The Socio-Political Effects of Rising Demand for Raw Materials Used in Battery Production

Introduction

Rising demand for battery raw materials is not merely a story about technology and climate. It is also a story about water, land, employment, public revenues, the rights of local communities, industrial policy, and the geopolitics of trade. In practice, the battery supply chain is becoming increasingly geographically concentrated: according to the IEA, the share of the three largest countries in the mining of key energy minerals rose to 77% in 2024, and in refining to 86%. At the same time, demand is not growing evenly across all metals, because battery chemistry itself is changing: LFP already accounts for nearly half of the global electric vehicle battery market, reducing the relative importance of nickel and cobalt compared with the earlier model based mainly on NMC cathodes. This means that local social and political effects will depend not only on the global number of EVs sold, but also on which battery chemistries are gaining market share, where processing is located, and what strategy resource-rich states adopt. (IEA)

From a socio-political perspective, three questions are most important today. First, which countries and locations actually supply the basic minerals needed for batteries. Second, whether rising demand translates there into lasting local development, or rather into enclave economies in which fiscal and export benefits grow faster than the quality of life of surrounding communities. Third, whether resource-rich states gain real political agency, or remain mainly suppliers of unprocessed raw materials while continuing to depend on external capital, technology, and refining capacity. The answer is not uniform: Australia and, to some extent, Chile are trying to build more orderly models of benefit-sharing; Indonesia and Gabon are pursuing industrialization policies and bans on exports of raw material; the Democratic Republic of the Congo is struggling with a combination of large resource rents and weak institutions; and China remains the most important processing hub in the entire system. (Industry.gov.au)

The Geography of Battery Raw Material Origins

The most important raw materials today for lithium-ion batteries are lithium, cobalt, nickel, natural graphite, manganese, and copper. The extraction and refining of these materials are spatially separated: some countries dominate at the mine level, others in chemical conversion into battery materials. This separation lies at the heart of current geopolitical tension, because consumer countries are trying to diversify extraction while still remaining heavily dependent on a limited number of processing locations, above all in China and, in the case of nickel, increasingly also in Indonesia. (IEA)

Production data based on USGS Mineral Commodity Summaries 2025; the role of refining and market concentration based on IEA. (U.S. Geological Survey)

Australia: a stable pillar of lithium, but highly exposed to price cycles

Australia remains the world’s leading lithium producer and supplied around 88 thousand tons of lithium in 2024, clearly more than the next producers. Socio-politically, this means a different model from that seen in many Global South countries: the benefits of mining are embedded in relatively strong institutions, a predictable licensing system, and a large share of formal employment and fiscal revenues. The federal government treats critical minerals as a tool of industrial policy and economic security, and the national strategy assumes not only exports of concentrate, but also the development of processing and a stronger embedding of Australia in the supply chains of allied states. From a geopolitical perspective, Australia is therefore a classic example of “friendly supply” for the United States, the EU, Japan, and South Korea. (U.S. Geological Survey)

At the same time, rising demand does not translate linearly into local prosperity, because Australia’s lithium sector is highly vulnerable to price collapses. In 2024, low lithium and nickel prices led to job cuts and reduced activity in Western Australia, and Reuters analysts assessed that Australia might bear the greatest burden of further supply cuts, because its hard-rock production is often costlier than South American brine deposits. This means that local communities in mining regions do receive jobs, contracts, and local government revenues, but they are also particularly exposed to the classic boom-and-bust effect. In practice, rising global demand strengthens Australia’s strategic position, but does not eliminate the problem of local employment instability or the pressure to move from a “mine plus export” model toward one with a larger share of local processing. (Reuters)

Chile: lithium, water, and negotiating a new social contract

Chile remains one of the main lithium producers, and its significance goes beyond the sheer scale of extraction, because Salar de Atacama has become a symbol of tension between the global energy transition and local rights to water and territorial control. Extraction from brines is less energy-intensive than some hard-rock production, but it generates enduring disputes over water balances in desert and high-altitude areas. Scientific reviews of lithium from brines indicate that the main axes of conflict are water use, impacts on fragile ecosystems, and the position of Indigenous communities, which demand not only compensation, but also real co-decision-making power. Rising demand in Chile will therefore strengthen not only export revenues and the state’s position, but also pressure for more transparent and participatory forms of resource governance. (U.S. Geological Survey)

