In the 21st century, a quiet but fundamental shift has taken place — one that has radically redefined the very concept of energy security. If in the previous century oil and gas shaped geopolitics, industrial development, and economic stability, today this role is gradually shifting to critical materials: lithium, nickel, cobalt, and rare earth elements. These resources have become the backbone of battery manufacturing, electric vehicles, wind turbines, energy storage systems, and modern defense technologies.
Demand for these materials is not just rising — it is growing exponentially. Over the past decade, global lithium production has more than tripled, while demand for nickel used in batteries has increased sevenfold. This surge is a direct consequence of the global energy transition and the explosive growth of electric transport. And as demand rises, competition among states and corporations for access to deposits, technologies, and production chains intensifies.
If a country’s political weight was once defined by its oil and gas resources, today energy independence increasingly depends on control over critical materials.
What Are Critical Materials and Why Do They Shape Global Energy?
The term “critical materials” is not new, but in the 2020s it has gained strategic meaning. This group includes metals and minerals essential for the functioning of key sectors of the modern economy — from energy and transportation to defense and digital technologies. They share two defining characteristics: high demand and vulnerable supply chains. For this reason, governments, institutions, and industries treat them as a matter of national security.
Critical materials primarily include lithium, nickel, cobalt, and rare earth elements. They have become the “bottleneck” of the technological transition: increasing electric vehicle production, deploying energy storage systems, or scaling renewable energy is impossible without access to these resources. According to international energy agencies, demand for certain critical materials will grow several times by 2035.
Their role is most evident in three sectors:
- Energy storage systems — lithium and nickel are the basis of modern battery technologies.
- Electric mobility — every electric vehicle requires tens of kilograms of critical metals.
- Defense and high-tech industries — rare earth elements are indispensable in engines, optics, guidance systems, and telecommunications.
Competition for critical materials is creating a new balance of power — similar to the one shaped by oil in the 20th century, but now with a far more serious technological dimension. This shift — from energy resources to technology resources — defines today’s logic of energy security.
Lithium: The Backbone of the Global Energy Transition
Lithium has become a key element of modern energy systems because it underpins most battery technologies — from electric vehicles to storage for solar and wind power. It is called “the metal of the energy transition” for a reason: without stable lithium supplies, it is impossible to scale the very technologies that form the low-carbon economy.
Global Distribution of Deposits
The global lithium market is concentrated in a few regions.
The largest reserves lie in the so-called “Lithium Triangle” of Latin America (Chile, Argentina, Bolivia), where salt flats contain high-concentration, easily extractable resources. Australia is the largest producer of hard-rock lithium from spodumene deposits. China dominates processing — hosting more than half of global refining capacity.
This means that even countries with large reserves depend on geopolitics and logistics, as refining remains the bottleneck in the supply chain.
Europe’s Dependency and Its Attempts to Overcome It
The European Union is almost entirely dependent on lithium imports. Demand for batteries in Europe is growing faster than new production capacity can be built. This is why Brussels adopted the Critical Raw Materials Act (CRMA), which for the first time formally defines strategic goals for extraction, processing, and recycling of critical materials within the EU.
Lithium mining projects are emerging in Portugal, Germany, and Finland, but their commercial viability and timelines remain uncertain. At the same time, the recycling and secondary extraction sector is developing rapidly.
Nickel: The Metal of High Energy Density
Nickel is one of the key components of modern battery technology — especially for high-performance electric vehicles. In NMC and NCA batteries, nickel ensures high energy density, meaning the ability to store more energy at the same weight. This increases driving range and reduces battery weight, making nickel a strategic material for “green mobility.”
Nickel’s Role in Battery Production
Nickel’s main advantage is that it boosts battery capacity without significantly increasing mass. For this reason, manufacturers are shifting to high-nickel cathodes (sometimes over 80% Ni). More nickel means a greater driving range.
Demand forecasts for the EV sector are extremely aggressive: by 2030 the industry’s nickel requirements may grow by 60–70%. This is transforming a market where nickel was previously used mostly in metallurgy and stainless steel.
