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The London Metal Exchange establishes plans for a so-called “green bonus” on metals which are extracted in a lasting way, following the pressure from the industry to distinguish them from “dirty” supplies with a greater environmental impact.
The exchange, the world's largest market for metals, said on Wednesday that there was sufficient support among market players to explore the launch of ways to buy aluminum, copper, nickel and zinc that had been extracted in a lasting way.
The scholarship, founded in 1877, said it proposed to allow traders to buy certified green metals via Metalshub, a trading platform with which it has an existing partnership.
LME's proposals “will unlock the value attached to sustainability and will have the potential to stimulate market development for more sustainable metals,” said General Manager Matthew Chamberlain.
The global mining companies have asked the exchange to introduce a green premium to distinguish, for example, the nickel that they produce from allegedly “dirty” supplies from Indonesia, which, according to environmental groups, caused forest loss, pollution of mining waste and high carbon emissions.
However, there was a limited appetite among buyers, such as car manufacturers, to pay more for more responsible metals. Last year, the LME said that the green nickel market was “not yet large enough to support dynamic trade in a dedicated green dedicated contract”.
Despite this, the exchange launched a partnership with Metalshub allowing merchants to buy green nickel for immediate delivery. Just over 400 metric tonnes of “low carbon nickel” have been exchanged on Metalshub since March 2024 – on a global nickel market of millions of tonnes.
As part of the LME plans announced on Wednesday, traders will be able to buy green aluminum, copper, nickel and zinc for immediate delivery. The exchange considers this as a means of assessing the appetite of metal buyers to pay more for sustainable basic products, in a step towards the possible launch of green term contracts on the LME.
The exchange said that he wanted to establish a “price administrator” who would publish sustainability premiums and have rules on green metals. The new plans will use a variety of industry sustainability standards that metal producers must respect so that their products are classified as green.
They include carbon emission methodologies developed by industry organizations the Nickel Institute, the Copper Association and the International Aluminum Institute.
Compliance with the rules should be provided by certain third parties – the copper brand, the performance standard of the aluminum management initiative and the zinc brand.
But that would not be immediately necessary for the nickel market because the green product existing on Metalshub “gained ground as a low carbon content” and it was “appropriate to respect the original specification” in the short term, said the LME.
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