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Critical mineral stockpiles could absorb 10% of key metals supply, 34% of cobalt supply
- a modelled 180-day reserve across seven economies could absorb 34% of annual cobalt supply and more than 10% of lithium, graphite and copper supply
- the US has launched Project Vault with up to US$10 billion in government financing; the G7 has committed to coordinate stockpiling through the IEA; Canada and Japan are discussing joint stockpiling arrangements for minerals including graphite and gallium
A new report by the London School of Economics warns that simultaneous buying by Australia, China, the EU, India, Japan, South Korea and the US could consume up to 34% of global cobalt supply under a modelled 180-day net-import scenario.
Lithium, graphite and copper would each face stockpile demand exceeding 10% of annual supply.
In other words, a global race to build critical mineral stockpiles could create the supply shock governments are trying to prevent.
Governments are already starting to stockpile
And significant global and state level efforts to stockpile critical minerals are already underway, with some of the latest critical mineral stockpiling, as of June 30, 2026, including:
- United States: Project Vault will establish a commercial critical-minerals reserve through a public-private partnership backed by an Export-Import Bank loan of up to US$10 billion. Boeing, GE Vernova, Clarios and Western Digital have indicated interest. The Oregon Group has previously examined the US strategic minerals reserve
- Canada–Japan: Ottawa and Tokyo are discussing joint mining projects, offtake agreements and stockpiling arrangements for graphite and gallium. Japan already operates a national rare-metals stockpile through JOGMEC
- G7: leaders agreed on June 17 to increase domestic stockpiling capacity, exchange procurement and release methods, and establish a joint crisis-response mechanism with the IEA. The agreement coordinates national reserves rather than creating a single G7 stockpile
- Canada–South Korea: the two governments will develop a joint critical-minerals stockpiling plan by the end of 2026, alongside investment and supply-stabilisation measures
- China: regulations issued in May strengthened state control across mining, processing and strategic mineral stockpiling. Beijing’s reserve volumes and mineral holdings remain largely undisclosed
- EU: the EU has reportedly shortlisted tungsten, rare earths and gallium for its first joint critical-minerals stockpile and is discussing storage infrastructure with the Port of Rotterdam. The move comes as pressure builds across the tungsten supply chain
- India: the National Critical Mineral Mission provides for a national stockpile containing at least five critical minerals. The programme is in force, although New Delhi has not disclosed its final mineral list or procurement timetable
- Australia: Canberra’s A$1.2 billion Critical Minerals Strategic Reserve is scheduled to become operational in the second half of 2026. It will initially cover antimony, gallium and rare earth elements, using production rights, offtake agreements and selective physical stockpiling
Trade restrictions are already resetting prices
The price impact is no longer theoretical. The LSE study finds that critical-mineral trade restrictions have accelerated since 2021, particularly for processed and semi-manufactured products.
Recent market moves show the effect:
- cobalt: The Democratic Republic of Congo replaced its 2025 export suspension with quotas. By April 2026, cobalt prices had risen 160% from February 2025 to US$26 per pound
- tungsten: Chinese export controls and lower mining quotas pushed Rotterdam ammonium paratungstate above US$3,000 per metric ton unit in April, more than 200% higher since the start of 2026
- gallium: Chinese unwrought gallium exports fell 94% during 2025. Ex-China spot prices subsequently reached a record US$1,850 per kilogram in April 2026—more than triple their level at the beginning of 2025
The restrictions are creating two-tier markets: lower prices inside producing countries and scarcity premiums for material available to Western manufacturers. Stockpile procurement would concentrate additional demand in that already constrained ex-China market.
The price matters because the report’s indicative modelling suggests a sudden 10% demand increase could lift prices by roughly 29–31% for highly inelastic minerals before new supply responds. Strategic reserves may protect manufacturers from the next disruption, but buying too aggressively could make the current shortage more expensive.
The insurance policy is becoming a market force
The figures are scenarios, not announced government targets. But they show how quickly strategic reserves could alter relatively small and concentrated mineral markets.
The report’s indicative modelling suggests a concentrated 10% demand addition could produce price increases of roughly 29–31% for highly inelastic metals before miners or processors can respond.
The pressure may also emerge downstream. Recent trade restrictions have increasingly targeted refined materials and intermediate products rather than ore, making processed material more useful for emergency reserves — and potentially more vulnerable to a procurement squeeze.
