The push towards net zero and reducing carbon emissions means more demand for electric vehicles (EVs) in countries like China. The second-largest economy is looking to control over 30% of the global lithium supply by the year 2025.
This makes sense since two of the largest EV companies currently reside in China — Li Auto and Lucid Motors, according to data from Capital. Lithium is a key critical mineral in producing batteries for EVs, and China’s push to bolster its supply is forcing other nations to follow that trend.
“Despite efforts from the United States and the EU to diversify their supply chains of critical minerals, China is expected to raise its share of the global supply of some of the metals key to accelerating the energy transition,” an Oil Price report said.
2 ETFs to Capitalize on China’s Lithium Supply Growth
As mentioned, the U.S. and the EU are looking at China’s plans, which could spur healthy competition for lithium mining. If that’s the case, consider the Sprott Lithium Miners ETF (LITP).
“The race to secure lithium is playing out at the highest levels, with nations including the US prioritizing access to the materials necessary for making batteries as the world turns away from fossil fuels,” Bloomberg noted. “China’s needs are particularly acute because it’s home to the world’s biggest market for new energy vehicles.”
LITP seeks to provide investment results that correspond generally to the total return performance of the Nasdaq Sprott Lithium Miners Index, which is designed to track the performance of a selection of global securities in the lithium industry, including producers, developers, and explorers. The fund features 45 holdings as of March 3, offering investors broad exposure to the lithium industry’s ancillary services.
In terms of its diversification, this characteristic also extends to regional exposure. In addition to the U.S., the fund incorporates holdings in other countries, including China — with the country’s ambitious plans to bolster its lithium supply, getting exposure to China may offer a tremendous growth opportunity.
A more broad play on the transition to more renewable energy sources is getting exposure to critical minerals such as lithium. This offers a broader, diversified approach with ETFs like the Sprott Energy Transition Materials ETF (SETM).
The fund seeks to provide investment results that correspond generally to the total return performance of the Nasdaq Sprott Energy Transition Materials Index. This index tracks the performance of a selection of global securities in the energy transition materials industry.
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