The Commercial Machinery

Copper, aluminium and silver, on deep and liquid exchange contracts with decades of history. Nickel partly — LME nickel trades, but battery-grade sulfate carries an assessed premium that can diverge. Lithium barely, since most contracts reference assessments even though GFEX futures have grown. Cobalt poorly, on a thin LME contract. Graphite and rare earths not at all. That right-hand column is a risk register: a cell manufacturer can hedge its copper and cannot hedge its magnets.

Because it is not fungible. "Battery-grade graphite" is a specification with a coating recipe, not a commodity — the coating controls SEI formation and first-cycle efficiency and is where most of the proprietary know-how sits. A deliverable futures contract needs a standard grade that any seller can satisfy, and that does not exist. The consequence is that these exposures must be managed with inventory, contract structure and supplier diversity rather than with instruments.

Offtake agreements, where a buyer commits to a fixed volume or percentage of output at a formula price, usually an index minus a discount — this is how nearly all new mine and converter capacity is financed. Prepayment, which is financing disguised as procurement. Streaming and royalties, where an investor funds a mine in exchange for the right to buy a byproduct at a deep fixed discount for the mine’s life — precisely how silver’s byproduct nature gets financialised. And tolling, where the material owner keeps title and pays a converter a fee, which usefully separates metal price risk from processing margin.

Because the stages have wildly different build times and demand signals propagate up the chain far faster than supply can respond down it. A gigafactory takes two to three years; the copper mine that supplies it takes sixteen from discovery to first production. That thirteen-year gap is every commodity cycle in this industry expressing itself — capacity arrives after the price signal that justified it has already reversed.