Why now? China dominates the chokepoints
China’s leverage is significant and concentrated across mining and refining of key critical minerals, including roughly 60–90% of global rare earths and battery materials.
And, Beijing has increasingly converted its industrial position into geopolitical leverage. Export controls have covered gallium, germanium, graphite, antimony, tungsten and rare earths, while China restricted dual-use exports to 20 Japanese entities in February 2026. Despite a partial US-China trade truce, Chinese unwrought gallium exports fell 94% during 2025 and ex-China prices more than tripled by April 2026.
That is why governments are moving from supply-chain strategies to physical reserves. Stockpiles can bridge a temporary disruption.
Conclusion
The first framework of internationally co-ordinated stockpiling is emerging. On June 17, G7 leaders committed to increase domestic stockpiling capacity, exchange procurement and release methodologies and establish a joint cooperation mechanism with the IEA. That follows a February mandate directing the IEA to help members develop stockpiles, monitor markets and coordinate responses to supply disruptions.
Government procurement is meant to support processors, traders and near-term producers capable of delivering qualified material, with critical mineral stockpiles planned to reduce exposure to supply at risk of insecurity and geopolitical leverage.
However, the very same security policy risks becoming the next commodity demand shock.
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Australia has 37 days of diesel stock, only 29 hours in Western Australia
- Australia reports 37 days of national diesel cover; major Pilbara mines may hold only seven to ten days on site; and Western Australia has just 29 hours of diesel stock
- the Asian diesel crack remains around US$36 per barrel, more than twice its pre-war level despite Brent returning to US$78
- global oil inventories are at “operational stress levels” as conflict continues in the Strait of Hormuz
Australia officially has 37 days of diesel stocks, but mines in Pilbara region may only 7-10 days of stocks — just as the world hits “operational stress levels” for global oil inventories due to the ongoing Middle East crisis.
The gap matters because mining in Australia consumes 9.6 billion litres of diesel a year, with up to 40% of Australia’s diesel is consumed by mining (the sector runs more than 50,000 large diesel-powered trucks)
52 service stations were reporting diesel stockouts on June 26, but Australia is not running out of diesel today.
Instead, there are warning signs that national averages may conceal how quickly disruption across the oil and diesel industry could reach the mines producing the country’s iron ore, gold and lithium, especially in the more remote regions of Australia.
Is Australia running out of diesel?
As of June 23, Australia held 37 days of diesel cover, above the March-quarter average of 30 days. Another 3.6 billion litres of crude and refined fuel were scheduled to arrive over the following four weeks.
Official data also showed 52 service stations without diesel on June 26, less than 1% of the 8,118 sites monitored nationally, less than in March when Australians started to panic buy. And, only four were in Western Australia — the country’s mining engine that accounts for about half of Australia’s resource exports, especially iron ore. The Western Australian government says fuel distribution to key industries remains uninterrupted, with June and July diesel supplies secured.
Diesel prices have also fallen since the start of the Middle East crisis and closure of the Strait of Hormuz. Across Australia’s five largest cities, average retail diesel reached A$1.801 per litre on June 24, just 3.5 cents above February levels and 44% below its March peak.
But Australia’s cheaper diesel has been supported by lower crude prices, weaker demand, emergency oil releases, a 32-cent-per-litre excise discount and the temporary release of additional domestic stocks. The concern is that these support measures are now running on fumes themselves, and masking a deeper crisis.
The Asian diesel crack remains at approx US$36 per barrel, more than twice its pre-war level, even as Brent retreated to US$78.
Australia is not running short of diesel nationally: stocks are nearly 17% above the 2024–25 average. The vulnerability lies in replacing those stocks and distributing fuel to Western Australia and remote mining operations, not in the headline national inventory.
| Fuel | 2025 average | 23 June 2026 | Change | Versus 2025 maximum |
|---|---|---|---|---|
| Petrol | 1,743 ML | 1,883 ML | +8.0% | 8.5% below |
| Jet fuel | 799 ML | 814 ML | +1.9% | 13.3% below |
| Diesel | 2,968 ML | 3,466 ML | +16.8% | 4.1% above |
Crude prices have recovered faster than fuel supply
Australia’s pump prices make the situation look more comfortable.
Average retail diesel across the five largest cities fell to A$1.801 per litre on June 24, just 3.5 cents above February and 44% below its March peak.
