The two top economic superpowers are vying for influence in Africa, as the world transitions to higher usage of alternative energy. As such, the U.S. and China are competing for resources that are pertinent to this energy transition.
Electric vehicles (EVs) are at the forefront of the transition, requiring critical minerals to manufacture EVs as demand rises over the next decade. Africa, in particular, is rich with these critical minerals and as such, the U.S. and China are quick to spot the opportunity to spearhead the energy transition.
“As the US and China wrestle for influence in Africa, their next big battle is taking shape – for control of the continent’s vast supply of the essential minerals used in electronics and batteries for electric vehicles,” a South China Morning Post article explained.
More specifically, the country of Tanzania is of great importance. The U.S. is already working with the country to provide critical minerals, as it slowly disassociates itself from China for necessary components to build EVs
“Tanzania is building a critical minerals processing facility with US backing, as Washington courts resource-rich African nations to help break its dependence on China for the essential supplies,” the report added.
An Energy Transition ETF Opportunity
Global goals of net zero will offer plenty of growth opportunities for investors looking to capitalize on this energy transition. Given this potential, investors should take a look at exchange traded funds (ETFs) such as 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, 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 was invested in 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 from 2023 to 2030.
- Exposure to well-positioned companies that are upstream in the supply chain and may be set up to benefit from the increased investment in the critical minerals necessary for the clean energy transition.
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