Chile has responded to this pressure with a strategy of a stronger state role. The plan to increase public control over the lithium sector, followed by the Codelco–SQM agreement, shows that the Chilean authorities want to retain a larger share of resource rents and link the sector’s development more closely to the national interest. At the same time, Reuters noted that projects in new salars will in some cases require the consent of local Indigenous communities, while Atacama communities themselves are demanding greater influence over the pace and form of further expansion. Socio-politically, Chile is thus moving from a liberal model toward a negotiated state–society model of resource governance. Geopolitically, this is a strong position: Chile can balance the interests of Western and Asian partners, but it must also maintain the internal legitimacy of mining projects, because without that, any increase in extraction capacity will carry the risk of social resistance. (Reuters)

Argentina: rapid growth, greater investment openness, and intensifying disputes over social consent

Argentina is developing its lithium sector faster today than Bolivia and in a less centralized way than Chile. Its model is based on greater openness to foreign investors, the provincial dimension of decision-making, and the relatively faster launch of projects in Jujuy, Salta, and Catamarca. In practice, rising demand means an inflow of capital to northwestern Argentina, growing export revenues, and the development of technical infrastructure, which is clearly visible in projects such as Mariana, carried out by Ganfeng. At the same time, the sector is counting on DLE technologies, promoted as faster and potentially less water-intensive than conventional evaporation, which is expected to improve the social reception of projects and shorten time to market. (U.S. Geological Survey)

This model, however, has clear social limits. In March 2024, a court in Catamarca halted the issuance of new permits in the Hombre Muerto area following a complaint by the Atacameños community, which pointed to insufficient consultation and environmental risks related to water use. This means that rising demand in Argentina will not lead only to an investment boom, but also to growing importance of local procedural conflicts: who has the right to be consulted on a project, what hydrological data are sufficient, and what share of value remains in the provinces. Geopolitically, Argentina is becoming an arena of competition among multiple sources of capital—Chinese, North American, Australian, and European—which increases the authorities’ room for maneuver, but also risks creating a model of rapid extraction with a relatively weaker capacity to enforce long-term social standards. (Reuters)

Bolivia: vast reserves, limited production, and highly politicized lithium

Bolivia is a special case because it holds some of the world’s largest lithium reserves, but for years has failed to translate them into a comparable scale of commercial production. This means that rising global demand does not yet produce a straightforward economic effect there, but primarily raises the political stakes in the dispute over the development model. In the Bolivian case, the center of conflict is the question of whether lithium should be developed in a strongly state-led model or in a formula more open to foreign and private capital. Reuters has reported both multibillion-dollar agreements with Chinese and Russian consortia and strong opposition from parts of parliament and actors from Potosí, who question the terms of the contracts, guarantees of profits for the country, and the transparency of the process. (U.S. Geological Survey)

Rising demand in Bolivia will therefore most likely strengthen above all conflicts over resource sovereignty, rather than automatically improving the situation of local communities. The country potentially has enormous bargaining power, but its effective use depends on the ability to reconcile three goals at once: attracting technology, maintaining political legitimacy, and convincing producing regions that they will not serve merely as a base for central redistribution. Geopolitically, Bolivia remains a field of rivalry among states and firms seeking access to its resources, but internal political instability and the high degree of politicization of contracts continue to limit its real ability to quickly join the first tier of suppliers. (Reuters)

Democratic Republic of the Congo: the global center of cobalt and a classic case of developmental risk

The Democratic Republic of the Congo remains the most important point in the entire cobalt supply chain. According to the USGS, the country accounted for around 220 thousand tons of production in 2024, or about 76% of world mine supply. For the local and national economy, this means enormous fiscal, export, and investment potential, especially since the Congolese Copperbelt combines cobalt with copper, two metals that are critical to electromobility. Rising demand therefore strengthens the DRC’s position as a state that can influence the balance of global supply and prices. The problem, however, is that high geological concentration does not automatically mean high institutional quality or broadly shared social benefits. (U.S. Geological Survey)

The greatest social tension concerns the coexistence of industrial and artisanal mining. The OECD points out that in the DRC, these two worlds are more interconnected than simplified narratives about “clean” industry and “dirty” ASM often assume. In its 2024 findings, the U.S. Department of Labor assessed that the country had made only minimal progress in combating the worst forms of child labor, while the ILO emphasized that more than 100 thousand miners work in the ASM sector, under conditions carrying high risks for safety and ethical compliance. This means that rising demand can increase employment and revenues, but without stronger oversight it can just as easily entrench informality, exploitation, and health costs shifted onto local communities. (OECD)

