LME explores price premium for sustainable nickel, copper, aluminium and zinc

The London Metal Exchange is proposing a price premium for low-carbon nickel, copper, aluminium and zinc as a way to incentivise sustainable mining.

Many mining companies are transitioning to renewable power and electric fleets to decarbonise their operations, but the lack of a price premium for sustainable metals has so far meant there was no competitive advantage to doing so.

Now, the London Metal Exchange (LME) is engaging with market stakeholders on a proposal to make a sustainability price differential public for low-carbon critical minerals such as nickel, copper, aluminium and zinc – all necessary to the energy transition. The initiative aims to support the development of a market for sustainable metals.

“We are setting out proposals that we believe will support the formation of sustainable premia that will be accessible to the whole market. They will unlock the value attached to sustainability and have the potential to drive the development of the market for more sustainable metals. Furthermore, the greater resilience exhibited by sustainable supply chains provides an important linkage to the global critical minerals agenda,” said Matthew Chamberlain, LME CEO.

Building on LME’s work on low-carbon nickel pricing

The proposal follows on from LME’s 2024 partnership with digital platform Metalshub to develop a price discovery mechanism for low-carbon nickel, in an effort to counter the competitive pressure placed on the market by large amounts of high-emissions nickel coming from Indonesia.

The Metalshub platform allows consumers to buy LME-grade low-carbon nickel – defined as less than 20 tonnes of CO2 equivalent per tonne of metal, compared to the average 58.6 tonnes of CO2e per tonne for Indonesian nickel. 

Since March last year, Metalshub has reported the monthly volumes transacted through the platform, and as of March 2025, this ‘Class 1 nickel’ was sold at a premium of US$245 per tonne.

“Our conversations with stakeholders have shown that there is support for establishing a way to reflect an LME brand’s sustainability in its price. There is a growing sophistication in industry sustainability standards and accreditation programmes that cover broad criteria for different metals markets,” added Chamberlain.

“Taken together with the disclosure and comparability of these credentials through LMEpassport and our work with Metalshub, these developments provide the opportunity to establish credible sustainability pricing premia for LME-listed metals.”

Beyond carbon footprint

For its broader series of sustainable metal price premia, LME is seeking to incorporate a more comprehensive set of criteria than just carbon footprint. For nickel, producers would need to prove they meet the established low-carbon threshold based on the Nickel Institute methodology, and seek third-party sustainability assurance by The Nickel Mark at a later stage.

For sustainable copper, producers would follow the International Copper Association methodology for carbon footprinting and seek assurance from The Copper Mark. For aluminium, carbon footprinting would need to be conducted based on the International Aluminium Institute methodology, with third-party sustainability assurance coming from the Aluminium Stewardship Initiative Performance Standard.

And for sustainable zinc, producers would follow the methodology of the International Zinc Association for carbon calculations, and get their third-party sustainability assurance from The Zinc Mark.

LME pricing administrator

Metal brands that meet the criteria would need to submit all their sustainability credentials via LMEpassport – and would then contribute to the price discovery of the sustainability premia via Metalshub’s spot offering.

In order to publish a price premium based on Metalshub transaction data, the LME is proposing to establish a pricing administrator whose role would be to use trading data and apply expert judgement to publish prices. 

Nick Stansbury, Head of Climate Solutions, Asset Management, L&G said: "We welcome the LME's proposal as a much-needed move to enable the proper pricing of low-carbon, sustainable products. We believe transparent pricing of sustainable materials is critical to incentivising investment into transition technologies in the mining industry and we look forward to the outcome of this market engagement process."