare earths, sulphuric acid, tellurium, tungsten, lithium iron phosphate batteries, and lithium refining. It reads less like a list of individual commodities than like a map of the entire clean energy and advanced technology supply chain.
The price consequences have been severe and geographically asymmetric. In Europe, prices for gallium and heavy rare earths including dysprosium and terbium are currently running at approximately five times Chinese domestic levels; germanium prices are nearly three times higher. Tungsten prices have surged sixfold since January 2025. The divergence reflects not just export restrictions but the deeper structural fact that the IEA's report quantifies with uncomfortable precision: the average market share of the top three refining nations across copper, lithium, nickel, cobalt, graphite, and rare earth elements rose to 86 percent in 2024, up from 82 percent in 2020, with almost all supply growth in those materials coming from a single supplier. For China, that share across gallium, graphite, manganese, and rare earths exceeds 90 percent.
The legal architecture underpinning Beijing's approach has also matured. China promulgated the Provisions on the Security of Industrial and Supply Chains in 2025, its first dedicated supply-chain security framework, integrating export controls, countermeasures, data security obligations, and investment screening under a unified national security mandate. As I reported in August on Beijing's response to European sanctions in my piece on China's use of rare earths as a geopolitical weapon, this is not improvisation but doctrine: China has constructed a legal and administrative apparatus that allows it to weaponise supply concentration with regulatory precision. The tripling of affected tariff codes since 2023 is the measurable output of that doctrine in operation.
Investment Retreats as Diversification Costs Mount
Against a backdrop of supply shocks and escalating trade restrictions, one might expect capital to be flooding into diversification projects. The IEA's data suggests the opposite has happened. Investment in critical minerals fell by 9 percent in 2025, the first substantial decline since 2020. Companies focused on battery materials, lithium, nickel, and cobalt, drove the decline with a 20 percent reduction in capital deployment. Lithium specialists pulled back most sharply, reducing investment by approximately 40 percent following several years of aggressive expansion that had culminated in the very oversupply that cratered prices.
The economics of diversification explain much of the hesitation. The IEA's cost analysis is blunt: capital costs for refining projects outside the dominant supplier are 20 to more than 150 percent higher than Chinese equivalents. Operating costs across cobalt sulphate, nickel sulphate, natural graphite, synthetic graphite, and lithium hydroxide are on average 50 percent higher. For mining executives considering whether to commit to a decade-long capital programme, those differentials represent a structural disadvantage that government support must overcome, not merely supplement.
The investment gap between mining and refining capacity is particularly stark. Mining capacity is expanding across diverse regions, as the project pipeline in the IEA's improved copper and lithium outlooks attests. But refining and downstream manufacturing capacity remain overwhelmingly concentrated. The rare earth supply chain illustrates the pattern most vividly: by 2035, announced mining projects outside the leading producer could deliver nearly 50,000 tonnes of capacity, yet planned refining and separation capacity is under 40,000 tonnes, concentrated mainly in Malaysia and the United States. Downstream capacity for rare earth metals, alloys, and magnets amounts to only about 18,000 tonnes on a rare earth content basis. The bottleneck is not in the ground. It is in the conversion infrastructure that transforms ore into the components that defence systems, electric motors, and renewable energy equipment actually require.
A sulphur shock in 2026 has added another layer of complexity. Sulphur is the feedstock for sulphuric acid, which is essential for processing copper, lithium, cobalt, nickel, and rare earths. Disrupted sulphur supplies prompted China to curb sulphuric acid exports in May 2026, creating ripple effects across multiple mineral and fertiliser value chains simultaneously. In some processing operations, acid costs have overtaken energy costs as the single largest cost component, compressing already-tight margins for projects that were counting on stable input pricing.
