The criticality of lithium and the finance-sustainability nexus: Supply-demand perceptions, state policies, production networks, and financial actors

Current sustainability transformations render certain minerals, such as lithium, ‘critical’. We argue that criticality is actively produced, involving demand, supply and price perceptions, policies linked to green extractivism, and underlying narratives around the role of commodities for sustainable development. Criticality affects, in turn, the geographical and organizational forms of as well as firm strategies in global production networks (GPNs). We highlight the impact of financial actors and interests in these processes, as they enable the expansion of lithium extraction, by assessing three channels through which financial actors impact producer strategies and GPNs – price-setting, equity and debt financing. Driven by criticality, financial actors mobilize green investment stories along the ‘finance-sustainability nexus’. This enables the shifting of resource frontiers through funding new projects and creates variable price-setting regimes linked to derivative markets. Financial interests introduce an additional speculative momentum to lithium extraction, contributing to accelerating boom-bust patterns, volatility and short-termism. Methodologically, the paper draws on sector data, industry and company reports, as well as semi-structured interviews with lithium sector and financial actors specifically in London, Switzerland, Chile and Zimbabwe.