Geopolitically, the DRC stands at the center of a complex game between resource nationalism and dependence on external operators and processors. China is the dominant player in cobalt refining and is also strongly present on the ownership and trading side, which limits the Congolese state’s full autonomy despite its geological advantage. At the same time, in 2025 the DRC showed that it can use state tools to manage supply, suspending cobalt exports and later moving to a quota system. Such a policy increases the state’s bargaining power, but at the same time raises risks for buyers and encourages the United States, the EU, Japan, and India to seek greater diversification and stronger traceability systems. For local communities, however, the key problem remains the same: merely raising the country’s geopolitical weight does not yet guarantee better working conditions, greater safety, or a fairer share in the benefits of extraction. (IEA)

Indonesia: a model of resource industrialization with large-scale local costs

Indonesia has become the central case for nickel and, indirectly, also for part of cobalt supply. The USGS estimates that in 2024 the country produced around 2.2 million tons of nickel, far more than other producers, while its cobalt output as a by-product reached about 28 thousand tons. Rising demand for batteries has brought Indonesia clear macroeconomic benefits: after the ban on exports of unprocessed ore, the sector developed very rapidly, attracting multibillion-dollar investments in smelters, stainless steel, precursors, and battery semi-finished products. A 2024 study describes how the growth rate of the nickel belt was more than three times the national average, while exports and state revenues rose sharply. Politically, this is a textbook example of resource nationalism combined with active industrialization policy. (U.S. Geological Survey)

These benefits, however, are not socially neutral. An analysis covering 7,721 villages in Sulawesi showed that deforestation in nickel-producing localities nearly doubled, and although some indicators—such as infrastructure, health, and certain elements of social relations—improved, overall environmental well-being clearly deteriorated, especially in poorer villages and at later stages of mine development. This means that the Indonesian model is not a simple development success story, but rather a model of rapid growth in which some economic benefits go hand in hand with rising environmental costs and the risk that local populations remain mainly providers of labor and land rather than full beneficiaries of the new industry. The literature offers an apt term here: “nationalist enclaves.” The sector creates new islands of growth, but does not necessarily build balanced regional development. (ScienceDirect)

Geopolitically, Indonesia is now one of the most important arenas of competition among American, European, and Chinese strategies. Chinese capital and technology largely built Indonesia’s nickel boom, but the same ownership profile has become a problem for access to some Western support instruments, including certain benefits linked to the U.S. EV market. Reuters reported that Chinese firms were seeking ways to reduce their stakes in new smelters precisely so that their products could better qualify for Western preferences. In practice, this means that rising demand for nickel can bring Indonesia greater political power, but only if the country maintains a balance between the desire for local industrialization, access to Western markets, and management of the social costs of industrial expansion. (Reuters)

New Caledonia: nickel as both a resource and an axis of identity conflict

New Caledonia is not the world’s largest nickel producer, but it is a place where the economy’s dependence on nickel is directly intertwined with political conflict and the question of the territory’s future status. The USGS estimates that nickel production in New Caledonia fell by about 52% in 2024, while Reuters described how riots and political crisis brought the sector almost to a standstill. Under normal conditions, rising demand for nickel could support employment, territorial revenues, and the geopolitical importance of the archipelago, but in practice every market signal is filtered through the dispute between loyalists and the Kanak independence movement. As a result, the future of the sector depends not only on metal prices, but also on the resolution of who has the political right to decide over the resource and who bears the costs of its exploitation. (U.S. Geological Survey)

The socio-political lesson of New Caledonia is important more broadly. It shows that in regions where a mineral resource coexists with an unresolved constitutional or colonial conflict, higher demand can act as a destabilizing force rather than a stabilizing one. Nickel raises the economic importance of the territory, but at the same time increases the stakes in disputes over representation, revenue-sharing, and the development model. This is why New Caledonia is now an important reminder that geology alone does not create supply security; supply security also requires a stable political order and social legitimacy for exploitation. (Reuters)

