While the rare earths market is currently oversupplied, US efforts to diversify supply away from China are driving investment for some minerals, while other minerals encounter constrained investment which could impact future supply-demand balances, says independent price reporting agency Benchmark Mineral Intelligence energy raw materials head Adam Webb.

Geopolitical tensions, particularly trade disputes between the US and China, are the dominant risk impacting critical mineral markets, he explains.

Tariffs introduced by the US and retaliatory trade restrictions introduced by China, including China’s restrictions on rare earth exports, have created uncertainty and encouraged onshoring of mining and refining capacity outside of China.

Historically, low prices and China’s low-cost advantage discouraged non-Chinese production; however, government involvement from various countries is helping new projects overcome economic barriers, notes Webb.

As a result, new non-Chinese mines and refineries are essential for US and global supply security, given China’s dominance in mining, and particularly, in refining, he notes.

Aligned to this, Webb says accelerated efforts by the US, Europe and other regions aim to reduce reliance on China by developing domestic or allied supply chains across mining, refining and downstream processing.

Many rare earth minerals are used in magnet production, which, in turn, are used in various new energy applications, such as electric motors, wind turbines and defence applications.

“[The defence applications are] quite a sensitive end use, and the US does not want to be reliant on China solely for this material. Currently China produces about 90% of refined rare earths,” says Webb.

Aligned to this, the US Department of War, formerly the Department of Defense, has supported rare earths producer MP Materials through loans, equity and an offtake agreement with a price floor significantly higher than market prices.

This intervention, he notes, has driven premiums for non-Chinese material and contributed to a bifurcated market.

The US has also signed cooperation agreements with Australia, Japan and Ukraine, likely for earlier stage type deposits.

Supply-Demand Balance
Driven primarily by electric vehicles (EVs) and increasingly by battery energy storage systems (BESS), the lithium-ion battery market is expected to be the principal driver of demand for most critical minerals over the next five years, states Webb.

He points out that global EV sales grew by an estimated 26% year-on-year in 2024, while marginally lower growth of 24% is expected in 2025, partly owing to the removal of US tax credits under the Trump administration; however, Webb says the absolute volume increase remains substantial.

Concurrently, BESS is experiencing greater growth, with such demand forecast to rise 44% year-on-year in 2025, largely driven by China.

As a result, the factors of increased demand for EVs, BESS or significant supply disruptions, could quickly shift the lithium market into deficit, despite Benchmark’s base case suggesting these shortages as unlikely before 2030, he highlights.

Currently, Webb expects lithium demand to grow about 15% a year over the next three years, with mine supply expected to grow about 13%. While the current surplus will narrow, the market is expected to remain oversupplied, keeping prices relatively low.



Other Critical Minerals
Apart from copper, which is currently in a deficit owing to supply disruptions at several major mines, most other critical minerals are in oversupply, with supply growth outpacing demand, he notes, adding that, as a result, prices remain subdued and are expected to stay low through 2026.

Indonesia is expected to continue to dominate nickel supply growth, with its global share rising to about 70% by 2030, outlines Webb, adding that this market continues to be oversupplied – a dynamic expected to persist, keeping prices near $15 000/t.





Longer term, he says prices are expected to rise as the market tightens and production costs increase.



In all, despite the current oversupply of critical minerals, Webb says longer-term demand growth for critical minerals is expected to exceed supply growth.

“In about six to seven years, depending on the commodity, demand growth will outpace the supply, particularly because prices right now are at a position where they are so low that they are not incentivising enough new mine production to come online,” he says.