The global transition to alternative energy options is causing countries to align themselves in order to obtain critical minerals. India and Australia provide a prime example of this type of strategic partnership.
As an Investing.com article explained, India is the sixth-largest trading partner of Australia, so it’s ideal that the two nations work together, particularly when it comes to clean energy. In this case, the nation’s leaders have discussed a cooperation agreement that focuses on the mining of critical minerals.
“We talked about taking the Australia-India comprehensive strategic partnership to greater heights in the next decade,” said Indian Prime Minister Narendra Modi.
Australia boasts a vast lithium ore supply, and it wants to break free from dependence on China for its processing. The refinement process is necessary to produce batteries for mobile phones and, more importantly in the clean energy transition, electric vehicles (EVs).
“Australia mines about 53 percent of the world’s supply of lithium, and virtually all of it is sold to China,” the New York Times reported. “But now the Australian government wants to break the world’s dependence on China for processing the minerals driving the green revolution.”
The report also noted Australia’s importance in lithium mining. It accounts for over 50% of the world’s lithium supply, but the challenge now is to try to outdo China in the lithium refinement process in order to meet growing demand for batteries.
Deploy Capital to Critical Mineral Growth
As more nations work together to mine critical minerals, this sets the stage for a tremendous growth opportunity. As such, consider the Sprott Energy Transition Materials ETF (SETM), which has a significant portion of its holdings in Australian companies (23.1% of the fund as of April 28).
All in all, the fund seeks to provide investment results that correspond generally to the total return performance of the Nasdaq Sprott Energy Transition Materials Index, which is designed to track the performance of a selection of global securities in the energy transition materials industry.
Per the Sprott product website, the fund offers:
- Pure-play access to a range of critical minerals necessary for the global clean energy transition.
- Potential for explosive growth as the government looks to achieve its net-zero goals. Globally, $1.11 trillion flowed into the energy transition sector in 2022. To meet net-zero targets, global investment may need to accelerate to a yearly average of $3.9 trillion 2023–2030.
- Exposure to well-positioned companies that are upstream in the supply chain and may benefit from the increased investment in minerals critical to the energy transition.
Additionally, the diversification of the fund is apparent in its 100+ holdings. These companies span across the globe for further country diversification, including (in addition to Australia) Canada, the United States, and Chile to name a few — key countries for critical minerals.
For more news, information, and analysis, visit the Gold/Silver/Critical Materials Channel.