China: not so much the world’s mine as its main refinery and strategic hub

In the socio-political analysis of battery raw materials, China should be treated differently from most producing states. While it dominates in extraction only for some raw materials—for example natural graphite, where the USGS estimates production at around 1.27 million tons in 2024—it is the key hub of the entire system in processing. The IEA expects that in 2035 China will still supply more than 60% of refined lithium and cobalt, as well as about 80% of battery-grade graphite and rare earth metals. Reuters further noted that China already refines more than 90% of graphite into anode material used in almost all EV batteries. This means that the geopolitical center of gravity lies not only where mines are located, but where chemical conversion turns raw material into industrial input. (U.S. Geological Survey)

For local communities in China, the most important dimension of rising demand therefore concerns not mining itself to the same extent, but industrial hubs, employment, innovation, and the concentration of value added. From the perspective of the rest of the world, however, two other effects are more important. First, dominance in processing gives China the ability to influence the terms of trade and investment. Second, this concentration makes full supply-chain transparency more difficult. The OECD notes that in the case of graphite, the mixing of natural and synthetic material during processing can make it harder to fully trace the origin of the input. This means that even if Western countries diversify mining, they may still remain dependent on Chinese intermediate stages. (OECD)

This influence already has a political form. Since the end of 2023, China has introduced licensing requirements for some graphite products, and Reuters described them directly as a move that will accelerate the development of alternative supply chains outside China. In practice, such an instrument is not used solely to protect the domestic market. It is also a signal that in the era of battery raw materials, strategic advantage comes not only from access to deposits, but from the ability to control the stage without which a deposit does not yet become a useful industrial material. That is why increased battery demand strengthens China’s position even where the mines themselves are located in Australia, Africa, or South America. (Reuters)

Mozambique: graphite, diversification, and security risk

Mozambique is now among the main producers of natural graphite, and according to the USGS, it mined about 75 thousand tons in 2024. Rising demand for battery anodes gives the country an opportunity to enter a supply chain that Western and Asian states want, at least partially, to reduce dependence on China in. Economically, this means the possibility of creating jobs, attracting investment, and gradually moving from ore exports to local processing. Reuters reported that the new graphite processing plant in Niassa has capacity on the order of 200 thousand tons per year, currently employs around 890 people, and is expected eventually to reach around 2,000 jobs. For a country with a limited industrial base, this is a significant qualitative change, not only a quantitative one. (U.S. Geological Survey)

However, the socio-political cost of this development may be high if expansion takes place in regions with low social trust and unstable security. The literature on Mozambique indicates that the lack of social acceptance for mining projects can lead to disruptions, vandalism, and political tensions, while in northern Cabo Delgado an additional factor is armed violence and population displacement. Reuters reported that since the end of 2023, violence in that province has led to more than 110 thousand new displacements. This means that rising demand can bring Mozambique higher revenues and employment, but without improved security and a credible mechanism for community participation in benefits, the sector may remain a source of tension rather than stable development. Geopolitically, Mozambique is attractive precisely because it can become a non-Chinese source of graphite, but that also makes it an area of intensive interest from foreign capital and security policy. (ScienceDirect)

Peru: copper as the backbone of all battery chemistries and a field of distributive conflict

Although the battery debate often focuses on lithium, nickel, or cobalt, copper remains the metal with the greatest lasting strategic importance, because it is needed regardless of which cell chemistry dominates: in batteries themselves, in wires, motors, charging infrastructure, and grids. Peru mined about 2.6 million tons of copper in 2024, keeping it among the world’s most important suppliers. Rising demand for electromobility and energy infrastructure therefore increases Peru’s significance not only as an exporter, but as a country capable of negotiating greater gains from the sector. At the same time, Peru clearly shows that high prices and large investments do not eliminate conflicts over the local distribution of benefits. (U.S. Geological Survey)

In 2024, Reuters described further blockades around Las Bambas, one of the key copper mines, where local communities demanded greater development transfers and better terms of engagement with the operator. The same materials also pointed to growing problems along the “mining corridor,” where rising transport volumes, together with greater illegal mining activity amid high commodity prices, are worsening road safety and complicating territorial governance. From the perspective of local communities, rising demand therefore strengthens their bargaining power, but also increases environmental, transport, and conflict-related pressure. Geopolitically, Peru remains an important source of diversification for the world relative to Chile and the DRC, but the recurrence of local conflicts shows that supply security there depends more on the durability of local social settlements than on geology alone. (Reuters)

