By David Willey, Benzinga
The transition towards low-carbon, clean energy solutions is continuing to pick up pace, and with it, the demand for critical minerals is projected to continue increasing. Critical minerals are the natural resources necessary to generate, transmit and store low-carbon energy. Modern forms of clean energy, such as battery, wind, solar and nuclear all depend upon a steady supply of these critical minerals.
To meet goals for lowering carbon emissions, governments and corporations have invested a historic $1.1 trillion into the transition to renewable energy sources. However, estimates say the figure needs to triple to meet net-zero targets.
One concern with the transition is whether the supply of critical minerals will be able to keep up with the rapidly increasing demand. Copper, for example, is a critical mineral that is involved in almost every type of clean energy. One projection shows the energy transition demand for copper going from todays demand of 5 million metric tons (MTs) to 50 million MTs by 2050, with demand expected to drive the commoditys price up. It is currently worth about $8,500 per MT, however, the global head of commodities at Goldman Sachs expects the price to reach $10,000 in the short term and $15,000 in the longer term.
That is one of a number of reasons why Sprott Asset Management, a subsidiary of Sprott Inc. (NYSE: SII), recently launched a series of exchange-traded funds (ETFs) for critical minerals. Sprott Asset Management offers some of the only pure-play ETFs for critical minerals, including the Sprott Energy Transition Materials ETF (NASDAQ: SETM) and the Sprott Lithium Miners ETF (NASDAQ: LITP).
One of its ETFs is the Sprott Junior Copper Miners ETF (NASDAQ: COPJ). It is the only pure-play ETF for small copper miners, and it currently has 39 holdings for $2.51 million in assets.
Another of Sprotts ETFs is the Sprott Junior Uranium Miners ETF (NASDAQ: URNJ). The company believes uranium is currently in a bull market, with the two previous uranium bull markets occurring in the 1970s and the early 2000s respectively. Investment is pouring into this sector, with 58 nuclear plants currently under construction globally and another 104 plants in the planning stage.
URNJ has 32 holdings and $33.1 million in assets. The ETF is focused on tracking the growth of mid-, small- and micro-cap companies involved in uranium mining.
A third ETF is the Sprott Nickel Miners ETF (NASDAQ: NIKL). Nickel is an important mineral with a range of uses in clean energy, including in electric vehicles (EVs), battery storage and additional infrastructure. Demand for this critical mineral may increase almost 20-fold between 2020 and 2040 as further uses are found for nickel within the clean energy space. Sprott reports taking advantage of the forecasted growth with its NIKL ETF, the only US-listed ETF with a pure-play focus on nickel mining companies.
NIKL has 24 holdings and has $1 million in assets. The ETF tracks companies involved in producing, developing and exploring nickel.
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