Markets for Critical Minerals Are Too Prone to Failure
Payne Institute Fellow Cullen Hendrix and Director Morgan Bazilian write this commentary on how in March, the London Metals Exchange suspended nickel trading after prices spiked over 250% in two days. Much of the spike occurred in an 18-minute window. The nickel debacle highlights one of the underappreciated financial challenges that green-energy transitions will bring: Markets for many critical minerals are small, thin, and opaque. Markets with these structures are prone to failures such as cornering, natural disaster- and geopolitically-induced supply disruptions, and murky, inefficient price discovery processes. December 17, 2022.