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Critical minerals: A new source of macroeconomic fluctuation?

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  • Attílio, Luccas Assis

Abstract

Energy transition involves the utilization of critical minerals. We investigate whether critical mineral (CM) prices (nickel, cobalt, lithium, and rare earth) contribute to macroeconomic fluctuations. Employing a GVAR with 34 economies from July 2012 to July 2023, our results reveal that most economies are sensitive to cobalt and lithium prices, suggesting these minerals could potentially induce a global recession accompanied by increasing inflation. Considering the predominant influence of oil prices, we compare the importance of oil and critical mineral prices in domestic fluctuations. Despite the potential for deep fluctuations caused by CM prices, our findings indicate that oil prices will maintain their position as a relevant global factor. Subsequently, we observed that oil prices affect critical mineral prices (but not vice versa). This suggests that oil and CM have a complex relationship marked by complementarities. To address the impact of Covid-19 on CM prices and the diminished importance of CM in the previous millennium, we adjusted our analysis period. The results remain robust to these modifications. Similar to oil and commodity prices, CM prices possess the potential to trigger international fluctuations and promote tensions in financial markets.

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  • Attílio, Luccas Assis, 2025. "Critical minerals: A new source of macroeconomic fluctuation?," Resources Policy, Elsevier, vol. 101(C).
    • Handle: RePEc:eee:jrpoli:v:101:y:2025:i:c:s0301420725000194
    DOI: 10.1016/j.resourpol.2025.105477
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    More about this item

    Keywords

    Critical mineral prices; Macroeconomic fluctuation; Oil prices; Financial markets;
    All these keywords.

    JEL classification:

    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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