Price dynamics of Energy Transition Minerals: The case of Cobalt, Lithium and Nickel.

• Název práce v češtině: Dynamika cen nerostných surovin klíčových pro energetický předchod: případ kobaltu, lithia a niklu
• Název v anglickém jazyce: Price dynamics of Energy Transition Minerals: The case of Cobalt, Lithium and Nickel.
• Klíčová slova: Volatility, Green energy, Cobalt, Lithium, Nickel
• Klíčová slova anglicky: Volatilita, Zelená energie, Kobalt, Lithium, Nikl
• Akademický rok vypsání: 2022/2023
• Typ práce: bakalářská práce
• Jazyk práce: angličtina
• Ústav: Institut ekonomických studií (23-IES)
• Vedoucí / školitel: PhDr. František Čech, Ph.D.
• Řešitel: skrytý - zadáno vedoucím/školitelem
• Datum přihlášení: 26.06.2023
• Datum zadání: 26.06.2023
• Datum a čas obhajoby: 09.06.2025 09:00
• Místo konání obhajoby: Opletalova, O105, místnost č. 105
• Datum odevzdání elektronické podoby: 23.04.2025
• Datum proběhlé obhajoby: 09.06.2025
• Oponenti: Mgr. Lenka Nechvátalová

Seznam odborné literatury

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Dominković, D. F., Bačeković, I., Pedersen, A. S., & Krajačić, G. (2018). The future of transportation in sustainable energy systems: Opportunities and barriers in a clean energy transition. Renewable and Sustainable Energy Reviews, 82, 1823-1838.

Watari, T., McLellan, B. C., Giurco, D., Dominish, E., Yamasue, E., & Nansai, K. (2019). Total material requirement for the global energy transition to 2050: A focus on transport and electricity. Resources, Conservation and Recycling, 148, 91-103.


TARASCON, Jean-Marie. Is lithium the new gold?. Nature chemistry, 2010, 2.6: 510-510.

Miao, Y., Hynan, P., Von Jouanne, A., & Yokochi, A. (2019). Current Li-ion battery technologies in electric vehicles and opportunities for advancements. Energies, 12(6), 1074.

Voskoboynik, D. M., & Andreucci, D. (2022). Greening extractivism: Environmental discourses and resource governance in the ‘Lithium Triangle’. Environment and planning E: Nature and space, 5(2), 787-809.

Khalil, A., Mohammed, S., Hashaikeh, R., & Hilal, N. (2022). Lithium recovery from brine: Recent developments and challenges. Desalination, 528, 115611.

Shengo, M. L., Kime, M. B., Mambwe, M. P., & Nyembo, T. K. (2019). A review of the beneficiation of copper-cobalt-bearing minerals in the Democratic Republic of Congo. Journal of Sustainable Mining, 18(4), 226-246.

Faber, B., Krause, B., & Sánchez de la Sierra, R. (2017). Artisanal mining, livelihoods, and child labor in the cobalt supply chain of the Democratic Republic of Congo.

Pandyaswargo, A. H., Wibowo, A. D., Maghfiroh, M. F. N., Rezqita, A., & Onoda, H. (2021). The emerging electric vehicle and battery industry in Indonesia: Actions around the nickel ore export ban and a SWOT analysis. Batteries, 7(4), 80.

Mo, J. Y., & Jeon, W. (2018). The impact of electric vehicle demand and battery recycling on price dynamics of lithium-ion battery cathode materials: a vector error correction model (VECM) analysis. Sustainability, 10(8), 2870.

Swarup, S., & Kushwaha, G. S. (2023). Nickel and Cobalt Price Volatility Forecasting Using a Self-Attention-Based Transformer Model. Applied Sciences, 13(8), 5072.

Junior, P. O., Tiwari, A. K., Tweneboah, G., & Asafo-Adjei, E. (2022). GAS and GARCH based value-at-risk modeling of precious metals. Resources Policy, 75, 102456.

Tweneboah, G. (2019). Dynamic interdependence of industrial metal price returns: evidence from wavelet multiple correlations. Physica A: Statistical Mechanics and Its Applications, 527, 121153.

Hong, S., Luo, Y., Li, M., & Qin, D. (2022). Volatility research of nickel futures and spot prices based on copula-GARCH model. Frontiers in Energy Research, 10, 1011750.

Engle, R. (2002). Dynamic conditional correlation: A simple class of multivariate generalized autoregressive conditional heteroskedasticity models. Journal of Business & Economic Statistics, 20(3), 339-350.

Bollerslev, T. (1986). Generalized autoregressive conditional heteroskedasticity. Journal of econometrics, 31(3), 307-327.