Nickel Geopolitics
A defining trend of recent years is Indonesia’s dominance.
The country controls about half of global output and is actively attracting investment in local refining. Indonesia imposed an export ban on raw nickel, forcing international companies to invest in domestic facilities — especially Chinese producers seeking secure supply chains for their battery manufacturing.
This is reshaping the geopolitical landscape: Indonesia is becoming the global center of nickel production, while Australia, the Philippines, and Canada seek to expand capacity to reduce dependence on Southeast Asia.
Technological and Environmental Challenges of “Clean” Nickel
Despite nickel’s importance, producing battery-grade Class 1 nickel is technologically complex and energy-intensive — particularly via HPAL (high-pressure acid leaching), which demands vast energy use and poses significant environmental risks.
Market volatility adds challenges: after the boom of 2021–2022, oversupply from China and Indonesia caused prices to drop, reducing investment in other regions.
Despite this, the long-term trend is unchanged: the energy transition fuels sustained demand for high-quality nickel, and countries with deposits or processing technologies will enjoy strategic advantages.
Rare Earth Elements: The Invisible Foundation of Modern Technology
Rare earth elements (REEs) — a group of 17 metals — rarely occur in pure form but are vital for high-tech manufacturing. Although rarely discussed publicly, they power electric motors, wind turbines, communication systems, military optics, and navigation technologies. Their influence is so profound that they are often called “critical materials we don’t see, but without which nothing works.”
Where REEs Are Used
The most important application is permanent magnets based on neodymium, dysprosium, and praseodymium. These magnets provide exceptional strength and stability, making them indispensable in:
- electric vehicle motors
- wind turbine generators
- high-precision sensors and optical devices
- power electronics
- aerospace and defense technologies
Most EVs that use magnetic rotors (the majority of models) contain several kilograms of REEs. Large wind turbines require dozens of kilograms. High-tech industries physically cannot function without these materials.
China’s Global Monopoly
The core problem is concentration of control. China dominates nearly the entire supply chain:
- over 60% of mining
- around 85% of processing
- near-complete monopoly on high-quality magnet production
This creates strategic vulnerability for Europe and the U.S. Any trade restriction or political escalation could instantly affect EV, defense, and renewable energy manufacturers.
Even countries with their own deposits often send ore to China for refining, as it has the most scalable and cost-effective infrastructure.
Western Attempts at Diversification
In recent years, Europe and the U.S. have begun building alternative supply chains:
- The U.S. restarted the Mountain Pass mine
- Sweden announced Europe’s largest rare earth deposit
- Canada, Norway, and Australia are launching new projects
- The EU is encouraging domestic magnet and processing facilities
But the biggest challenge is refining — the most technologically complex, chemically sensitive, and capital-intensive step. No Western market currently has a complete industrial cycle comparable to China’s.
Therefore, the near-term focus is on regional partnerships, circular systems, and funding for new processing technologies. Without this, rare earths will continue to strengthen their geopolitical influence.
Conclusion
Lithium, nickel, and rare earth elements have become what oil was in the 20th century: a resource that determines development speed, geopolitical balance, and technological potential. Their role in today’s economy goes far beyond batteries or electric mobility. They are essential for renewable energy, digital infrastructure, defense technology, and industrial innovation.
The competition between nations is no longer for barrels of oil, but for access to strategic raw materials, processing technologies, and the ability to control supply chains. The global economy is shifting from the energy of hydrocarbons to the energy of materials — and this shift will define global security.
For Europe, critical materials are fundamentally a question of technological sovereignty. For Ukraine, they represent an opportunity to strengthen economic resilience and integrate into European value chains, given its promising deposits and strategic location. But the central challenge is the same for everyone: building complete, resilient, and transparent supply chains that minimize dependence on individual countries and political risks.
The transition to a new energy model is inevitable. Its success will be determined not only by innovation or the growth of electric mobility, but by how effectively states and industries secure access to critical materials. Whoever controls these resources controls the future of energy and technology.
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