But crude oil has fallen faster than the products refined from it.
| Benchmark | February 20 | June 24 |
|---|---|---|
| Dated Brent | US$73 | US$78 |
| Singapore Mogas 95 | US$76 | US$105 |
| Singapore gasoil | US$89 | US$114 |
| Petrol crack | US$3 | US$27 |
| Diesel crack | US$16 | US$36 |
Calculated from ACCC international benchmark data.
The diesel crack has fallen from an extraordinary US$108 in March, but at US$36 it remains 125% above its pre-war level. Petrol is showing an even larger relative divergence. Its crack has widened from approximately US$3 to US$27 per barrel.
And it may widen further from July 1, when the exceptional government fuel-excise discount will fall from 32 cents to 16 cents per litre, and the ACCC expects petrol and diesel prices may rise. In particular, eligible off-road mining fuel receives fuel tax credits, so the excise restoration is not a simple 16-cent increase in mine-site costs, with road haulage, contractors and other parts of the supply chain remain exposed.
To be clear, this does not necessarily prove speculative short positions are solely suppressing crude. Crack spreads can rise because of refinery outages, seasonal demand, fuel specifications, transport constraints or declining product inventories, according to the US Energy Information Administration.
But the market signal is significant: crude has priced a recovery that refined-fuel markets have not yet received.
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Global oil reserves are buying time
Australia’s immediate relief is part of a wider drawdown of global strategic inventories:
- the IEA says OECD government oil stocks fell by 163 million barrels after the conflict began, reaching their lowest level since December 1990. Global observed inventories fell another 143 million barrels in May alone
- the US Strategic Petroleum Reserve dropped by 9.1 million barrels in the week to June 19, reaching 331.2 million barrels, 71.3 million below a year earlier, according to the EIA’s petroleum stock report
In May 2026, JPMorgan projected projected global visible inventories reaching a 7.6-billion-barrel operational-stress threshold in June and a 6.8-billion-barrel operational floor by September if disruption continued, leading to “operational stress levels.”
Strategic releases can suppress prices and replace missing supply, but they cannot indefinitely create new primary diesel supply as the Strait of Hormuz faces ongoing conflict.
Hormuz tanker recovery has weakened again
The expected reopening of the Strait of Hormuz helped drive crude prices lower after the signing of the MoU between the USA and Iran. However, both physical traffic and a reduction in conflict has not yet matched that optimism.
This matters in particular for Australia which imports 87% of its diesel, and is the world’s largest diesel importer.
AIS data show tanker traffic averaging 9.1 vessels per day, compared with a rate of approx 125 before February 2026. After reaching 16 tracked LNG, crude and product-tanker crossings on June 24, daily traffic fell back to between two and five vessels late in the week.
Australia’s own inbound clean-product pipeline has also shortened with 37 refined-product tankers heading to Australia on June 26, equivalent to 12 days of supply, down from 44 tankers and 16 days one week earlier.
This does not constitute a shortage (yet), but it does reduce the margin for error.
Western Australia’s reserve would last about 29 hours
The Western Australian government has assembled a state-controlled backup for “areas of acute need” of 20 million litres of diesel to support remote communities, agriculture, transport and mining during local supply failures, but western Australia consumes approximately 6 billion litres annually, or 16.4 million litres a day, according to figures reported when the state stockpile was established — that makes the entire reserve equivalent to roughly 29 hours of statewide demand.
And a recent Pilbara fuel-security analysis published by Craig Tindale estimates that major operations typically hold 7-10 days of diesel on site. Junior and mid-tier miners reportedly operated with approximately five days during the March disruption.
Near the start of the crisis in March 2026, Association of Mining and Exploration Companies (AMEC) CEO, Warren Pearce, warned some smaller mining companies had only five days’ of diesel supply.
“Many coal mines in Australia are operating near their break-even level, so there are concerns that a shortage or higher prices of fuel could affect operations and possibly impact supply… The mining industry runs on diesel and an interruption to fuel supply will potentially see mines having to shut down until fuel becomes available” — Warren Pearce, CEO, Association of Mining and Exploration Companies (AMEC)
The comparison reveals the scale problem: Australia’s fuel-security system can manage temporary local shortages, but it cannot replace sustained maritime imports.
The federal government recognises the issue and has extended a measure permitting suppliers to hold 20% less petrol and diesel in reserve until September if additional fuel is released into domestic and regional markets. The measure can free up to 762 million litres of fuel.
What does this mean for mining and metals?
