Sprott Energy Transition Materials Monthly

Growing Urgency to Modernize U.S. Power Grid

Main Takeaways

  • The U.S. power grid is old and outdated, considering the growth in electricity demand and the risks posed by extreme weather and climate change. Grid modernization is required to expand capacity, meet future requirements and increase resilience.
  • The power grid's most vulnerable components are its transmission and distribution lines. These aging elements urgently require modernization to ease congestion, connect renewable energy sources and adapt to the changing energy landscape.
  • Energy storage systems and V2G (vehicle-to-grid) technology are emerging as new growth drivers in future battery use and demand for energy transition metals.
  • Despite the attention paid to electric vehicles (EVs), solar, wind and other clean technologies, the electricity network is the biggest — and least elastic — factor in the growing global demand for copper.
  • In July, the Nasdaq Sprott Energy Transition Materials™ Index rose modestly and conventional metals recovered strongly, with robust gains in base metal prices and copper mining stocks.

July in Review

The Nasdaq Sprott Energy Transition Materials™ Index (NTSEM)1 rose 4.23% in July to close the month at 1,005.62. It was a strong recovery month for conventional metals miners, as witnessed by robust returns for copper miner stocks and rising base metal prices. Commodities staged a strong recovery as the risk of recession in the U.S. was pushed out further and the potential for a soft landing picked up momentum. The anticipation of further financial stimulus from China also contributed to a positive outlook. China continues to post economic numbers weak enough to hint at deflation risk — a considerable risk for an over-leveraged country.

Lithium carbonate prices and lithium miner stocks pulled back on a tumble in China's lithium futures market. But after the recent recovery, a minor pullback was not unexpected. Uranium and uranium miners were flat in July after a significant June rally. Copper, particularly copper mining stocks, had a solid recovery in July, breaking through several notable technical resistance levels on large trading volumes. Overall, the NSETM Index continues to consolidate (Figure 1).

Figure 1. Consolidation Continues for Energy Transition Materials (2018-2023)

Figure 1. Consolidation Continues for Energy Transition Materials (2018-2023)

Source: Bloomberg. Nasdaq Sprott Energy Transition Materials Index (2018-2023). Data as of 7/31/2023. Moving average convergence/divergence is a trend-following momentum indicator that shows the relationship between two exponential moving averages (EMAs), calculated by subtracting the 26-period EMA from the 12-period EMA. Included for illustrative purposes only. Past performance is no guarantee of future results.

  

Updates on Critical Minerals

Lithium: China Futures Trigger Price Declines

In July, the lithium carbonate spot price fell 12.65% to $16.80 per pound, and lithium mining stocks dropped 3.71%. Lithium’s performance in July marked a continuation of its volatility (Figure 2). The lithium carbonate spot price is now approximately 55% above the recent low of April 25, 2023, but 56% below its recent high on November 14, 2022. Over a longer horizon, however, the lithium price is still above its historical levels.

Lithium was stable for most of July until the first lithium carbonate futures contract was launched on the Guangzhou Futures Exchange on July 21.16 On its first day of trading, contracts for January 2024 delivery fell below their daily limit, triggering a price decline and putting the lithium market into backwardation. As of this writing, the lithium carbonate price for January 2024 delivery is $14.42 per pound in U.S. dollar terms and reflects market expectations of a further decrease in the spot price.

We note that the establishment of a lithium futures market provides market participants with a mechanism to hedge risk and delivers greater pricing transparency. Both have the potential to help mitigate the extreme volatility in the current lithium spot market.

Lithium miner stocks fell less than the lithium spot price in July. Generally speaking, the valuations of lithium miners already reflected the expectation of even lower lithium spot prices, which are still above producers’ costs. Lithium miners are also being buoyed by the increasing recognition that the long-term outlook for lithium demand is very positive.

In July, several noteworthy organizations released reports on critical minerals. The International Energy Agency (IEA) published its inaugural edition of the “Critical Minerals Market Review” (CMMR 2023),17 which includes an overview and outlook on critical minerals such as lithium. CMMR 2023 noted that lithium demand had tripled from 2017 to 2022 and forecasted that to reach net-zero emissions by 2050, lithium demand may still need to increase 10 times by 2040 relative to 2022.

