CANBERRA - Australia is a crucial source of minerals, including for nuclear power, to help stave off a bigger supply shock than the world is currently facing in energy due to the Iran war, the head of the International Energy Agency (IEA) said on Tuesday.

The world is facing its worst-ever energy shock due to the US-Israeli war on Iran, losing the equivalent of 10 million barrels of oil a day, said Fatih Birol, the IEA's executive director.

"We are going to see that this energy security challenge that we are facing today might well be a small one compared to the critical minerals challenges we may face in the future if we don’t take the necessary measures in terms of diversification of critical minerals, especially in refining and processing," he said.

A single country controls more than 80% of the world's refining and critical minerals processing, he said, referring to China.

"It is good that ... the world has an energy supplier that is reliable and doesn’t use energy as a weapon," he said, referring to Russia. He spoke at the Minerals Week conference in Canberra.

"The world should be thankful to Australia for producing energy, uranium."

Australia’s uranium reserves are the world’s largest, accounting for about a third of global supplies, according to figures from the Minerals Council of Australia (MCA). Australia is also the world’s fourth-largest uranium producer behind Kazakhstan, Canada and Namibia, the MCA said. Australia banned nuclear power for domestic energy generation more than a quarter of a century ago.

"There will be a policy response to this crisis globally," Birol said, adding that countries would turn to nuclear power.

"In this policy response, one of the beneficiaries will be small module reactors coming on to the market," he said, pointing to production from the US, Britain, France and South Korea.

"Nuclear will come back, this will accelerate," he said. "Australia being a major supplier, there will be opportunities."

Other opportunities for Australia will come from greater demand for its natural gas, given the damage to Middle Eastern facilities.

"So more LNG from Australia will definitely be imported," he said.

There will also be increasing demand for electric vehicles, he said. Australia has the critical minerals to support EV batteries and demand for its copper will also grow due to electrification.

"We need grids around the world, this means copper," he said.