Supply: hints on the supply chain in 2026

Where are battery raw materials sourced?

Global mine production of cobalt remains heavily concentrated, with the Democratic Republic of Congo (DRC) accounting for roughly 74% of global output (up from 54% in 2016) (USGS, 2026; USGS, 2016), followed by Indonesia at roughly 7% - which has rapidly scaled production via nickel-cobalt High-Pressure Acid Leach operations (a new major strategy compared to 2016) (IEA, 2025) - and smaller shares from Russia, Madagascar, and Australia. Refined cobalt operations remain overwhelmingly dominated by China, which controls over 70% of global processing capacity (up from 46% in 2016) (IEA, 2025).

In contrast, global lithium extraction is primarily driven by Australia at roughly 33% to 40% (up from 29%), Chile, and China, mined predominantly from hard-rock spodumene and brine deposits (USGS, 2026; USGS, 2016). Despite historical fears of severe supply deficits, sharp market price volatility and dynamic capacity expansions coming online have shifted short- to medium-term supply expectations (IEA, 2025). Lithium refining remains heavily centralized in China, Chile, and Argentina, while European nations continue to advance exploration and mining developments across member states - such as France, Portugal, and Finland - to build regional autonomy (European Commission, 2024).

China also maintains dominant control over global natural graphite production, supplying approximately 78% of mined material (up from 70% in 2016) (USGS, 2026; USGS, 2016), with high-grade natural graphite increasingly diverted toward spherical graphite for battery anode manufacturing (IEA, 2025). East African producers in Tanzania and Mozambique, along with Madagascar and Brazil, supply much of the remaining global market, while synthetic graphite remains a widely used substitute despite higher energy costs.

Finally, the supply of mined nickel has become vastly consolidated, with Indonesia single-handedly supplying roughly two-thirds (66%–67%) of global output (INSG, 2025; IEA, 2025), followed by the Philippines, Russia, Canada, and New Caledonia. Downstream refining for battery-grade nickel sulfate is largely driven by Indonesian and Chinese joint ventures (IEA, 2025). For Europe, import reliance on nickel remains high, with regional production and late-stage development projects focused primarily in Finland and Sweden to secure high-purity material for cathode active manufacturing.

More information for each battery raw material, including EU versus global production and the number of new mine development projects, can be found in the raw material profiles.

Where are the supply chain bottlenecks concentrated?

Asia continues to dominate the global lithium-ion value chain - from raw material processing to final cell manufacturing. Other key regional players remain Japan and South Korea for processed active materials and components, alongside South Korea and the United States for lithium-ion cell production. While Europe’s share in cell component manufacturing was historically negligible (<1%), recent domestic investments have expanded its share of global component and processed material output closer to 8% to 10% (IEA, 2025; Blagoeva et al., 2019a).

In greater detail: a critical structural challenge remains Europe’s limited domestic capacity for crucial processed materials, notably synthetic anode materials (e.g. graphite) and advanced cathode active materials (e.g. NMC, LFP chemistries) (CAM) (T&E, 2025; Blagoeva et al., 2019a). While European production of NMC (Nickel Manganese Cobalt) and LFP (Lithium Iron Phosphate) cathode precursor materials has grown, regional output remains insufficient to fully meet fast-growing European downstream demand. Refined materials must subsequently be converted into battery-grade chemical precursor compounds and semi-manufactured active components.

East Asia - led by China, Japan, and South Korea - supplies roughly 80% to 85% of processed materials and components globally, with China alone providing over 70% to 80% of refined battery-grade chemicals and cathode/anode active capacity (up from 48% in 2016) (IEA, 2025; Benchmark Mineral Intelligence, 2025). Europe holds a modest 7% to 10% market share of processed components, while other nations account for the remaining volume, leaving narrow room for short-term supply diversification. Europe continues to face strong import dependencies for processed battery-grade natural and synthetic graphite anodes, high-nickel cathode formulations, and specialized separator membranes.

Regarding cell manufacturing, China remains the global leader, covering over 80% of global capacity (up from 66% in 2016) (IEA, 2025; Meta-Markt-Monitoring, 2025). North America (driven by US IRA incentives) and South Korea maintain major operational shares. Europe’s operational cell manufacturing capacity has expanded substantially from its historical baseline (0.2% in 2016) to roughly 7% to 10% of global cell output (IEA, 2025; European Commission, 2025).

How do battery raw materials prices affect global future supply?

The key investment factor for future mine development projects is a stable price level. This is needed for financial planning and stability in order to commercially realise intended production projects. Mining projects are intrinsically financially risky, and downward price risks significantly reduce incentives to develop the necessary future capacity.

As an example, cobalt has been historically subject to high price volatility. Cobalt prices became considerably volatile since the late 1970s, influenced by events ranging from de-stocking and geopolitical unrest in the Democratic Republic of the Congo (DRC) to recession and concerns over future supply (at the time closely related to the production of permanent magnets, not batteries). Since 2000, demand rose gradually due to rechargeable batteries in electronics, while price spikes in 2002–2004 and 2006–2008 reflected supply tightness combined with rapid Chinese economic growth. Following a steep decline during the 2008–2009 global economic crisis, market projections around accelerated adoption of electric vehicles (EVs) drove cobalt prices from USD 22,000 per tonne in 2016 to over USD 90,000 per tonne in 2018. A subsequent influx of cobalt hydroxide from the DRC caused prices to plunge back down to USD 30,000 per tonne by 2019. More recently, after peaking again near USD 80,000 per tonne in 2022, cobalt prices experienced a deep contraction through 2023–2024 (dropping below USD 30,000/tonne) due to surging Indonesian High-Pressure Acid Leach output and DRC supply expansion, before seeing partial price rebounds and geopolitical policy interventions (such as export controls) (IEA, 2026; Cobalt CRM factsheet 2020).

More recently, lithium prices rose significantly from mid-2015 onwards, reflecting dynamic EV market growth. Global average prices for lithium carbonate nearly quadrupled from USD 5,200 per tonne in late 2014 to USD 18,900 per tonne in 2018, before declining to USD 10,300 per tonne in 2019 due to rapid supply additions. The market subsequently entered an unprecedented volatility cycle: lithium prices surged to historical records above USD 70,000–80,000 per tonne in late 2022 due to extreme supply tightness, before undergoing a sharp 75% price correction across 2023–2024 as massive mining and brine capacity came online. By 2025–2026, prices have stabilized into a more mature, cost-reflective range (around USD 12,000–18,000 per tonne) driven by surging energy storage system (ESS) demand and steady EV adoption (IEA, 2026; Benchmark Mineral Intelligence, 2025; S&P Global Market Intelligence, 2019b).

Technically speaking, battery chemistry trends show dynamic shifts: while high-nickel chemistries drove a strong preference for lithium hydroxide over lithium carbonate in the late 2010s and early 2020s, the rapid global expansion of Lithium Iron Phosphate (LFP) chemistries has re-anchored strong long-term demand for lithium carbonate (IEA, 2026).

The industry must continue to deliver supply growth to fuel the wave of global electric vehicle and energy storage expansion. However, prolonged periods of low spot prices reduce capital expenditure, leading to deferred investment decisions that risk triggering future supply deficits and price spikes. Sustained, functioning economics are essential to ensure the pipeline of projects comes online in time.[1]

Footnotes