Minerals security measures needed to withstand growing demand in critical sectors, report warns

Certain critical infrastructure sectors could be hit especially hard by volatility in the supply of critical minerals, underscoring the need to explore paths to self-sufficiency including reaping the benefits of recycling and recovering byproducts from mining operations, according to The State of Critical Minerals Report 2025 from the Payne Institute for Public Policy at the Colorado School of Mines.

This is the third in a series of annual reports from the institute exploring critical minerals security. The first report focused China’s global dominance of critical minerals supply chains and the resulting strategic vulnerabilities. The 2024 report centered around challenges for the U.S. in sourcing critical minerals, and this year’s report incorporates a big-picture view of current and future demands for critical minerals to satisfy “increased requirements for applications in defense and AI point to considerable growth in demand for a much broader range of materials and supply chains.”

The report also emphasizes that big-ticket investments aren’t always necessary to address the problem of critical minerals security.

“Our work suggests, for example, that U.S. gallium needs could be funded for less than $15 million per year if there was adequate domestic processing capacity,” Payne Institute director Morgan D. Bazilian wrote at the outset of the report. “We also observe that the U.S. could significantly lower copper imports if we recycled copper scrap ourselves vs. sending it overseas.”

The energy sector could face a sharp sting if the availability or affordability of certain minerals wane — risks that can’t always be fully mitigated, forecast or managed.

A shock in the availability of any one of 13 critical minerals could impact the deployment of power generation technologies by 25% or more, the report finds. If the prices of six of these critical minerals see significant hikes, that could reduce the deployment of solar-power generation by 10% or more.

The estimated growth in demand by 2050 for 16 critical minerals used for power generation and battery storage needs exceeds 400%.

In the defense and tech sectors, demand for 10 critical minerals is expected to rise by 135%, on average, in the next 10 years compared to the previous decade; the defense sector could see demand grow by anywhere from 80% to 250%. 

“The basic tools of warcraft (fighter jets, tanks, submarines, and drones) are users of an array of critical minerals and as such the increased budgets point to rising demand for such minerals,” the report states. “A Payne-conducted study of such military equipment yields an expected demand increase of as much as 250% on an annualized basis for vanadium and manganese, ~200% for titanium and copper, and 80-100% for six other critical minerals.” Hafnium, which is used in the turbine alloys in commercial and military jets, “might comprise nearly 30% of the U.S.’s current use.”

AI is particularly driving demand for minerals used in batteries and copper. If the U.S. recycled all scrap copper instead of exporting it — with 40% of our copper scrap exports going to China in 2023 — the need to import copper could be reduced to 14% of U.S. demand and could meet 40% of the country’s total demand, the report says.

Dramatic growth in demand for various critical minerals also fuels black markets and “gray market” activity that may reach into the billions of dollars.

“Amid the ongoing debate over how to securely source critical minerals, not nearly enough attention has been paid to the threats posed by illicit flows, black markets, and covert supply chains,” the report states. Illicit supply chains that have been learning from the current gold trade “may cut off access to critical minerals from current mining operations and stable, politically aligned regions.”

China “is only one actor among many” that could be transporting undeclared “hidden in plain sight” minerals from countries of origin to global hubs. 

“Every mineral supply chain is complex, and with that complexity comes an array of vulnerabilities, links where product can be diverted, concealed, and sold on the black market or re-integrated into legitimate commerce for profit,” the report notes. “…While the world’s attention is on conflict zones rich in critical minerals, comparatively stable regions are being quietly stripped of them.”

Government can support the establishment and growth of formal marketplaces that could “complement government measures including stockpiling and price floors” as well as mitigating “risks associated with bilateral trades.”

Among the routes the report offers to approach self-sufficiency in critical minerals, the report stresses that demand for 27 critical minerals in the U.S. could be met with 10% recovery and processing of byproducts from active mines — ceasing the need for imports. “Critical minerals are almost always byproducts of primary targets of mining, and therefore refining, operations,” the report adds. “Their recovery offers clear benefits of expediency, minimizing the environmental impact or actively reducing environmental impact, and creation of income streams to fund such recovery.” The U.S. could become self-sufficient in 13 additional critical minerals “if up to 50% of these minerals could be recovered from mined resources.”

The report also emphasizes the modest investments that could pay dividends when it comes to meeting U.S. needs.

An estimated 200% of the country’s consumption of gallium, a mineral deemed “highly critical” for defense and high-tech manufacturing, could be met by investing $150 million in one Tennessee processing facility and then purchasing all of their gallium for about $15 million per year, the report notes.

“As governments increasingly seek to secure critical minerals supply, numerous policy solutions are available. These include stockpiling, tax credits, guaranteeing minimum prices, and direct equity investments in mines. The dollar cost of a government commitment level will vary significantly depending on the mineral in question,” the report states, noting that of the 50 critical minerals on the U.S. Geological Survey’s list domestic consumption of “cesium is just a few thousand kilograms, whereas aluminum is millions of metric tons.”

“While, in practice, governments are not the primary buyers of critical minerals, the difference in cost should the government purchase the entire U.S. annual requirement would range from a few million dollars to multiple billions of dollars per year,” the report continues, stressing that “what works for one mineral may not work for others.”