Battery-metal prices can rise while investment in them falls

themePublished 19 October 20262 min readcommodities, equities

Key points

• The IEA says lithium prices more than doubled on energy-storage demand and constrained supply, and cobalt prices rose by around 130 percent, largely because of export restrictions in the Democratic Republic of the Congo.
• Battery-metal capital spending fell by more than 20 percent in 2025, and lithium companies cut investment by around 40 percent.
• Critical minerals are around a quarter of battery-cell costs and about 3 percent of an average electric vehicle's price, on the IEA's figures.

What is going on

The summary places the price rebound in 2025 and early 2026, after declines in 2023 and 2024. Lithium more than doubled. Cobalt rose by around 130 percent, tied largely to the Congo's export restrictions, and the summary says a projected cobalt supply gap has emerged because of a new export quota. Battery metals saw the sharpest investment pullback, with capital spending down more than 20 percent, the largest decline in over a decade on the IEA's account, and lithium investment down around 40 percent. Exploration spending on lithium and nickel fell by around 45 percent. These are 2025 outcomes in the report, not forecasts.

Why it matters

A higher spot price helps the miner who is already producing and hurts the cell maker who buys the chemical, until the cell maker passes it on. The IEA says critical minerals are around one-quarter of cell costs but only about 3 percent of an average electric vehicle's price, and that a tripling of battery-material prices would raise the final price of electric vehicles and storage systems by around 5 percent. A tripling that is small in the car can be large in the cell. The firm in the middle can be squeezed while the car buyer barely notices. Overcapacity is a separate risk the summary approaches through investment cuts and through recycling concentration, not through a single utilisation rate this note is willing to type.

What to watch

The bullish metal reading weakens if new supply, or the Congo's policy, reverses the price and the cut in investment has already reduced the industry's ability to meet the next shortage. The bullish manufacturing reading weakens if cell prices fall faster than input costs. Recycling matters at the margin: China holds over three-quarters of pre-treatment capacity and 90 percent of recovery capacity, so 'recycling will loosen the market' is itself a concentrated statement.

Risks

Export quotas can be relaxed. Prices that more than doubled can more than halve, which is what the prior downturn already demonstrated in the IEA's narrative of 2023 and 2024. A 40 percent cut in lithium investment can starve a later cycle or prevent a wasteful one. This note does not know which, and it does not publish a lithium price in dollars.

Demand is not a margin

Storage and vehicles can both want the same chemicals. That raises demand. Margins depend on who has the scarce step that year: the mine, the conversion plant, the cell factory or the brand that sells the car. The IEA's cost shares are the tool for seeing that the pain is not spread evenly. They are not a forecast of the next price.