Price-making in provisioning systems and social-ecological transformation? The cases of the electric vehicle metals copper, cobalt, and lithium

Figures & data

Figure 1. LME average daily trading volume (in number of lots).

Source: HKEX Investor Presentation (2016) and HKEX Annual reports 2016 to 2022.

Table 1. Price-making in copper, cobalt, and lithium-provisioning system.

	Copper	Cobalt	Lithium
Materiality and territorial form	Base metal Standardized and storable Extraction and processing distributed globally	Minor metal Refined into different products, metals storable Extraction concentrated in DRC (70%), processing mainly in China	Minor metal Refined into different products, chemicals not easily storable Extraction concentrated in Latin America and Australia, new mining projects globally, processing mainly in China
Production and organizational structures	Large volumes Many actors on different levels, traded from miners, smelters, refiners to end-uses by international traders	Small volumes Few integrated firms, battery producers and automakers as new actors upstream	Small volumes, but growing Few integrated firms, battery producers and automakers increasingly as new actors upstream
Physical actors’ interests in price-making	Miners: Exposure to price risks All other: Hedging of price risks through derivatives All: Speculation on derivative markets	Established actors: Some exposure to short-term price fluctuations, little interest in hedging through derivatives, strongly represented in PRA benchmark New actors: EV-linked interested in hedging	Established actors: More exposure to short-term price fluctuations, little interest in hedging through derivatives, strongly represented in PRA benchmarks New actors: EV-linked interested in hedging
Financial actors’ interests	Creation of single, global market for financial trading and accumulation Exposure to price movements through simplified, liquid derivative markets Interest in electronic and high-frequency trading
Price determination	LME physically-settled futures as benchmark, LME trading and organization increasingly dominated by financial actors	Established PRA benchmark PRA benchmark and futures based on cobalt metals—contested Physical- and cash-settled futures at LME not traded, growing trade on CME	No single established PRA benchmark PRA benchmark and futures based on hydroxide—contested Cash-settled futures at LME not traded, some trade on CME
Price-setting	80% long-term contracts with variable prices	70% long-term contracts with variable prices, move to more short-term benchmarks	80% long-term contracts with variable prices, move to more short-term benchmarks and spot trading