A Cross-Country Examination of Mineral Import Demand and Wind Energy Generation: Empirical Insights from Leading Mineral Importers

Abstract

The relevance of this research lies in the utilization of mineral goods as critical industrial inputs for the manufacture of renewable energy machinery, which has sparked an increase in demand and prices for essential minerals. The purpose of the study is to examine the import-demand function for metallic mineral goods by applying the quantiles via moments (MM-QR) approach, considering the potential heterogeneity across the sample of the top 5 mineral-consuming (importing) nations. The dataset, covering the years 1996-2021, is analysed to test the hypothesis regarding the influence of wind production capacity on mineral-import requirements, considering the price of mineral goods, exchange rates, and income growth. We observe a monotonic favourable response of mineral import demands to wind power generation across all quantiles. However, when considering the quadratic form of wind energy generation, the mineral import demand shows a monotonic reverse trend as the size of wind energy generation expands. Our results reveal the unexpected finding of a monotonic positive effect of copper prices on mineral import demand, which contradicts the Marshallian price theorem. Conversely, the reaction of mineral imports to exchange rates remains consistently positive without modulation. Additionally, we observe a non-monotonic association between the income factor and mineral imports, indicating that the mineral import response to economic growth remains positive until a specific threshold is reached, beyond which it tends to stabilize. The theoretical and practical significance of these findings lies in boosting mineral goods trade to advance the clean energy transition goal for a decarbonized global environment.