Trade concentrations and bottlenecks exist in global critical mineral supply chains, with countries like China supplying roughly a quarter of global processed mineral demand in 2023. This is a potential risk for ASEAN's push-towards higher value-added activities, with GVC integration remaining skewed towards backward participation and foreign value-added accounting for almost two-thirds of GVC participation. Governments, seeking to increase downstream value-addition, have responded with a marked intensification of trade measures: export restrictions on industrial raw materials increased more than fivefold between 2009 and 2023 while investment conditions have tightened in parallel.
Critical minerals in Southeast Asia and India
A regional overview
Trade data illustrate the imbalance, supporting the need for secure and resilient supply chains. China dominates global exports of critical minerals, especially processed materials and battery packs: in 2023, China supplied USD 66.3 billion worth of battery packs and roughly a quarter of global processed mineral demand (Figure 2).
Korea, Japan and the EU hold market niches in battery materials and battery packs, while Australia contributes upstream raw minerals such as lithium, graphite and cobalt. Nevertheless, their output remains far smaller than China’s. Overall, most Indo-Pacific economies remain heavily reliant on Chinese exports.
(Million USD)
Note: Raw Minerals = Lithium (Lithium ores and concentrates, and Lithium carbonates), Graphite (Graphite flakes and raw materials for manufacturing artificial graphite), Cobalt (Cobalt ores and concentrates). Processed Minerals = Lithium processed and/or refined raw material, Cobalt processed and/or refined raw material, Artificial graphite. Battery Materials = Lithium cathode materials, Cobalt cathode materials, Graphite cathode materials. Battery Packs = Cell component of batteries and battery pack.
Source: Author's calculations based on data from (World Bank, n.d.[15]).
The electric vehicle (EV) sector well exemplifies this dependency and represents a good example to understand the steps involved in the critical minerals supply chain. While production bases are distributed across Asia, Europe and the US, critical components are still sourced primarily from China.
Imports of critical minerals and EVs reveal even greater vulnerabilities and dependencies in the supply chains of several important economies, highlighting the risks for economies pursuing energy transition and carbon reduction strategies. Such concentration is neither economically sustainable nor strategically viable.
(Million USD)
Note: Raw Minerals= Lithium (Lithium ores and concentrates, and Lithium carbonates), Graphite (Graphite flakes and raw materials for manufacturing artificial graphite), Cobalt (Cobalt ores and concentrates). Processed Minerals= Lithium processed and/or refined raw material, Cobalt processed and/or refined raw material, Artificial graphite. Battery Materials= Lithium cathode materials, Cobalt cathode materials, Graphite cathode materials. Battery Packs= Cell component of batteries and battery pack.
Source: Author's calculations based on data from (World Bank, n.d.[15]).
Growing concentration and strategic dependencies in critical mineral supply chains are prompting governments to take a more active role in managing access to these resources. While state involvement in the minerals sector is not new, historically encompassing regulation, state ownership, subsidies and trade measures, recent years have seen a marked intensification of such interventions. According to the OECD Inventory on Export Restrictions on Industrial Raw Materials (OECD, 2025[21]), the use of export restrictions has surged over the past decade, reflecting governments’ efforts to secure domestic supply, capture more value-added activities and strengthen industrial competitiveness.
Between 2009 and 2023, the number of export restrictions on industrial raw materials increased more than fivefold, with a sharp acceleration in 2023, when the growth rate more than doubled compared to 2022 (OECD, 2025[21]). This trend has significant implications for global markets: during 2021–2023, more than 20% of global exports of critical minerals, including cobalt, rare earth elements, tin, palladium, platinum, nickel, copper, iron and steel, manganese, silver and other precious metal ores, were subject to at least one export restriction. The shares are considerably higher for certain minerals, reaching 67% for cobalt and 46% for REEs. For cobalt and nickel, the share of trade affected by export restrictions has nearly doubled compared to 2009–2011 (OECD, 2025[21]).
Export restrictions are particularly concentrated among a handful of key suppliers. China, India, Viet Nam, Argentina and Burundi were the five countries introducing the highest number of new measures between 2009 and 2023, together accounting for over half of all new restrictions in this period (OECD, 2025[21]). Export taxes and licensing requirements remain the most commonly used instruments, partly because they are permitted under WTO rules, unlike quantitative restrictions such as quotas or export bans. However, even these highly restrictive tools are being deployed more frequently: the incidence of export prohibitions has risen significantly since 2019 and, notably, they were the most frequently introduced type of measure in 2022 and the second most frequent in 2023 (Figure 4) (OECD, 2025[21]).