Australian mining consumes almost 9.6 billion litres of diesel annually, around one-quarter of national use.
Singapore gasoil remains approximately A$0.23 per litre above February prices. If fully passed through across that consumption, the difference represents roughly A$1.8 billion of annualised gross exposure before contracts, hedging and tax treatment.
Fortescue, in an interview with Reuters, says every 10-cent movement in diesel changes its costs by approximately US$70 million. Across the four largest iron-ore miners, the combined effect may reach US$500 million, according to Reuters reporting on mining fuel exposure.
For now, major mines have fuel and falling cracks are easing costs. But, smaller operators, contractors and exploration programs remain especially vulnerable because they have less storage and weaker purchasing power.
If the maritime disruption continues, the likely sequence is straightforward: discretionary work is cut first, juniors ration fuel next, and major production is protected until site tanks approach minimum levels as we warn in our analysis on how the Strait of Hormuz diesel shock threatens mining industry.
The immediate conclusion is not that Australia has ten days before its mining industry stops. It is that 37 days of national diesel cover may translate into only seven to ten operational days at the mine that needs it.
Australia is not running out today, but the accumulation of reserves offers a warning, rather than hope — if the Strait of Hormuz stays closed and oil inventories keep running down — it doesn’t matter what the price of oil is, diesel will crack.
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US Army lease awards turn bases into critical minerals safe haven
- the US Army announces conditional long-term lease awards on for at least four companies to build and operate critical mineral processing facilities on Army installations
- the Army has preliminary lease agreements with Titan Mining, EnergyX, Ioneer and REalloys for graphite, lithium, boron and rare earth processing
- the awards cover graphite at Anniston Army Depot and Pine Bluff Arsenal, lithium at Red River Army Depot, and boron plus dysprosium and terbium at Tooele Army Depot
- Titan Mining said its Empire State Mines subsidiary received conditional selections for Pine Bluff and Anniston, with construction of its Kilbourne Graphite Purification Plant targeted for the second half of 2027
- the companies are expected to invest about US$2 billion, with construction starting as early as 2027 and mineral production targeted for 2028
The US Army is will host critical minerals processing plants on military bases, leasing land to companies that can refine materials including lithium, graphite, boron and rare earths.
The conditional lease awards cover four companies: Titan Mining subsidiary Empire State Mines for graphite at Anniston Army Depot in Alabama and Pine Bluff Arsenal in Arkansas; EnergyX for lithium at Red River Army Depot in Texas; Ioneer USA for boron at Tooele Army Depot in Utah; and REalloys for dysprosium and terbium, also at Tooele.
“The ability to process critical minerals on US soil is a national-defense priority required for munitions, missiles, sensors, batteries, and the platforms our Soldiers depend on” — said Dr. Jeff Waksman, Principal Deputy Assistant Secretary of the Army for Installations, Energy and Environment
Formal lease agreements are still in negotiation, with development expected to start in 2027 with initial operating capability targeted by 2028. The bases involved include:
- graphite at Anniston Army Depot and Pine Bluff Arsenal with Empire State Mines, LLC, a wholly owned subsidiary of Titan Mining Corporation
- lithium at Red River Army Depot with Energy X
- boron at Tooele Army Depot with Ioneer USA Corporation
- dysprosium and terbium at Tooele Army Depot with REalloys
Titan Mining said its Empire State Mines subsidiary has received conditional selection notices for Enhanced Use Lease opportunities at Pine Bluff and Anniston, with construction of its Kilbourne Graphite Purification Plant targeted for the second half of 2027.
“By establishing robust domestic processing capabilities on Army installations, we are actively reducing our reliance on foreign sources and ensuring the Joint Force has uninterrupted access to the foundational materials required for next-generation defense technologies” — Rita Adiani, President and CEO of Titan Mining
Titan’s graphite award shows how this could work. The company said Pine Bluff is the primary site at about 245 acres, Anniston is the secondary site at about 97 acres, and the planned Kilbourne facility would produce purified micronized graphite and coated spherical purified graphite for defense, energy and industrial markets through a public-private partnership with the Army.
The announcement signals that critical minerals are no longer being treated as a conventional mining problem. They are national-security infrastructure and part of that supply-chain defense.