Other forecasters echo the IEA’s view in CMMR 2023. Material and Resource Requirements for the Energy Transition by the Energy Transitions Commission, 18 and The Net-Zero Materials Transition: Implications for Global Supply Chains by McKinsey & Company,19 both released in July, include strong demand forecasts for lithium. Both reports indicate that lithium supply will likely be constrained given factors like long lead times for new projects and geographically concentrated supply chains. According to McKinsey, “There are approximately 500 cobalt, copper, lithium and nickel mines operating today. The base-case scenario would require the addition of 196 mines (an increase of approximately 40%) by 2030, while the high-case scenario would require the addition of 382 mines (an increase of approximately 80%).”

Figure 2. Volatile Lithium Takes Another Tumble (2018-2023)

Figure 2. Volatile Lithium Takes Another Tumble (2018-2023)

Source: Bloomberg. Lithium carbonate spot price, $/lb, 2018-2023. Data as of 7/31/2023. Included for illustrative purposes only. Past performance is no guarantee of future results.

Copper: Market Sentiment Raises Prices

The copper spot price rose 5.74% to $3.99 per pound in July (Figure 3), while stocks of copper miners jumped 11.56%. Copper’s sensitivity to the global economy due to its very diverse demand segments means its price has moved in line with swings in global macroeconomic sentiment.

In China, which accounts for over 50% of the global copper demand, copper prices were supported by Beijing’s promise of more help for the real estate sector and news that it was considering extending its support policies for EVs.20  In the U.S., inflation fell to 3% in June (measured by core price inflation, year over year), boosting market sentiment in the U.S. as investors became more confident about an end to interest rate hikes.

We believe the increase in copper spot prices and copper mining stocks is not only due to better market sentiment but reflects increasing investor interest in the energy transition process. CMMR 2023 forecasts that to reach net-zero emissions by 2050, copper demand may have to grow over 60% by 2040 relative to 2022. This figure, although smaller than the IEA’s projected hypothetical increase in lithium production, is still a very aggressive target. Copper is a much more mature market than lithium, with a market size close to $200 billion.

In addition, from a supply perspective, the “easy” copper has already been mined, and ore grades have been declining. According to S&P Global, “Copper ore mined today typically contains only 1% or less copper, in contrast to 150 years ago when ore grades typically exceeded 5%.”21 An analysis by Australian mining group BHP released in July noted that major copper discoveries are becoming less common22 (Figure 4). Supply disruptions have also been abundant in the copper mining space. Codelco (the National Copper Corporation of Chile) is the world’s largest copper producer, and it recently reduced 2023 production guidance after posting its lowest copper production in approximately 25 years in 2022.23 Given the current historically low levels of copper inventory, short-term supply disruptions may have an undue impact on copper prices in this market.

Figure 3. Copper Tracks Macroeconomic Outlook (2018-2023)

Figure 3. Copper Tracks Macroeconomic Outlook (2018-2023)

Source: Bloomberg. Copper spot price, $/lb, 2018-2023. Data as of 7/31/2023. Included for illustrative purposes only. Past performance is no guarantee of future results.

Figure 4. New Copper Discoveries: Rarer and Harder to Mine (1900-2040)

Figure 4. New Copper Discoveries: Rarer and Harder to Mine (1900-2040)

Source: BHP Group. Included in a presentation to Bank of America Global Metals, Mining & Steel Conference, May 16, 2023. Included for illustrative purposes only. Past performance is no guarantee of future results.

Nickel: Low Inventories Support Market

The nickel spot price rose 8.50% in July to $10.01 per pound (Figure 5), while stocks of nickel miners rose 0.92%. Nickel followed a similar path to copper but with greater volatility as expected, given its smaller market and the increased volatility since the London Metal Exchange (LME) fake nickel scandal.24 Further, historically low nickel inventories continue to support the nickel price.

The CMMR 2023 predicts that nickel demand would need to rise 128% by 2040 (versus 2022) to reach net-zero emissions by 2050, which places it between lithium and copper on the IEA forecasts. Electric vehicles constitute the largest segment of demand growth for nickel as EV adoption grows and as cathodes with greater nickel intensity are expected. That said, nickel also has supply challenges. For example, S&P Global Commodity Insights notes that only four major nickel discoveries have been made in the past decade (Figure 6).

