Geopolitical factors will continue to play a pivotal role for critical minerals. The United States in particular could be a catalyst for rising prices as it looks to rein in control of the industry from China.
“Washington’s focus on plugging strategic vulnerabilities amid worsening U.S.-China relations has also reignited U.S. efforts to control crucial, yet often overlooked, materials: critical minerals,” a Washington Post article said.
China already has a leg up on the U.S. in all facts of critical minerals, including mining, refining, and processing. The U.S. is looking to alleviate this by aligning itself with other countries where critical minerals supply is abundant. Hopefully, this creates an environment where it no longer has to rely on China for these minerals.
“Quite frankly, we’re in a vulnerable position,” said John Podesta, a top White House advisor on clean energy. China “has the potential to use its lock on supply chains to hold politically hostage decisions by governments.”
Weaning itself from China’s dependence will be crucial, as the Washington Post article pointed out. As the world transitions to heavier reliance on alternative energy sources, nailing down an efficient process to mine and access these minerals is of utmost importance.
“The consequences of failing to do something about this are really quite severe,” said Jason Bordoff, the founding director of Columbia University’s Center on Global Energy Policy. “If we don’t have the mineral inputs that we need for key technologies, our transition to clean energy is going to stumble. And it would hamstring our ability to manufacture technologies crucial to our national defense.”
An Aggregate Critical Minerals Play
Given the urgency, investors can capitalize on opportunities like the Sprott Energy Transition Materials ETF (SETM). SETM presents investors with an opportunity to capture the growth. It focuses on companies positioned upstream in the supply chain that stand to benefit from the increased investment in the critical minerals required for the clean energy transition.
SETM provides prospective investors with an aggregate option. It seeks to mirror the results of the total return performance in the Nasdaq Sprott Energy Transition Materials Index. The index tracks the performance of a selection of global securities in the energy transition materials industry.
The fund offers a pure-play fund to capitalize on the transition to clean energy use. It sets up the increased demand for critical minerals. Mining will also be necessary for other minerals such as uranium, copper, nickel, silver, manganese, cobalt, graphite, and others. As such, this gives SETM further diversification of its holdings.
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