Allied Governments Respond: Stockpiles, Price Floors, and the Architecture of Resilience
The G7's response to the gathering supply crisis has accelerated sharply since mid-year. On June 17, G7 leaders strengthened the Critical Minerals Resilience and Production Alliance, building on the framework launched during Canada's 2025 presidency, and set a measurable target: reduce dependence on any single non-G7 supplier of rare earth elements and permanent magnets to below 60 percent by 2030, with an ambition to reach 50 percent as quickly as possible. The Declaration accompanied an announcement of 195 projects that had reached 64 billion euros in investment, including equity participation and offtake agreements, across critical mineral value chains in G7 and partner countries.
As I detailed in my August analysis of the G7's emerging price and procurement architecture, the alliance's tools now extend well beyond tariffs into price floors, joint procurement instruments, and coordinated stockpile strategies. What is new in 2026 is the explicit coordination of reserve strategies across allied nations, and the extension of that logic from established metals like titanium and cobalt into newer categories such as battery-grade graphite and semiconductor-grade gallium. The IEA's own Critical Minerals Security Programme, operating under mandates from both IEA Ministers in February 2026 and G7 Leaders in June, is deepening its emergency preparedness work to support that architecture.
The European Union has selected 60 Strategic Projects targeting lithium, graphite, cobalt, nickel, and rare earths, with a growing emphasis on processing rather than extraction alone. Of those projects, 47 are located within EU territory and 13 externally, with partner countries including Canada, Kazakhstan, Ukraine, and Zambia. The United States has moved in parallel. At the Forum on Resource Geostrategic Engagement, the FORGE initiative, Washington signed new bilateral critical minerals frameworks and memorandums of understanding in a single day, signalling an intent to use diplomatic architecture as a supply chain instrument. And as I reported in August, the Trump administration's convening of more than 200 mining executives at the State Department, coupled with $3 billion in defence-linked mineral investments, has extended that logic into explicit industrial mobilisation.
The IEA's own modelling offers one structural reason for cautious optimism: recycling. Under current policy settings, average recycling rates across key energy minerals could rise from around 10 percent today to close to 20 percent by 2040, partially offsetting primary supply constraints. That trajectory depends, however, on the kind of regulatory intervention that my August reporting on the Trump administration's Defense Production Act gambit described: turning the recycling stream into a sovereign asset by restricting the export of battery black mass and rare-earth magnet scrap. The logic is identical to Kinshasa's cobalt quota, even if the institutional form is different. Nations with material endowments, whether in the ground or in their waste streams, are discovering that withholding supply from global markets is a form of industrial policy that generates results.
Conclusion: The Year Theory Became Reality
In the language of risk assessment, analysts have long distinguished between theoretical vulnerability and operational exposure. The former is a modelling concern; the latter is a crisis. TDI Sustainability's commentary on the IEA's 2026 Outlook captured the inflection point precisely: if the report is clear on one issue, it is that 2025 was the year supply chain concentration risk moved from theory to reality. The cobalt quota, the tripled Chinese tariff codes, the sulphur shock, the automakers forced to idle production lines because the magnets in their motors could no longer cross a border: these are not projections. They happened.
The IEA's revised cobalt deficit figure, widening from just over 15 percent to more than 25 percent of projected demand, will be revised again. By the time the 2027 Outlook is published, Benchmark Mineral Intelligence's warning about ex-DRC stocks falling to one month of demand will either have been borne out or averted, depending on whether ARECOMS adjusts its quota, whether Indonesian HPAL plants fill the gap, and whether the bridge collapses in Katanga are repaired quickly enough to matter. The uncertainty itself is the condition that allied governments are now treating as permanent.
Back in Kolwezi, the cobalt hydroxide that cannot be exported accumulates in storage. Congolese officials, for the first time in a generation, are fielding calls from battery manufacturers who once dictated terms and are now negotiating them. The price of cobalt at $56,000 per tonne is a data point. The shift in bargaining power it represents is something more durable. Whatever the IEA's next Outlook concludes about supply gaps and deficit percentages, the era in which resource-rich nations were price-takers in the minerals economy appears, at least for now, to be ending.