Figure 5. Nickel Prices Up in July (2018-2023)

Figure 5. Nickel Prices Up in July (2018-2023)

Source: Bloomberg. Nickel spot price, $/lb., 2018-2023. Data as of 7/31/2023. Included for illustrative purposes only. Past performance is no guarantee of future results.

Figure 6. Nickel Discoveries Slow Down (1990-2022)

Figure 6. Nickel Discoveries Slow Down (1990-2022)

Source: S&P Global Market Intelligence. Data as of 7/11/2023. Included for illustrative purposes only. Past performance is no guarantee of future results.

Modernizing the U.S. Power Grid

The U.S. urgently needs to modernize its power grid, which is outdated, fragmented and vulnerable to climate change. Despite the high cost of upgrading the system, grid modernization is essential to mitigate economic damage and possible loss of lives from climate-related disasters. The U.S. and other nations are now recognizing how vulnerable current power grids are to climate change. Governments globally have a growing urgency to enact policies to boost energy resilience.

The U.S. power grid’s components vary in age because different parts were developed and expanded at different times. Some portions of the grid date back to the early 20th century, while others are more recent. The estimated cost of modernizing the grid over the coming decades is well into the trillions of dollars. However, power outages cost the U.S. economy approximately $150 billion annually — excluding the human toll — so the price of inaction would eventually be far greater. Figure 7 provides a quick overview of the U.S. power grid.

Figure 7. U.S. Power Grid: Main Components

Component

Description

Function

Power Plants Facilities that generate electricity using various sources Produce electricity to meet demand
Transmission Lines High-voltage lines that transport electricity over long distances Transmit electricity from power plants to substations and distribution centers
Substations Facilities that step down voltage for distribution Regulate and distribute electricity to lower voltage levels for local use
Distribution Lines Lower-voltage lines that deliver electricity to consumers Deliver electricity from substations to homes and businesses
Transformers Devices that change voltage levels Step up or step down the voltage for efficient transmission and use
Switchgear Equipment that controls, protects and isolates electrical circuits Safely manage the flow of electricity and prevent damage
Control Centers Centralized facilities to monitor and control the grid Coordinate power generation and distribution in real time
Energy Storage Systems Batteries and other technologies that store excess electricity Store energy for times of high demand or low production
Smart Grid Technology Advanced sensors, communication and automation systems Optimize grid performance and enable demand response

Source: Sprott Asset Management. As of July 30, 2023.

Recent U.S. legislative efforts recognize the urgency of modernizing the power grid and enhancing its resilience. The Bipartisan Infrastructure Law (2021) allocates $13 billion for grid modernization. The Inflation Reduction Act (2023) guarantees up to $250 billion in loans for projects to reduce greenhouse gas emissions from existing energy infrastructure.

Comprehensive upgrades will be needed, including transitioning to renewable energy sources like wind and solar, constructing storage facilities for renewable energy and expanding, and upgrading transmission lines. Additional investments in battery facilities are also crucial for optimizing the efficiency of renewables and improving grid reliability during supply disruptions. All this will require supplies of energy transition metals that go well beyond EV battery demand.

How Extreme Weather Strains the Grid

High temperatures, prolonged heat waves, rising sea levels, droughts, wildfires, hurricanes and other severe weather events can disrupt all aspects of the power grid, from power generation to transmission and distribution. The North American Electric Reliability Corporation warns of the elevated risk of energy shortages due to extreme heat events. Disasters like Hurricane Maria in 2017 and the Texas winter storm of 2021 have resulted in fatalities and massive power crises. These incidents emphasize the need for grid modernization to prevent catastrophic consequences.

According to the World Meteorological Organization, July was the hottest month on record worldwide.25 Extremely hot weather puts the transmission and distribution infrastructure at risk. High temperatures stress power lines, potentially leading them to sag or fail. They increase electrical resistance and cause thermal expansion of conductors, which affects performance and reliability. Components that require cooling, such as thermal power plants and transformers, are also highly susceptible to extremely hot weather.

