Background

Critical minerals are increasingly important for energy systems, strategic industries and economic security. The report highlights growing concentration risks across mineral supply chains, particularly in refining, where the top three countries accounted for 86% of refining activity in 2024, up from 82% in 2020. China held an average 70% share across 19 of 20 strategic minerals. Export controls introduced in 2025 exposed vulnerabilities in automotive, defence and clean energy supply chains.

Traceability refers to tracking mineral origin, movement, custody and transformation through the supply chain. Systems can also include environmental, labour and quality data. The report states traceability supports supply diversification, compliance with sourcing rules and development of standards-based markets for responsibly produced minerals.

Industry perspectives on traceability practices

The IEA and OECD surveyed 82 companies across mining, refining, manufacturing and end-use industries. Around 69% reported operating some form of traceability system, although only 30% had full coverage across their operations. Adoption was strongest in cobalt supply chains due to longstanding human rights scrutiny, while lithium and nickel showed strong uptake among upstream operators.

Most companies collected country-of-origin information, but fewer gathered environmental or corporate transparency data. Traceability coverage often weakened beyond direct suppliers, highlighting ongoing difficulties extending visibility across multiple supply chain tiers.

Mass balance systems were the most commonly used model, reflecting widespread blending and aggregation during processing. Companies identified brand reputation, customer demand and regulatory compliance as the main drivers of adoption. More than 40% cited compliance obligations, while only one-quarter reported receiving price premiums for traceable or sustainably produced materials.

Use of traceability as a policy instrument: State of play

Producing countries primarily use traceability to reduce illegal mining, strengthen oversight and improve domestic value capture. China, Indonesia, Colombia and Zambia implemented systems linking production, shipment and royalty data through centralised digital platforms. Indonesia’s SIMBARA system reportedly prevented around USD 200 million in unpaid taxes and royalties.

Consuming economies focus on diversification and responsible sourcing. The European Union Batteries Regulation introduced digital product passports and due diligence requirements for battery minerals. The United States implemented provenance requirements for permanent magnets and restrictions linked to foreign entities of concern.

The report notes traceability systems increasingly support compliance with environmental and labour regulations while helping governments identify supply chain vulnerabilities and strategic dependencies.

Challenges and barriers to adoption

Implementation costs were identified as the largest barrier, with 56% of surveyed companies citing costs among their top challenges. Companies also highlighted poor interoperability between systems, limited supplier leverage and commercial confidentiality concerns.

Fragmented digital infrastructure and inconsistent reporting standards reduced data reliability and comparability. Midstream operators faced particular challenges due to blending and aggregation during refining. Data coverage declined significantly beyond tier-one suppliers.

Complex and geographically concentrated supply chains further constrained implementation. The report notes lithium supply chains may be easier to trace due to lower concentration, fewer operators and reduced artisanal mining involvement compared with cobalt or rare earths.

Opportunities to enhance traceability for energy and economic security

The report recommends stronger incentives for traceability through procurement requirements, regulatory measures and financial support. Governments could reduce implementation costs through grants, tax incentives and technical assistance.

International co-operation is identified as critical to harmonise standards, improve interoperability and strengthen trust in shared data. Recommended core data fields include origin, chain of custody, geographical path and environmental indicators such as emissions and water usage.

The report also recommends a phased approach focusing initially on less complex supply chains, particularly lithium, before expanding to more challenging minerals and broader sustainability metrics.