International mineral trade-cleaner energy transformation nexus: How decomposed mineral prices and geopolitical events act?

Abstract

In the global transition to cleaner energy, the role of international mineral trade, which is subject to price volatility and geopolitical competition, is crucial yet complex. This study investigates the dynamic correlation between clusters of international mineral trade (both exports and imports) and decomposed mineral price shocks (trend and cyclical), as well as geopolitical risks (threats and acts) across the globe. We employ the wavelet local multiple correlation (WLMC) technique to analyze the non-stationary and non-normal features of monthly data from January 1990 to December 2021. Our findings reveal a positive correlation between the imports and exports of mineral goods and their decomposed price dynamics, as well as geopolitical events. Notably, this correlation is reversed when constructing an indicator such as international mineral trade (imports and exports)-driven cleaner energy transformation using the linearization power function. This suggests that the interactive connectivity of global cleaner energy installation capacity and international mineral trade is negatively correlated with mineral price volatility and the diverse patterns of geopolitics. However, we recommend the adoption of effective hedging strategies for mineral pricing issues and data-based risk mitigation schemas to counter geopolitical turmoil in the context of international mineral trade and clean energy transformation.