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Editorial Advisory Board

  • Professor Andrea M. Armani, University of Southern California
  • Ruti Ben-Shlomi, Ph.D., LightSolver
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  • Professor Birgit Stiller, Max Planck Institute for the Science of Light, and Leibniz University of Hannover
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  • Mohan Wang, Ph.D., University of Oxford
  • Professor Xuchen Wang, Harbin Engineering University
  • Professor Stefan Witte, Delft University of Technology

Analysts Predict Net Zero Energy Transition Will Push Most Battery Metals Into Shortage By 2030 – How Investors Can Potentially Get Exposure

--News Direct--

By Rachael Green, Benzinga

Shares of Sprott Energy Transition Material ETF (NASDAQ: SETM) could be positioned for growth as the quest for new supplies of key battery metals like lithium and nickel intensifies. Sprott Asset Management launched the ETF at the beginning of the year as a way to give investors pure-play access to critical minerals that will be key to the global clean energy transition currently underway.

Battery Metals Are Quickly Approaching Extreme Shortages

According to the International Energy Agency (IEA), lithium demand has tripled since 2017, and it’s forecast to increase tenfold from 2022 to 2040 in order to meet the battery and electricity storage needs of countries aiming to reach net zero emissions by 2050.

The soaring demand for lithium is almost entirely tied to the net zero transition. The mineral is a key component of EV batteries and clean energy storage platforms. About 56% of the demand for lithium in 2022 came from EV batteries exclusively. That’s only expected to get higher in the decades ahead as the typical battery contains about 8 kilograms (17.5 pounds) of lithium and about 2 billion electric vehicles (EVs) will need to be on the road by 2050 in order to meet the net zero emissions target.

Meanwhile, while EV batteries and storage only represent about 11% of the current demand for nickel, the IEA estimates that it’ll account for over half of total nickel demand by 2040. A similar trajectory is forecast for cobalt and other minerals that are used to make various kinds of EV batteries and other storage units.

To meet that demand, McKinsey & Company estimates that over 380 new mines would need to be added on top of the approximately 500 mines currently operating today.

The Sprott Energy Transition Materials ETF (SETM) Gives Investors Broad Upstream Exposure to Critical Minerals

SETM tracks the Nasdaq Sprott Energy Transition MaterialsTM Index, which is composed of over 100 global companies directly involved in energy transition materials including copper, lithium, nickel, uranium, cobalt, graphite, manganese, rare earths and silver. Currently, the index is heavily weighted toward lithium-, uranium-, and copper-related stocks, with each group accounting for about a quarter of the portfolio’s weight.

With an even mix of large, medium and small-cap stocks all over the world, this gives investors broad exposure to the companies poised to benefit most from the net zero transition. It’s also concentrated on upstream companies – including producers, developers, explorers, refiners, recyclers and other companies involved in providing raw materials to EV makers, power plants and other downstream companies that will need those critical materials.

With a supply shortage looming, upstream exposure might not only give investors a way to capture returns from surging battery metal prices but also to limit exposure to downstream companies that might not be able to keep up with competitors as costs increase.

While the need for clean energy is clear and policymakers are enacting increasingly stricter emissions standards, it still remains to be seen which companies will come out on top and exactly what the clean energy mix will look like in the future. But what is fairly certain is that these critical minerals will be key to building the infrastructure to store and distribute that clean energy.

This post contains sponsored content. This content is for informational purposes only and not intended to be investing advice.

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