Eli Hayes1, Victor Ferguson2, Darren J. Lim1
1Australian National University, Australia, 2University of Tokyo, , Japan
Biography:
Victor Ferguson is a JSPS Postdoctoral Research Fellow at the University of Tokyo's Research Center for Advanced Science and Technology. In Fall 2025 he will join Hitotsubashi University's Graduate School of Law as an Assistant Professor of International Relations. He received his PhD from the School of Politics and International Relations at the Australian National University.
Abstract:
Under what conditions and through which mechanisms can states manipulate global commodity prices to achieve national security objectives? Governments are scrambling to secure advantageous positions in global value chains for the extraction and processing of critical minerals, widely seen as central to national security amid the net-zero transition and geoeconomic fragmentation. These ambitions require long-term investments viable only if global market prices remain profitable. Yet, recent prices for key commodities—such as lithium, nickel, and rare earths—have been anything but. Commentators attribute these low prices to strategic behaviour by the People’s Republic of China, which is widely accused of manipulating prices to derail other states’ ambitions in critical mineral supply chains. There is much scholarship on commodity price manipulation by economic actors seeking profit or market advantage, but we know little about when and how such behaviour is engaged in by states pursuing security objectives. This paper theorises commodity price manipulation as an instrument of economic statecraft. Synthesizing research on price manipulation in IPE, we present a model of five mechanisms through which states can engage in such manipulation and use it to structure case studies of the lithium and rare earth markets. We leverage our empirical analyses first as plausibilty probes to validate the model and specify scope conditions for each mechanism’s viability, and second as a heuristic case studies to inductively refine the model by identifying new variables, mechanisms, and hypotheses. In doing so, we shed light on the potential and limitations of this novel form of economic statecraft.