Sprott Copper Miners ETF (Nasdaq: COPP) seeks to provide investment results that, before fees and expenses, correspond generally to the total return performance of the Nasdaq Sprott Copper Miners™ Index (NSCOPP™).

The Nasdaq Sprott Copper Miners™ Index (NSCOPP™) is designed to track the performance of a selection of global securities in the copper industry, including copper producers, developers and explorers, as well as physical copper.

The Index combines Sprott’s decades of experience in the mining sector with Nasdaq’s renowned index expertise. To be eligible for inclusion in the Nasdaq Sprott Copper Miners™ Index (NSCOPP™), a company must meet the following requirements:

Eligibility Requirements

• The security must be listed on an approved exchange. China A-shares are not eligible.
• The security’s issuer must be classified by Sprott as a copper producer, developer or explorer.
• A security’s issuer must have a Copper Intensity Score of at least 50%, meaning that at least 50% of its revenues are attributable to copper-related activities covered by the index strategy.
• The security must have a free-float market capitalization of at least $50 million, or $30 million for existing constituents.
• The security must have been listed and available for trading on an eligible exchange at least three months prior to the reconstitution reference date.
• A security must have a three-month average daily traded value of at least $50,000 or $30,000 for existing constituents. 

Note: The Sprott-sponsored closed-end trusts that invest in physical copper are exempt from the security eligibility criteria. 

Constituent Weighting Process

• The Index is a modified free-float market capitalization-weighted index.
• Index Security weights are determined using a multi-step process detailed below:
  • The weight of physical copper is set to 4.75%. The initial weight of each Index Security, excluding physical copper, is determined by dividing its free float market capitalization by the aggregate free float market capitalization of all Index Securities.
• Initial weights are adjusted to meet the following constraints:
  • All securities are capped at 24%. Excluding the security with the highest initial weight, all other securities are then capped at 10%.
• Securities that make up more than 5% of the index weight are grouped together. If the combined weight of these securities exceeds 49% of the index, the smallest weights within this group are reweighted to 4.75% until the group’s total weight is no more than 49% of the index weight. Weights are then adjusted to meet the following constraints:
  • The weight of physical copper is set to 4.75%.
  • The aggregate weight of securities with a weight greater than 5% may not exceed 49%.
  • No security weight may exceed 24%.
  • No security that is not the top-weighted security may exceed 10%. 

Index Rebalancing

• The index is reconstituted semi-annually in June and December, effective at the market open on the first trading day following the third Friday.
• The index is rebalanced quarterly in March, June, September and December, effective at the market open on the first trading day following the third Friday.

The weight of physical copper is set to 4.75% at each quarterly rebalance.

Critical materials are natural materials that are essential to the generation, transmission and storage of energy. Sprott focuses on copper as the critical material required for all energy transmission. Copper is integral to electric power generation, transmission, distribution and use, including in power grids, technology, manufacturing and the energy transition.

Growing copper demand, declining ore grades, long mine-development timelines and dwindling inventories may create supportive conditions for copper prices and copper miners.

COPP is the only¹ ETF focused on providing pure-play² exposure to copper miners and physical copper. A pure-play copper miner is a producer, developer or exploration company that earns at least 50% of its revenues from copper. Pure-play copper miners are rare, as many top copper producers earn the majority of their revenues from activities related to other materials. Because a pure-play copper miner’s financial performance is more directly tied to copper market conditions, its earnings and share price may rise more sharply than the metal itself when copper rallies.

Upstream companies are generally the miners, developers and producers of copper. These companies sit at the beginning of the supply chain and provide the raw materials needed by downstream manufacturers.

If copper demand increases, companies that extract and produce copper may be positioned to benefit from stronger market conditions. Sprott focuses on those upstream producers rather than end-users of the material.

Several long-term themes may support investor interest in copper miners:

Copper and other critical-material supply chains have become national security priorities

Nations are expanding and diversifying their energy infrastructure, including nuclear and renewables, to reduce exposure to geopolitical, macroeconomic and financial shocks. The U.S. increasingly views critical-material supply-chain vulnerabilities as a national security risk. It has launched a federal investigation into copper and critical materials, which could result in broad-based tariffs, similar to the 50% imposed on both steel and aluminum.

A U.S. executive order seeks to accelerate domestic critical-material supply by expediting permitting, streamlining regulatory processes and unlocking government-backed financing, with copper among the prioritized materials.

AI data center expansion is driving copper-intensive power infrastructure

Global data center electricity demand may rise 2.2x by 2030, exceeding Japan’s total electricity consumption.³ As data centers’ AI capabilities grow, so does the need for copper-intensive electrical equipment and infrastructure.

Cumulative new copper demand from AI data centers is projected to reach 5 million metric tons by 2030. On an annual basis, this is equivalent to 2.8% of 2030’s forecasted global demand. Further, BHP Group, the world’s largest mining company, estimates that the copper used in data centers globally will grow sixfold by 2050 to around 3 million metric tons annually.⁴

Copper is critical to the future of energy

Electricity demand is estimated to increase 157% by 2050⁵ as emerging-market middle classes expand, new technologies proliferate and AI data centers create a new source of demand. Copper is essential to the transmission and distribution infrastructure needed to support this growth, as well as to many current and emerging energy and digital technologies.

Copper supply faces challenges

Global copper supply faces significant constraints, including declining ore grades, limited new discoveries and the long lead times required to develop new mines. On average, a copper mine takes 17 years to move from discovery to first production.⁶

The copper supply-demand imbalance is likely to grow, underscoring the critical role of copper mining companies in meeting demand.

Copper miners may benefit as long-term energy requirements evolve

Copper miners may offer long-term investment potential as global electricity, digital infrastructure and energy-security requirements expand. If copper demand outpaces available supply, the resulting market conditions may support copper prices and improve the economics of certain mining companies. Additionally, long development timelines may encourage larger miners to pursue mergers and acquisitions (M&A), potentially increasing strategic interest in established copper assets and development-stage projects.

Sprott Asset Management USA, Inc. is the investment adviser to the Sprott Copper Miners ETF. ALPS Advisors, Inc. is the sub-adviser, and ALPS Fund Services, Inc. serves as the administrator. ALPS Distributors, Inc. is the Distributor for the Sprott Copper Miners ETF and is a registered broker-dealer and FINRA Member. Additionally, State Street Bank and Trust Company serves as the custodian and transfer agent.

The Sprott Copper Miners ETF expects to declare and distribute all its net investment income, if any, to shareholders as dividends at least annually and on a pro-rata basis. The Fund may distribute such income dividends and capital gains more frequently, if necessary, to reduce or eliminate federal excise or income taxes on the Fund.

Please reach out to your Sprott representative at 888.622.1813 or invest@sprott.com for additional questions.