The reason is that China dominates global processing capacity across many critical minerals:
- rare earth supply chain — accounting for approx 60% of global mined production of magnet rare earths, its share of refining is above 90%, and almost 95% of permanent magnet production. But has increasingly been willing to use its dominance to threaten Western supply chains through export restrictions. For example, adding MP Materials and USA Rare Earth to its export control list in June 2026, and exports of yttrium to Japan collapsing since January 2026
- the US is 100% reliant on imports for natural flake graphite, and China controls more than 90% of global battery-grade graphite processing capacity, a chokehold over materials essential to munitions, missiles, sensors, energy storage and electric vehicles
- Chinese companies accounted for over two-thirds of the world’s cobalt and lithium processing capacity
Refining plants are expensive, politically difficult and often need power, water, waste handling and heavy-industrial zoning. Building on military infrastructure allows the metals companies to fast-track permitting that can otherwise take years. By offering industrial land on Army bases, the US is trying to compress permitting, infrastructure and offtake into one national-security package.
And this may well be just the start, with the US Department of the Interior identifing 60 minerals as vital to the US economy and national security, and added boron, copper, uranium, silver and six other minerals to the US critical minerals list.
The US Army is moving critical minerals inside the defense perimeter.
Q&A
What are US Army critical minerals plants?
They are proposed processing and refining facilities on Army bases for minerals including graphite, lithium, boron and rare earths, under preliminary agreements.
Why is the US Army involved in critical minerals?
Critical minerals feed defense, energy and technology supply chains, and the Interior Department says 60 minerals now face supply-chain risks tied to US economic and national security in the 2025 critical minerals list.
When could production begin?
The companies are expected to begin construction as early as 2027 and target production in 2028.
Why does this matter for China supply risk?
The IEA says refining concentration has increased, with China driving major growth in graphite and rare earth refining, making diversification a core issue.
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China tightens rare earth restrictions with new export controls on US firms
China has added MP Materials and USA Rare Earth to its export control list, restricting Chinese companies from supplying the two US rare earth firms with certain dual-use goods and technologies, putting two of America’s most important rare earth producers directly in Beijing’s sights.
China has added MP Materials and USA Rare Earth to its export control list, escalating the minerals and technology fight with Washington by restricting Chinese companies from supplying the two US rare earth firms with certain dual-use goods and technologies, and escalating the minerals and technology fight with Washington.
The move, announced Monday, adds 10 US entities to China’s export control list, including companies across rare earths, drones, robotics, aerospace and defence. Chinese companies and individuals are now barred from supplying the named firms with dual-use goods, a step Beijing said was needed to protect national security and meet non-proliferation obligations.
The list includes MP Materials operator of Mountain Pass in California — the only producing rare earth mine in the US and, last year, the company got a US$400 million equity investment from the Department of Defense. — and USA Rare Earth, which is developing a mine-to-magnet supply chain in Texas. Also named were Aveox, Red Cat Holdings, Teal Drones, IMSAR, Jaia Robotics, Ball Aerospace & Technologies, Oshkosh Defence and L3Harris Maritime Services.
China also restricted 46 US companies from government procurement, widening the retaliation after Washington expanded its own military-linked blacklist of Chinese companies.
A spokesperson for the Ministry of Commerce told the South China Morning Post, the decisions were made in response to “malicious actions” by the US government, after the US Department of Defence expanded the Pentagon’s 1260H list of Chinese tech companies it believes to be aiding the Chinese military.
The commercial impact may be limited in the near term. Several of the targeted US firms have little direct exposure to China. But the signal is bigger than the immediate disruption: Beijing is again showing it is prepared to use critical minerals supply chains as leverage in its fight with Washington.
Rare Earth exports plunged 74.3% year over year to 1,239 mt in May 2025 in the immediate aftermath of US President Donald Trump’s country-specific tariffs. China’s global exports of less processed rare earths fell to 4,392 mt in December 2025, 15.8% below the 2025 monthly average of 5,215 mt. And, S&P Global warns in January that rare earth supply bottlenecks are expected to persistt hrough 2026.
Rare earths are essential for high-performance magnets used in electric vehicles, wind turbines, drones, missiles, fighter jets and other advanced defence systems. China dominates rare earth processing and magnet production, giving Beijing influence over the parts of the supply chain the US is still trying to rebuild.
The latest restrictions follow a broader pattern. China tightened controls on several rare earth elements and permanent magnets in 2025, including materials used in defence, energy and automotive supply chains. Exports of some key magnet materials to Japan have already been constrained, showing how quickly licensing rules can become a geopolitical tool.
