National Security, Mining Investment and the Future of Materials: A Critical Crossroads

In this episode of Metals in Motion, Steven Schoffstall, Director, ETF Product Management at Sprott Asset Management, explains how government action and massive private-sector investment are reshaping the critical materials landscape, including rare earth metals. New U.S. equity stakes, global agreements and major nuclear initiatives are accelerating efforts to rebuild secure domestic supply chains amid rising geopolitical tensions. Investors are taking notice, and specialized Sprott ETFs offer targeted exposure to this expanding market.

For the latest standardized performance and holdings of Sprott Uranium Miners ETF, Sprott Junior Uranium Miners ETF, Sprott Critical Materials ETF and Sprott Active Metal & Miners ETF, please visit the individual website pages: URNM, URNJ, SETM and METL. Past performance is no guarantee of future results.

Video Transcript

Steven Schoffstall: I think what this is doing is emphasizing critical materials, and then how Western governments are viewing them as it relates to national security.

Thalia Hayden: You are watching Metals in Motion, and I'm Thalia Hayden with ETFguide. We're glad to see you again. If you missed any previous episodes of Metals in Motion, we've got you covered. Just hit the description section below to see everything we've aired this year. All episodes on our Season 2 playlist are neatly organized, archived and ready for you to watch. From uranium to rare earths, the U.S. is investing heavily in critical minerals, and the stakes are rising rapidly, with new government equity moves, global agreements and a $1.5 trillion private sector push. We're breaking down how metals markets, nuclear energy and national security are colliding in real time. Helping us get to the bottom of all of this is Steve Schoffstall, Director of ETF Product Management at Sprott Asset Management. Welcome to the show, Steve. Great to see you again.

Steven Schoffstall: It's great to be back. Thank you.

Thalia Hayden: The U.S. Department of the Interior is responsible for managing the nation's natural resources. Their 2025 list of critical minerals includes 60 minerals deemed vital to the U.S. economy and national security. What are some of the critical minerals on the list, and what is the significance of their inclusion?

Steven Schoffstall: It's a very important list because it guides the federal strategy and investment related to reducing reliance on foreign supply chains. Before this announcement, it included items such as lithium, nickel, other battery metals, rare earths, platinum and palladium — a range of common metals vital to the U.S. economy and energy security. This most recent round of updates added copper, silver and uranium, along with seven other metals, to the list. These are areas where we're starting to see the federal government step up its game. With the addition of new investment in the space, particularly in copper and uranium, we've seen significant activity, whether it comes through investments in infrastructure or companies directly. And that's really all geared toward solidifying the supply chain.

Thalia Hayden: That makes sense, Steve. Now, as rhetoric moves to action, the U.S. government has recently taken equity stakes in several mining companies. What impact are these actions having on the mining sector?

Steven Schoffstall: There's been about three or so high-profile, equity stakes that the government's taken over the last 2 to 3 months. These equity stakes range from approximately 5% to 15%. It's a very important step that we've seen, as it encourages additional investment in the space. It's all geared toward making a robust domestic supply chain. And it does provide some level of not only additional capital for these miners, but, more importantly, the clarity it gives the mining industry overall. Lithium Americas was one of the beneficiaries of an equity stake; about a 5% stake was taken by the U.S. government. This is a Canadian-listed company with a large lithium deposit in Nevada. 

If we were to discuss this 18 months ago, GM had made a $650 million investment in the same company. Trilogy Metals, which has some copper reserves it is looking to develop in the Ambler mining district in Alaska, is also acquiring an approximately 10% equity stake. And probably the most high-profile would be MP Materials, a rare earths producer. This has become increasingly important as tensions with China have escalated, and their stranglehold on the rare earths market has become apparent. This is even more significant than we've seen, possibly from some of the other targets the government has taken, because it accomplishes two important things. First, the Department of Defense has agreed to purchase 100% of the output of the new 10X facility. That's important because it provides some insight into what could happen. One thing that's different from past deals is that they're also setting a price floor in place. This also provides MP Materials with some stability in terms of financing. That, combined with the Department of Defense being the only entity that will step in if the price floor isn't met, is a very important signal as to how the government views rare earths and other critical materials.

Thalia Hayden: Now, you mentioned this particular interest has been placed on rare earths in recent months. Why are these materials, or metals, receiving so much attention?

Steven Schoffstall: They're very important across the economy. They're used in wind turbines, EVs, fighter jets, missile guidance systems and all across the technology spectrum. If you think about your cell phone, the thing that makes it vibrate is a combination of rare earths and the magnets inside. This is of particular concern, especially for Western countries, as evidenced by the fact that, going back to the early 1990s, the U.S. was the leading producer of rare earths. Throughout the 1990s and early 2000s, China made a concerted effort to take ownership not only of rare earths but also of other critical materials, effectively internalizing its supply chain. Now, we find ourselves in a situation where much of that knowledge, industry expertise, processing knowledge and technology have been lost, and we're starting to rebuild it. And that's really been a focus of the last 12 to 18 months, particularly as geopolitical tensions have risen. China has utilized rare earths as a key component in its negotiation tactics.

