The global shift to low-carbon energy is mineral-intensive. Lithium, copper, nickel, cobalt, graphite and rare earth elements are essential for batteries, renewable power and advanced manufacturing.
For developing countries, these critical energy transition minerals offer a pathway to structural transformation but also risk reinforcing dependence on extracting and exporting commodities.
This report shows that market forces alone will not deliver inclusive outcomes for mineral-rich developing countries. Given the high concentration of production and processing, along with growing geopolitical and environmental pressures, countries need integrated industrial policies embedded in broader diversification strategies.
Production is highly concentrated and vulnerable
Global production is dominated by a few countries. For example, in 2024:
- Cobalt: The Democratic Republic of the Congo supplied nearly three-quarters of global output.
- Nickel: In 2024, Indonesia and the Philippines accounted for more than two-thirds of global nickel production.
- Lithium: Australia and Chile together represented over half of global lithium production.
- Rare earth elements: China dominated global production and processing.
This concentration creates supply risks and reinforces unequal power relations in global value chains. The report includes a special focus on lithium and rare earth elements.
Lithium reserves, central to rechargeable batteries for electric vehicles and stationary storage, are largely located in the “lithium triangle” of Chile, Argentina and Bolivia and in Australia. However, refining is highly concentrated in China, underscoring that industrial capability – not geology alone – shapes positions in the battery value chain.
Rare earth elements, essential for electric motors, wind turbines, advanced electronics and defence systems, have an even more concentrated supply chain. China accounts for roughly 70 % of global mining output and more than 85 % of refining and separation capacity.
The report calls for more diversified, transparent and resilient supply chains, supported by international cooperation and harmonized standards.
The real value lies beyond extraction
Participation in critical mineral value chains is uneven. Processing and refining capture a disproportionate share of value added.
In 2022, refined lithium, graphite, nickel and cobalt commanded prices three to four times higher than their raw forms. For example, refined cobalt averaged $20.8 per kg compared with $6.6 per kg for raw material. Similar price gaps exist across other minerals.
Evidence shows that countries that move beyond primary extraction into refining and downstream processing achieve higher manufacturing value added, stronger links between economic sectors and greater resilience to commodity price volatility. Capturing these benefits requires investment in processing capacity, skills development, technology transfer and infrastructure.
Industrial policy must drive diversification
The report highlights that industrial policy is essential. Drawing on case studies from Latin America and Africa, the report identifies converging policy priorities:
- Securing and expanding production
- Promoting domestic value addition
- Ensuring environmental sustainability and social inclusion
In Latin America, countries such as Brazil, Chile and Argentina have adopted different governance models but share the objective of linking mining to broader industrial development.
In Africa, through UNCTAD’s rapid assessment project for value addition and diversification, local stakeholders in Zambia identified procurement policies, standards enforcement and skills development as practical measures to strengthen links between mining and domestic manufacturing, and to reinforce the links between extractive activities and the wider economy. In Namibia, stakeholders identified training centres, industrial infrastructure and support for small and medium-sized enterprises as essential to stimulate domestic production and regional trade.
Across regions, the key challenge is translating resource endowment into long-term structural transformation rather than enclave-type extraction.
Governance and regional cooperation are critical
Without strong safeguards, mineral booms risk reinforcing extractive patterns and environmental damage. The report calls for integrated governance frameworks that embed sustainability, transparency and community participation across the value chain.
Key recommendations include:
- Strengthening domestic value-chain development and diversification
- Building strategic partnerships while preserving policy space
- Ensuring coherence across fiscal, trade, industrial and environmental policies
- Advancing regional cooperation on standards, infrastructure and market access
The report highlights that the choices made today will determine whether critical minerals become a catalyst for economic transformation or reinforce patterns of commodity dependence.