Washington has spent years trying to rebuild domestic critical mineral supply chains. Beijing’s latest move shows why that effort is accelerating — and why rare earth mining, processing and magnet capacity outside China are becoming central to the next phase of the US-China rivalry.
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G7 moves to cut China rare earth dependence to below 60% by 2030
The G7 has agreed to reduce reliance on any single supplier of rare earths and permanent magnets to below 60% by 2030, in the clearest sign yet that Western governments are trying to turn critical minerals security from policy language into industrial strategy.
The target, agreed by G7 leaders in Évian, France, is aimed at cutting exposure to China, which dominates rare earth processing and permanent magnet supply chains used across electric vehicles, wind turbines, defence systems, robotics and advanced electronics.
“We aim to significantly reduce our dependencies on a single supplier outside the G7 and partner countries for rare earths and permanent magnets to under 60 per cent by 2030 and continuing to decrease further over time, with an ambition to reach 50 per cent as soon as possible” — G7 Leaders’ declaration on securing supply chains for critical minerals, June 17, 2026
G7 leaders said they would work with partner countries to build mining, processing and recycling capacity across the full critical minerals value chain. The bloc also set an ambition to reduce single-supplier dependence to 50% as soon as possible after 2030.
The move follows more than a year of supply chain tension after Beijing’s export controls on permanent magnets exposed how dependent manufacturers remain on Chinese midstream processing.
- in 2024, China accounted for 60% of global mined production of magnet rare earths
- for refining, China represented 91% of global refined output
- and its share is even higher for permanent magnet production: in 2005, China accounted for around 50% of the production of sintered permanent magnets, but its share expanded significantly to reach 94% in 2024
The G7 said 195 critical minerals projects have been announced since the start of 2026, representing $73.4 billion of investment, including equity participation and offtake agreements. But officials acknowledged the challenge remains significant: building mines is only part of the problem. The harder bottleneck is processing, separation, refining and magnet manufacturing.
The alliance will begin with pilot traceability and transparency mechanisms for lithium and nickel, before extending the system to five additional critical minerals each year, with particular attention to rare earths.
Leaders also backed stronger coordination between development finance institutions, export credit agencies and private capital, including possible joint procurement, price-gap subsidies, quotas and price floors to support new non-Chinese supply.
A new G7 Critical Minerals Resilience and Production Alliance will coordinate policy, data sharing, stockpiling and crisis response. The International Energy Agency and OECD will help monitor markets, identify distortions and provide early warnings of supply stress.
The message is blunt: critical minerals are no longer just a commodity issue. They are now a security, industrial and geopolitical priority.
For investors, the focus is shifting from discovery alone to supply chain position. Projects with credible routes into processing, offtake, financing and allied-country supply chains are likely to become more strategic as governments try to build alternatives to China before the end of the decade.
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Sulphuric acid crunch pushes key critical minerals cost exposure up 33% since Iran war
The sulphuric acid crunch is now feeding directly into critical minerals production costs, with sulphur and acid accounting for an average 33% of C1 costs across key supply chains — rising to 42% for HPAL nickel and 30% for Chilean SX-EW copper.
According to the latest data from Benchmark Minerals, between the start of the conflict in the Middle East at the end of February and mid-April, sulphuric acid prices surged by more than double and sulphur prices rose by 50% (albeit with regional variations).
The reason, as per our recent analysis on the Strait of Hormuz as a chokepoint for critical minerals, the Middle East accounts for about 24% of global sulphur production, including 50% of seabourne trade of sulphur — which must be exported via the Strait of Hormuz. And sulphur is the feedstock for sulphuric acid used across nickel, copper and fertilizer supply chains
“Sulphuric acid is a vital feedstock for many critical minerals,” Benchmark raw materials research manager Will Talbot said. “The outstanding risk is that more critical minerals players cut production or even shut down operations entirely.”
Benchmark estimates more than half of global lithium, cobalt, rare earth and purified phosphoric acid production expected in 2026 is exposed to sulphur and sulphuric acid disruption. High-purity manganese sulphate monohydrate, used in electric vehicle batteries, is fully dependent on sulphuric acid supply.
That matters because sulphuric acid is not optional in large parts of the energy transition supply chain. It is used to leach copper, process nickel through high-pressure acid leaching, convert spodumene into lithium chemicals, produce purified phosphoric acid for LFP batteries and make high-purity manganese sulphate for battery cathodes.