Source: (OECD, 2025[21]).
Overall, restrictions tend to be most prevalent at the upstream stages of the supply chain, affecting ores and concentrates, where production is already highly concentrated. This pattern is broadly consistent with the strategic objective of supporting domestic downstream industries by limiting the export of raw materials (OECD, 2025[22]). As governments aim to foster domestic refining, processing and clean-technology manufacturing, restricting upstream exports is increasingly seen as a lever to stimulate local value addition (see Section III, IV and Box 4.1).
FDI patterns further highlight the fragility of supply chains. Global FDI fell by 11% in 2024, from USD 1.67 trillion to USD 1.49 trillion, and FDI flows into India have seen a moderate slowdown since 2020 (Figure 5, Figure 6). This reflects persistent uncertainty in international investment flows.
Note: USD at current prices in millions, FDI= foreign direct investment.
Source: (UNCTAD, n.d.[23])
Note: USD at current prices in millions, FDI= foreign direct investment.
Source: (ASEANStats, n.d.[1])
Sectoral data show a stark divergence (UNCTAD, 2025[24]):
Greenfield project announcements in industrial sectors rose by 3% in number but fell by 5% in value.
The ICT sector was one of the few to record significant gains.
In contrast, the energy sector and extractive industries recorded sharp declines – the value of greenfield investment in extractives fell by nearly half, to about USD 40 billion, underlining the mismatch between climate targets and the need to secure and diversify critical mineral supply chains.
Semiconductors were an exception within GVC-intensive industries, with investment in new projects increasing year-on-year, reflecting the strategic realignment of global production networks.
The slowdown in extractive and mineral-related investments is partly linked to lower commodity prices, increased price volatility, and heightened scrutiny of mining projects. Large scale mining projects in Indonesia, for instance, had their permits revoked due to environmental backlash which will have a significant impact on investment risk. International project finance for mining and critical minerals also contracted sharply, highlighting tightening financing conditions and a more selective approach by sponsors and lenders (UNCTAD, 2025[24]).
ASEAN has become a magnet for strategic investment, with investment trends shaped by two converging forces: diversification strategies by global firms seeking alternative production hubs, and a rapid surge in Chinese capital deepening existing dependencies. Global power rivalries and trade restrictions in key sectors such as EVs, semiconductors and critical minerals have amplified both dynamics, encouraging investors to view ASEAN as a relatively neutral production base. This dual dynamic highlights ASEAN’s attractiveness as an investment destination, but also underscores its growing exposure to Chinese capital and the structural challenge of achieving genuine supply chain diversification. To mitigate concentration risks, ASEAN economies will need to broaden their investment base and strengthen sustainability and governance standards that attract responsible, high-quality FDI.
Developing Asia’s strength lies in its strong integration in global value chains, underpinned by strong infrastructure connectivity and supply chain efficiency. Structurally, ASEAN’s integration is skewed towards backward participation – importing foreign inputs, which are embedded into its exports. The share of foreign value added in gross exports accounts for almost two-thirds of ASEAN participation in GVCs, stressing its global upstream position as final exporter.
The nature of bilateral integration has changed over time, with ASEAN increasingly accounting for a larger participation of Chinese inputs in ASEAN exports. At the same time, trade with the EU remains mostly upstream with less foreign value added in gross exports (OECD, 2025[25]). This difference highlights a need in ASEAN to monitor trends supply chain dependencies and potentially intensify efforts to diversify supply chain partners.
South and Southeast Asia’s pursuit of diversified, resilient and trustworthy supply chains extends into the supply chains for critical minerals too. The circularity among the elements of demand and supply, and those of security, sustainability and our responsibility towards environment protection has been taken on board by most countries in the Indo-Pacific region. Ensuring secure and sustainable supply chains for critical minerals is considered to be the litmus test of broader infrastructure and investment plans that are being put in place to build resilient supply chains. In the emerging geopolitical context, inter-dependence for critical minerals among trusted partners, who are also committed to sustainable growth and environmental governance rules, is seen as the way forward.