Thalia Hayden: Now, several agreements related to critical materials were reached during the president's trip to Asia in late October. What impact is this having on metals markets?

Steven Schoffstall: This is becoming very important. One of the highlights of President Trump's recent trip to Asia was the number of deals he secured. Agreements were reached with Malaysia and Thailand, both of which possess significant critical materials resources. Those deals are aimed at ensuring that these resources can be exported to the U.S. and other Western countries. Not necessarily in Asia, but also as part of that trip, President Trump visited Australia. Following that trip, he signed an $8.5 billion deal with Australia, aimed at joint ventures to increase the supply of critical materials for the U.S. This is a significant step. Earlier this year, Australia announced its intention to establish a strategic stockpile of critical materials. We've seen the U.S. make a similar statement about a month ago, in which it aims to establish a $1 billion critical material stockpile. I believe this highlights the significance of critical materials and how Western governments perceive them in relation to national security. Additionally, with this Australian deal, it will establish price floors that help stabilize the market and provide an incentive and attractant for other investments in the space.

Thalia Hayden: Now, switching gears a bit, Steve, nuclear energy is also getting attention as the U.S. government announced an $80 billion partnership, which is being called one of the most ambitious plans in U.S. atomic energy in decades. What impact will this have on the outlook for nuclear energy?

Steven Schoffstall: This is another instance of the government moving beyond rhetoric and taking action. It's a very significant investment, where we see the U.S. government, along with Brookfield, looking to make a $80 billion investment with Westinghouse Electric Company, which is owned by Cameco, the world's largest uranium miner by market capitalization. This is a joint venture where the U.S. government can not only finance and work through the permitting process to bring nuclear reactors to the U.S., but also through the Westinghouse technology. However, it can also convert into an equity stake, as a profit-sharing incentive is also involved. Not only do taxpayers benefit from increased nuclear energy capacity, but the government also gains from it through enhanced energy security. However, this potential for an equity stake also exists to limit taxpayer involvement or risk related to some of these stakes. It's different from what we've seen in the past, where the government has provided funding through various grants. The equity stake is a move we're starting to see. This was a significant announcement when it was released about three weeks ago. We observed that the Sprott Uranium Miners ETF, ticker URNM, and the Sprott Junior Uranium Miners ETF, URNJ, both increased on the news of the day.

Thalia Hayden: Steve, one last thing before you take off. Government investment in critical materials has been in the headlines, and private investment is following suit. J.P. Morgan announced a $1.5 trillion initiative focused on industries critical to the economic security of the U.S. What should investors know about this initiative?

Steven Schoffstall: This was one that really moved markets for critical materials when it was announced, about a month ago. It's been a busy 6 to 8 weeks, particularly with critical materials. J.P. Morgan stepped up and said it would finance, facilitate or invest directly in a number of industries critical to national economic security. Within this, they have identified 27 areas in which they're willing to invest. Specifically, they highlight nuclear energy, as well as the mining and processing of critical materials. 

As we begin to see these investments emerge, this is by far the largest that we've seen from the private sector. It's been many years now that we've started to see hyperscalers, or those AI data centers, really turn to nuclear energy. As I mentioned, we've seen GM and other automakers invest directly in battery metals or the supply chain related to battery metals. However, what we've seen in this case is that investors are now starting to take notice, and we've seen record flows.

The Sprott Critical Materials ETF (ticker SETM) and our newly launched Sprott Active Metal & Miners ETF (ticker METL) both provide significant critical materials exposure. The active strategy offers a bit more diversification in terms of grid build-out and the infrastructure needed to integrate supply chains, particularly for critical materials. And I think this is a noticeable shift where we've seen investors focusing on uranium and copper, but it's a much broader approach. And what we hear from advisors is that they like this approach because they don't necessarily have to pick just one market, which will inevitably have winners and losers. And I think the main takeaway from all these announcements is that it's not just rare earths, uranium or copper, where we're seeing investment come in. It is indeed across the entire spectrum of critical materials.

Thalia Hayden: All right, Steve, thank you so much. We appreciate your timely insight. Keep up the great work.

Steven Schoffstall: Looking forward to coming back. Thank you.

Thalia Hayden: See you soon. For U.S. investors, Sprott offers several ways to participate through ETFs linked to high-demand, critical minerals, including uranium, rare earths, copper, and more. Visit SprottETFs.com for those details. And that does it for today's episode of Metals in Motion. If you enjoyed the show, please let us know in the comment section below by clicking the like button. I'm Thalia Hayden with ETFguide. Thanks for watching, and we'll see you next time.