Modeling interconnected minerals markets with multicommodity supply curves: examining the copper-cobalt-nickel system

Demand for many of the metals used in the energy transition is expected to grow rapidly. Many of these are by-products, often considered critical because their production responds weakly to prices and is instead tied to the economics of the host mineral. We present a model of prices and production for jointly produced commodities that accounts for interconnectivity between host and by-product markets at the mine level. We demonstrate this method using the copper-cobalt-nickel system, in which approximately 99% of cobalt is a by-product of copper or nickel mining. Our results show that the model more accurately captures the economic benefits of diversified mine outputs than previous approaches. Furthermore, changes in demand drivers for any two commodities produce non-linear effects on production and price. We challenge the prior best-practice assumption that cobalt cannot impact the copper or nickel markets. Recognizing the importance of both copper and cobalt for future electrification, we emphasize that incentivizing the copper industry to reduce cobalt supply risks could inadvertently undermine copper supply.