A sharp drop in mineral prices critical for green energy production is masking a looming shortage due to inadequate investment, the International Energy Agency (IEA) said on Friday. 

In its first review of the market for critical materials, the IEA pointed to the prices of key minerals used in the production of electric vehicles, wind turbines, and solar panels, saying that the prices fell back to pre-pandemic levels as supplies surpassed demand.

The Paris-based agency said it is concerned that the price drops will deter investment needed to meet the demands of the green energy transition. Demand is expected to take a sharp rise, as many governments work on phasing out internal combustion engines in favor of electric vehicles in the next decade.

As such, the IEA says that announced projects, concerned with the sourcing and production of minerals and metals, will only be able to meet 70% of copper and 50% of lithium requirements in 2035. The IEA based its estimates on a scenario in which all countries would meet their national climate goals for 2035.

"The world’s appetite for technologies such as solar panels, electric cars, and batteries is growing fast – but we cannot satisfy it without reliable and expanding supplies of critical minerals," IEA Executive Director Fatih Birol said in a statement.

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China leads world's green energy transition 

To the disappointment of the United States-led Western world order, China leads the world's supplies of critical minerals, as its stockpiles include aluminum, antimony, cadmium, cobalt, copper, gallium, germanium, indium, molybdenum, rare earth elements, tantalum, tin, tungsten, zinc, and zirconium, all of which are essential in high-tech and green products. 

As detailed by the IEA, investment in "diversifying" the supply chain of minerals has been inadequate, with most of the world's supplies of essential minerals coming from China. The lack of investment has essentially tied the continuity of supplies to China-West relations, specifically China-US relations. In recent times, these relations have been shaky, putting supplies of critical minerals at risk of disruption. 

Earlier, the US State Department said that it is extremely important not to replace the era of dependence on Russian fossil fuels with one depending on Chinese critical minerals.

Read more: America's military highly dependent on China-controlled minerals

First Russia, now China: US works to maintain financial monopoly

In other words, the US implicitly warned European leaders against replacing Russian energy that ran its industries for several decades, with Chinese minerals.

At a conference hosted by CSIS, Assistant Secretary of State for Energy Resources Geoffrey Pyatt shed light on the "critical importance of continuing to work on the diversification of energy supplies," emphasizing that "in particular, we need to make sure that we don't replace an era of dependence on Russian fossil fuels with dependence on critical minerals and critical mineral processing in the People's Republic of China."

Pyatt claimed that China has an "overwhelming monopoly" over solar energy supply chains, stressing that the US should stop this from happening in emerging energy sectors like clean hydrogen, wind power, and electric vehicles. 

He moved on to label the EU as "an essential partner in this effort," as European countries are also aiming for a clean energy transition with billions of dollars of investment flowing both ways across the Atlantic. 

Read more: China leads global green energy transition, but not without challenges