The cost shock is already showing up in lithium. Benchmark warns sulphuric acid previously represented around 3% of the cost of producing lithium chemicals from hard rock sources. It now accounts for 11%, overtaking energy as the largest individual C1 cost component. Sulphuric acid now makes up 22% of total hard-rock lithium conversion costs.
Nickel is also exposed, with sulphur now representing 42% of HPAL nickel costs, up from 26% before the conflict. Indonesia, the world’s largest nickel producer, sourced 76% of its sulphur imports from the Middle East last year. HPAL processing can require more than 10 tonnes of sulphur to produce one tonne of nickel.
Copper is more complicated.
Solvent extraction and electrowinning operations, which account for roughly 22% of global mined copper output, need large volumes of sulphuric acid. That puts acid-leach copper operations under pressure, particularly in regions such as Chile where imported acid is critical to mine supply.
But copper smelters can benefit because sulphuric acid is produced as a by-product of smelting. Higher acid prices can improve smelter economics, even as leach operations face rising costs.
The wider message is clear: critical mineral supply chains are not just constrained by ore bodies, mine permits and capital. They are also constrained by chemicals, reagents, shipping routes and industrial infrastructure.
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US Army lease awards turn bases into critical minerals safe haven
China tightens rare earth restrictions with new export controls on US firms
G7 moves to cut China rare earth dependence to below 60% by 2030
Sulphuric acid crunch pushes key critical minerals cost exposure up 33% since Iran war
Rare Earth prices surge as China keeps export restrictions
Yttrium oxide prices outside China have risen x140 since Beijing imposed rare earth export controls in April 2025, while dysprosium and terbium oxide prices have climbed x4 to x5, according to Argus data cited by Reuters.
Yttrium oxide prices hit nearly US$1,100/kg by May 2026, up from single digits before the export restrictions. Dysprosium oxide rose to roughly US$1,450/kg, while terbium oxide reached about US$4,500/kg.
The price increases have followed a sharp fall in exports. Shipments of yttrium, dysprosium and terbium are still down about 50% since China introduced the controls, compared with the 12 months before April 2025, according to Chinese customs data.
China’s controls cover seven heavy rare earths: samarium, gadolinium, terbium, dysprosium, lutetium, scandium and yttrium. The materials are used in aerospace, defense, semiconductors and high-performance magnets.
Beijing rolled back a wider package of restrictions
China announced export restrictions on seven rare earth minerals in response to the recent tariffs by US President Trump in April 2025. The restrictions include:
- Samarium
- Gadolinium
- Terbium
- Dysprosium
- Lutetium
- Scandium
- Yttrium
China dominates the rare earth market: it’s responsible for 70% of global production and nearly 90% of processing of global output, as well as 90% of rare earth element permanent magnet production.
The supply squeeze is also hitting US allies. Japan, the largest rare earth magnet producer outside China, received just 4% of the dysprosium it imported in the 12 months before the controls, and Germany received none.
Dysprosium is used to improve magnet performance at high temperatures. Terbium is used in permanent magnets and phosphors. Yttrium is used in thermal barrier coatings, aerospace components and chipmaking applications.
But, magnet manufacturers are reportedly paying up to x3 more than before the restrictions.
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US data center spending hits $50 billion as AI buildout squeezes metal markets
Spending on US data-center construction has overtaken conventional office building, with the latest US Census Bureau data showing private data-center construction reached a seasonally adjusted annual rate of US$50.706 billion in April 2026, up 28.1% year-on-year.
For mining and critical minerals, that makes AI less a software story than a fast-growing demand shock for copper, aluminium, gallium, rare earths, backup batteries and the grid equipment needed to power the buildout.
And, importantly, the US Census data defines data centers as buildings that contain hardware for storing, processing and transmitting digital information, while excluding racks or servers as equipment. So the latest figures captures construction put in place, but not the full mineral footprint of chips, servers and IT hardware that is increasing demand.
The US already has more than 3,000 operating data centers and more than 1,500 in development, according to Pew Research Center’s April 2026 analysis. Each project requires high-voltage connections, transformers, switchgear, backup batteries, cooling systems and miles of cabling before a single AI chip starts earning revenue.
The IEA estimates global demand for critical minerals from data center development is set to rise significantly by 2030, compared to 2024 levels:
- 2% for copper
- 2% for silicon
- 3% for rare earths
- 11% for gallium
The problem is supply concentration, with nearly 60% of refined copper, around 90% of aluminium and more than 90% of silicon, magnet rare earths and gallium came from the top three producing countries in 2024.
