A0192
Title: Ensuring the security of the transition: Examining the impact of geopolitical risk on the price of critical minerals
Authors: Russell Smyth - Monash University (Australia)
Jamel Saadaoui - University of Paris 8 (France) [presenting]
Joaquin Vespignani - University of Tasmania (Australia)
Abstract: Constant and time-varying parameter local projection (TVP-LP) regression models are used to examine the effect of geopolitical risk on prices of six critical minerals: Aluminum, copper, nickel, platinum, tin, and zinc. A conceptual framework is proposed in which the responsiveness of prices for critical minerals to geopolitical risk depends on the non-technical risk associated with procuring each critical mineral, and geopolitical threats have a bigger effect on critical mineral prices than geopolitical acts. Results are generally consistent with these predictions. Considerable evidence is found that the effect of geopolitical risk on the prices of critical minerals is time-varying, with the Gulf War, 9/11 terrorist attacks, and COVID-19 pandemic each having a significant effect. It is found that shocks due to geopolitical threats are generally bigger in magnitude than geopolitical acts and that prices respond more quickly to geopolitical threats.
