Sprott Insights

A New Era: How Critical Minerals are Driving the Global Energy Transition

BY Sprott | Tuesday, May 23, 2023

We believe the unique supply and demand dynamics for critical minerals will underpin potential investment opportunities in the years ahead.

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Synopsis

The Energy Transition Depends on Critical Minerals

Critical minerals are essential for the global energy transition as we gradually phase out CO2-intensive energy sources with cleaner sources, including nuclear, solar, wind, hydro and geothermal energy and greater use of electric vehicles (EVs). The reality is that these critical minerals will likely experience significant increases in demand, while developing new supplies will require enormous amounts of capital and time. We believe the unique supply and demand dynamics for critical minerals will underpin potential investment opportunities in the years ahead.

Critical Mineral Miners Poised for Growth

Supply and demand pressures should position miners for an era of sustained investment. From a bird’s-eye view, energy is transitioning away from high-carbon sources, and miners’ share of GDP (gross domestic product) production should expand in line with the share of carbon-free activity. Indeed, mining equities tend to move in line with commodity spot prices over long periods. This trend has begun to emerge post-pandemic, and we expect it to continue.

Important Disclosures

The Sprott Critical Materials ETFs are made up of the following: Sprott Critical Materials ETF (SETM), Sprott Uranium Miners ETF (URNM), Sprott Junior Uranium Miners ETF (URNJ), Sprott Copper Miners ETF (COPP), Sprott Junior Copper Miners ETF (COPJ), Sprott Lithium Miners ETF (LITP) and Sprott Nickel Miners ETF (NIKL). Before investing, you should consider each Fund’s investment objectives, risks, charges and expenses. Each Fund’s prospectus contains this and other information about the Fund and should be read carefully before investing.

A prospectus can be obtained by calling 888.622.1813 or by clicking these links: Sprott Critical Materials ETF Prospectus, Sprott Uranium Miners ETF Prospectus, Sprott Junior Uranium Miners ETF Prospectus, Sprott Copper Miners ETF Prospectus, Sprott Junior Copper Miners ETF Prospectus, Sprott Lithium Miners ETF Prospectus and Sprott Nickel Miners ETF Prospectus.

The Funds are not suitable for all investors. There are risks involved with investing in ETFs, including the loss of money. The Funds are non-diversified and can invest a greater portion of assets in securities of individual issuers than a diversified fund. As a result, changes in the market value of a single investment could cause greater fluctuations in share price than would occur in a diversified fund.

Exchange Traded Funds (ETFs) are bought and sold through exchange trading at market price (not NAV) and are not individually redeemed from the Fund. Shares may trade at a premium or discount to their NAV in the secondary market. Brokerage commissions will reduce returns." Authorized participants" may trade directly with the Fund, typically in blocks of 10,000 shares.

Funds that emphasize investments in small/mid-cap companies will generally experience greater price volatility. Diversification does not eliminate the risk of experiencing investment losses. ETFs are considered to have continuous liquidity because they allow for an individual to trade throughout the day. A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses, affect the Fund’s performance.

Sprott Asset Management USA, Inc. is the Investment Adviser to the Sprott ETFs. ALPS Distributors, Inc. is the Distributor for the Sprott ETFs and is a registered broker-dealer and FINRA Member.

ALPS Distributors, Inc. is not affiliated with Sprott Asset Management LP.