The Energy Transition Has Its Own Strait of Hormuz

Why It Matters

Mineral supply constraints can delay decarbonisation and raise costs, making energy security a central policy priority. The shift creates fresh geopolitical leverage points that could destabilise global markets.

Key Takeaways

• Renewable supply chains create new geopolitical chokepoints
• Critical minerals concentrated in few producing nations
• Processing facilities become strategic assets
• Energy transition may shift conflict zones to mining regions
• Policy must address mineral security and diversification

Pulse Analysis

The narrative that clean‑energy decouples the world from the Strait of Hormuz overlooks a growing reality: the transition introduces its own narrow passages. While oil once moved through a single maritime corridor, renewable technologies now depend on a handful of rare‑earth and battery minerals—lithium, cobalt, nickel, and graphite—sourced from a limited set of mines and smelters. The logistics of extracting, refining, and transporting these inputs create bottlenecks that are just as vulnerable to disruption, whether from natural disasters, labor unrest, or geopolitical pressure.

Geopolitically, the new chokepoints concentrate power in regions that have historically been peripheral to energy politics. The Democratic Republic of Congo supplies over 60 % of global cobalt, while Australia and Chile dominate lithium production. Any instability—civil conflict, sanctions, or export restrictions—in these locales can ripple through global supply chains, inflating battery costs and delaying renewable projects. Moreover, the downstream processing of these minerals is heavily clustered in China, giving it leverage over the entire value chain and prompting rival nations to seek alternative routes and domestic capabilities.

Policymakers therefore face a dual challenge: accelerate decarbonisation while insulating the system from supply‑side shocks. Strategies include diversifying mineral sources, investing in recycling infrastructure, and fostering transparent trade agreements that limit coercive practices. Private firms are also expanding into secondary refining and exploring substitute materials to reduce dependence on high‑risk inputs. By treating mineral security as a core component of energy strategy, governments can mitigate the risk of a new ‘Strait of Hormuz’ emerging in the battery supply chain.