South Africa and Gabon: manganese between old steel and the new battery economy

Manganese is not yet as politically visible as lithium or cobalt, but it remains an important component of some cathode chemistries, and its significance may grow as alternatives to more problematic cobalt supply chains are sought. The USGS reports that in 2024 South Africa produced about 7.4 million tons of manganese, Gabon 4.6 million tons, and Australia 2.8 million tons. Socio-politically, this means that battery demand does not start from zero, but is layered onto already existing mining economies with strong ties to steel, rail logistics, and ports. Unlike lithium from salars or cobalt from ASM, rising importance of manganese will therefore likely strengthen disputes mainly around local processing, energy, and infrastructure, rather than necessarily generating the same type of direct water-related or ethical conflicts. (U.S. Geological Survey)

This is most clearly visible in Gabon. In 2025, the authorities announced plans to ban exports of unprocessed manganese from 2029 onward, and in 2026 the mining minister emphasized that energy shortages could not serve as an excuse for delaying this goal. This is a clear example of value-added policy: the state wants to stop being an exporter of ore and force local upgrading. For the local economy, this could mean more industrial jobs and a larger share of rent retained within the country, but only if problems of energy supply and investment cost can be solved. In South Africa, one sees a similar pattern: the future of the sector depends not only on the deposits, but also on the ability to modernize rail and port corridors for bulk mineral exports. Objectively, it must be acknowledged that the evidence base for directly “battery-related” social conflict around manganese is currently weaker than in the case of lithium, cobalt, and nickel, but the pressure for industrialization and control over exports is already very clear. (Reuters)

Cross-cutting conclusions

The main conclusion from comparing the principal locations is that higher demand for battery raw materials does not produce a single development model. In countries with stronger institutions and better bargaining positions—such as Australia or, to some extent, Chile—it tends rather to lead to disputes over how to increase the share of local processing and public revenues. In countries with weaker institutions or high conflict pressure—such as the DRC or parts of mining zones in Mozambique—the same demand can strengthen resource rents without a proportional improvement in labor safety or the situation of communities. In resource-nationalist models, such as Indonesia or Gabon, rising demand becomes a tool of industrial policy, but at the same time increases the risk that environmental and social costs are localized, while a larger share of economic value is concentrated in industrial enclaves. (ScienceDirect)

The second conclusion concerns geopolitics. Producing states gain importance, but they do not all gain autonomy to the same degree. The strongest position belongs to those that can combine deposits with processing policy, regulatory stability, and the capacity to enforce local value added. The weakest are those that have deposits but depend on external refining, capital, and logistics, or are themselves internally unstable. Against this background, China remains the central player not because it controls all the mines, but because it controls the most important intermediate links. That is precisely why battery geopolitics is not a simple transition “from oil to minerals,” but a transition to a system in which mining, processing, technology, and trade are far more intertwined than in the classic fossil-fuel model. (IEA)

The third conclusion is social. In most key locations, local communities do not automatically reject mining as such; more often, they question the distribution of benefits, the lack of transparency in environmental data, insufficient consultation, weak labor standards, or their limited influence on decisions. This means that long-term supply security depends not only on new investment and opening mines, but on building a more credible social contract around extraction. Without that, increased demand will produce not only more raw material, but also more blockades, court disputes, export bans, partial nationalizations of value, and international tensions around access to critical points in the supply chain. (Reuters)

Sources

International Energy Agency, Global Critical Minerals Outlook 2025 – Executive Summary. (IEA)

International Energy Agency, Global Critical Minerals Outlook 2025 – Analysis. (IEA)

International Energy Agency, Overview of outlook for key minerals. (IEA)

International Energy Agency, Sustainable and Responsible Critical Mineral Supply Chains. (IEA)

International Energy Agency, Beyond NMC batteries: supply chain issues for emerging battery technologies. (IEA)

International Energy Agency, Global EV Outlook 2025 – Electric vehicle batteries. (IEA)

U.S. Geological Survey, Mineral Commodity Summaries 2025 – lithium, cobalt, natural graphite, nickel, manganese, copper. (U.S. Geological Survey)

OECD, Interconnected Supply Chains: A comprehensive look at due diligence challenges and opportunities sourcing cobalt and copper from the Democratic Republic of the Congo. (OECD)

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Reuters, materials concerning Chile, Argentina, Bolivia, the DRC, Indonesia, New Caledonia, China, Mozambique, Peru, Zambia, Gabon, and South Africa. (Reuters)