Our report on how the explosion of Artificial Intelligence (AI) is expected to spark a 10-year critical mineral supercycle as the massive energy needs of new AI data centers will increase pressure on global supply chains already under strain to meet global net-zero targets:
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Aluminium inventories fall below five days of global supply
Visible aluminium inventories have fallen to less than five days of global supply, spiking spot aluminum prices to a US$97-a-ton premium to three-month futures — the highest level since 2007.
The fall in aluminium inventories is the lowest cover among the six main metals traded on the London Metal Exchange after the conflict in the Middle East has tightened supply. The region accounts for nearly 10% of global aluminium supply, and the closure of the Strait of Hormuz has disrupted a key route for metal moving into the US, Europe and Japan.
Aluminum on the LME (London Metal Exchange) is trading at its steepest premium to Shanghai futures since March 2022 — no longer trading like a metal with a comfortable inventory buffer, leaving the market exposed to any further disruption in supply, shipping or smelter output.
The pressure is already showing in prices. Spot aluminium on the LME surged to a $97-a-ton premium over three-month futures on Friday, the highest since 2007, according to Bloomberg. That kind of backwardation is a classic sign of buyers paying up for metal now, not later.
This matters beyond the metals market. Aluminium is used in power cables, vehicles, aircraft, packaging, solar frames, buildings and defence supply chains. As inventories fall this low, risk shifts from price volatility to physical availability.
China’s aluminium exports rose 15% in April to 598,000 tonnes, the highest since November 2024. Analysts cited by Bloomberg said exports could rise above 680,000 tonnes in coming months, which would be a record. But China is not a limitless backstop. The International Aluminium Institute estimates China produced 3.68 million tonnes of primary aluminium in April 2026, out of global production of 5.92 million tonnes. That means China already accounts for more than 60% of global primary output.
Falling inventories, tight nearby spreads and rising physical premiums all point to the same problem: the market’s buffer is shrinking. And when a metal used across energy, transport, construction and defence drops below five days of visible supply, the shock does not stay inside the exchange warehouse system for long.
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Why Corporate Treasuries May Start Holding Critical Minerals
For decades, corporate treasuries followed a predictable playbook: Excess cash went into short-term government securities, investment-grade bonds or other highly liquid instruments designed to preserve capital.
But in an era defined by supply chain disruptions, geopolitical tension and the accelerating energy transition, some companies are beginning to rethink what it means to manage risk. Increasingly, the question is not just how to preserve financial capital but how to secure access to the physical materials their businesses depend on.
CFOs and other executives are likely to come under pressure to protect margins and their supply chains within this new environment. In this context, it may not be surprising if corporate treasuries begin holding exposure to critical minerals.
End Of Cheap And Reliable Inputs
For much of the past three decades, companies could assume that raw materials would be available, relatively affordable and sourced through global supply chains that prioritized efficiency.
The energy transition alone is dramatically increasing demand for metals such as copper, nickel, lithium and rare earth elements. At the same time, supply growth in many of these materials has been constrained by long permitting timelines, capital shortages in the mining sector and rising geopolitical competition over strategic resources.
The result is a world where commodity availability—and price volatility—can directly impact corporate strategy.
For manufacturers, technology companies and energy developers alike, shortages or price spikes in critical inputs can delay projects, disrupt production schedules and compress margins. Imagine if you are a semiconductor business and rely on gallium, or a magnet business and rely on neodymium—having a treasury could help to protect margins and your business during times of shortage and or price spikes.
Against this backdrop, companies may begin thinking about certain commodities less as operational inputs and more as strategic assets.
From Inventory To Treasury Strategy
Historically, companies have managed commodity risk primarily through procurement strategies or hedging programs using derivatives. But those tools are designed to manage short-term volatility, not long-term structural supply constraints.
Holding strategic exposure to key materials—either physically, financially or through tokenized instruments—could offer a different kind of hedge. For a CFO new to commodities, starting with basic materials that impact their business would make sense.
Consider a large technology manufacturer dependent on copper and rare earth elements, or an energy developer building grid-scale battery systems that require nickel and lithium. If those inputs are expected to become structurally scarce or volatile, maintaining some exposure on the balance sheet could serve as a form of strategic insurance.
In effect, certain commodities could begin to play a role similar to how companies have historically viewed foreign currency reserves or inflation hedges.