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

Abstract

AbstractResearch and debates around mineral extraction in the context of social-ecological transformation have to date dedicated limited attention to price-making. Drawing on the provisioning systems approach, this article assesses price-making in mineral provisioning as contested processes. We argue that price-making is not an objective or solely technical process taking place on abstract markets but rather it is, first, reflective of power struggles over specific rules and devices between different actors, embedded in social relations, network practices, and institutions and, second, linked to the materialities of commodities and the territorial and organizational forms of their provisioning. Empirically, we analyze the “electric vehicle metals” copper, cobalt, and lithium for which derivative markets are intensifying their role as price-determination institutions linked particularly to the interest of financial actors in getting price exposure. The article criticizes current shifts to benchmark- and derivative markets-based price-determination. This approach focuses on short-term demand and supply considerations without considering local producer-region production specificities, broader economic impacts, and environmental and social costs and risks. Moreover, it fails to address the long-term insecurities related to resource depletion. With financial actors dominating price-determination on derivative markets, prices deviate even from such a narrow fundamental demand and supply perspective, increasing volatility and short-termism. Alternative price-making mechanisms are needed, together with other policies for social-ecological transformation which requires political regulation embedded in democratic decision-making. Methodologically, the article is based on production, trade, and financial data and semi-structured interviews with representatives of price-determination institutions, metal-provisioning systems, and producer countries.

Keywords

• Green extractivism
• price-making
• provisioning systems
• financialization
• electric vehicle metals