European Commission (2019). Communication from The Commission to The European Parliament, The European Council, The Council, The European Economic and Social Committee of the Regions: The European Green Deal. Brussels. Retrieved from https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52019DC0640

Liu, W., Oh, P., Liu, X., Lee, M. J., Cho, W., Chae, S., ... & Cho, J. (2015). Nickel‐rich layered lithium transition‐metal oxide for high‐energy lithium‐ion batteries. Angewandte Chemie International Edition, 54(15), 4440-4457.

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Předběžná náplň práce v anglickém jazyce

Research question and motivation:

The energy transition is currently one of the most discussed topics on the international political and economic landscape, with the European Union´s (EU) ambitious goal to become carbon-neutral by 2050 as a part of the Green Deal (European Commission, 2019), and other leading economies adopting a similar philosophy (Allam et al., 2021). With an estimated 23% (UN Sustainable Transport Conference, Beijing 2021) of the total CO2 emissions attributed to the transportation sector, a transformation of the infrastructure to fully support the transition towards electric vehicles (EV) as the most promising alternative to internal combustion engines running on fossil fuels (Dominković et. al. 2018). This is a problem many of today´s economies tackle, with one of the leading examples being China and its emphasis on policies designed to efficiently push the country towards the goals in energy transition in the transportation sector (Peng et al., 2022).

The development and production of technologies, which are projected to be the key to a successful energy transition of the transportation as well as energy production sectors heavily rely on the availability of raw materials in amounts sufficient to support this shift. Lithium, Cobalt, and Nickel are three of the most important energy transition minerals (ETMs), with demands projected to increase dramatically in the process of building a sustainable future (Watari et al. 2019), thus becoming very important strategic resources in the coming years. Lithium is the most electropositive metal and the lightest solid element at room temperature (Tarascon, 2010), and because of its unique set of chemical properties, it is a primary material in the production of lithium-ion batteries, which power all the EVs today (Miao et. al. 2019). Most existing reserves are believed to exist in the “Lithium Triangle” between the borders of Argentina, Colombia, and mainly Chile (Voskoboynik et al. 2022), extracted mostly in the form of “lithium brine” (Khalil et al. 2022). The second key mineral in not only EV batteries is Cobalt. It is mined as a byproduct of Copper and Nickel (Moats et al. 2014), with the largest reserves existing in the Democratic Republic of Congo, producing more than 50% of raw cobalt (Shengo et al. 2019) It has also been a point of controversy over the past several years due to the practice of artisanal mining, which is largely unregulated and is said to often be done using child labor (Faber et al. 2017). Nickel is one of the most abundant elements on Earth, with Indonesia being the current largest producer in the world (Pandyaswargo et al. 2021). Apart from stainless steel and many other applications, it is also used in EV batteries to increase their energy density (Liu et al. 2015).

For the emerging importance of these commodities in today´s world, their respective markets become an interesting subject of study. A question this thesis attempts to address is given the recent increased attention to these materials, the geopolitical situation surrounding them, the high pressure on supply, and their connectedness in technological applications, is there an observable underlying relationship between the price volatility behaviors of these ETMs? The relationship has been partially explored by Mo (2018), who finds that in the long run, the rise of lithium and nickel prices decreases the price of cobalt, and Swarup (2023), with his study of the volatility of nickel and cobalt futures. Whilst there exists quite extensive research on the price dynamics of other precious (Owusu Jr. et al. 2022), and industrial metal markets (Twebenoah 2019), there seems to be a potential for studying the market interdependencies of the Energy Transition Metals.


Contribution:

The existing research on the topic of metal market forecasting has explored mostly the price dynamics of the precious (Owusu Jr. et al. 2022) and industrial metal markets (Twebenoah 2019). Mo (2018) studies the price relationships between the demand for electric vehicles and ETM prices. The price volatility comovements of Cobalt and Nickel have been investigated by Hong (2022), and Swarup (2023). By studying the three key ETMs together and applying previously unused methods for studying these relationships, this thesis aims to provide more insight into the behavior of their respective markets and could serve as a basis for future investigation. Furthermore, the results could provide investors with useful information for decision-making about operating in these commodity markets.

Methodology:

The data used will be daily, weekly and monthly spot price data of Cobalt, Nickel, and Lithium, downloaded from the Refinitiv/Reuters financial database. The weekly and monthly price dynamics will be analyzed using a variety of models from the ARMA and GARCH families, such as the DCC-GARCH model, proposed by Engle and Shepard (2001), based on the original model proposed by Bollerslev (1986). These models are frequently used to study the spillover effects between different assets or economic variables in general. The software used for the analysis will be the programming language Python, which is appropriate for such a task thanks to the packages Arch and Statsmodels, which provide a convenient way to work with predefined functions for these models.

Outline:
1.Introduction
2.Theory and literature review
3.Methods and models used
4.Data description
5.Model estimation, analysis and discussion
6.Conclusion