A global transition to alternative energy is helping to fuel a fourth industrial revolution (4IR). This will increase demand for critical minerals, leading to opportunities in ETFs that specifically focus on these in-demand minerals.
Meeting carbon emissions goals means more countries must shore up supplies of critical minerals to manufacture clean energy technologies. From hydroelectric power devices to (EVs, 4IR will require significant critical minerals for a variety of alternative energy applications.
“Central to the 4IR transformation are critical minerals like copper, uranium, lithium and nickel,” a Sprott Critical Materials Monthly report stated. ’These are pivotal in transitioning toward more sustainable and interconnected energy systems.
When it comes to specific minerals/metals, copper is one to watch. Its electrical conductivity properties will mean demand for copper will only increase exponentially as more consumers rely on electric power.
“Copper, essential for its superior electrical conductivity, is fundamental in manufacturing renewable energy technologies such as wind turbines, solar panels and EVs,” the report added. “The International Energy Agency projects that global copper demand could double over the next two decades, fueled by investments in renewable energy and the electrification of transport.”
Access Critical Minerals in One ETF
Investors can concentrate on specific minerals central to the transition to alternative energy like copper. Or they can opt for a more broad-based option via the Sprott Energy Transition Materials ETF (SETM ).
SETM seeks to provide results corresponding to the total return performance of the Nasdaq Sprott Energy Transition Materials Index. That index essentially tracks the performance of a selection of global securities in the energy transition materials industry.
With the overall demand for these minerals projected to rise, the demand for miners that materially affect the global supply will also increase. To capture this growth potential, SETM provides investors access to miners producing key critical minerals like the aforementioned lithium for electric vehicles.
In addition to subsector diversification in the critical minerals industry, the fund also offers global diversification regarding country exposure. Canada, the United States, and Australia round out its top three country allocations. Moreover, there’s also diversification as the fund spreads its assets over large-, mid-, and small-cap companies to offer a balanced market-cap blend.
For more news, information, and analysis, visit the Gold/Silver/Critical Minerals Channel.