Another critical impact of extreme weather on the U.S. grid is the significant increase in air conditioning demand during heat waves. The U.S. Energy Information Administration estimates that air conditioning typically represents 10% of electricity demand, but this can rise exponentially during extreme heat. Surges in demand strain the grid’s ability to generate and transmit power, especially during peak hours when energy consumption is already high, resulting in brownouts or power outages.

The transmission infrastructure is the part of the U.S. power grid that most needs upgrading. A modern transmission network is required to accommodate today's electricity consumption and generation patterns, efficiently move power across the grid, integrate renewable energy resources from remote areas, enhance grid resilience and implement smart grid technologies for real-time data analysis.

Demand response programs and energy-efficient technologies may play a crucial role in building resilience. Incentivizing consumers to adjust electricity usage during high-demand periods can alleviate strain on the grid. Advancements in energy-efficient appliances, homes, buildings and vehicles will contribute to a more sustainable and reliable energy landscape.

Upgrading the U.S. power grid would be a critical step toward mitigating the impact of climate change and ensuring a more secure and sustainable energy future. Through government initiatives and strategic investments in low-carbon energy generation, storage and transmission, the U.S. can fortify its power grid to withstand the challenges of climate change and safeguard its citizens and economy.

Electricity Networks Push Copper Demand

Among the major components of the electrical grid, power generation sources tend to consume the most metals. Constructing power plants requires significant amounts of various metals and alloys (e.g., steel, copper and aluminum) for structural components, turbines, boilers, generators, condensers and other plant infrastructure. Transmission and distribution lines use aluminum and copper for conductors, with specific metal components depending on the scale, design and location of the power grid infrastructure.

CMMR 2023 describes several scenarios for copper demand from electricity networks. Using the IEA's base-case scenario based on stated policies26 (Figure 8),  we show expected copper demand by sector. For reference, some 150 million tons of copper are currently in U.S. electricity grids. The U.S. transmission network has 600,000 miles of lines.

The electricity network is by far the most significant among the various components of clean technology that require copper. CMMR 2023 projects copper demand for electricity networks will increase by 2,329 kilo tonnes between now and 2030 — more than all other clean tech sectors combined. Versus 16% currently, electricity network demand for copper is expected to represent 21% of all copper demand by 2030. Growth in demand for copper from clean tech is expected to be several times higher than from other end users. Electricity network demand is likely the most inelastic of all copper demand sources.

Figure 8. Power Grids Need Copper

IEA Total Copper Demand Outlook
Stated Policies Scenario Only   Kilo Tonnes (KT)* Growth to 2030
  2022 2025 2030 KT % Ch
Electricity networks 4,182 4,579 6,510 2,329 56%
Grid Battery Storage 20 38 83 62 305%
Electric vehicles (EVs) 373 580 1,044 671 180%
Solar Photovoltaics 682 779 907 226 33%
Wind 394 428 646 253 64%
Other Low Emissions Power Generation 85 69 108 23 26%
Hydrogen technologies 0 0 0 0  
Total Clean Tech Copper Demand 5,736 6,473 9,298 3,562 62%
Other Copper Demand 19,766 20,282 21,550 1,784 9%
Total Copper Demand 25,502 26,755 30,848 5,346 21%
% Demand From Clean Technologies 22% 24% 30%    

* KT or Kilo Tonnes is equal to one thousand tonnes. Source: IEA, Critical Mineral Markets Review 2023, July 2023. Included for illustrative purposes only. Past performance is no guarantee of future results.

Energy Storage Crucial to Sustainability

Energy storage systems are the newest components in the U.S. power grid and we believe have the most growth potential. These technologies — like batteries, pumped hydro storage and other emerging solutions (Figure 9) — play a critical role in supporting the integration of renewable energy sources into the grid. They address the challenges of intermittent generation, which is the primary shortcoming of wind and solar power.

Renewable energy sources like solar and wind power have grown significantly in recent years, and their share in the energy mix is expected to continue to rise. However, renewable energy fluctuates based on weather conditions and time of day. This leads to imbalances between electricity supply and demand, which energy storage systems can help mitigate. Energy storage systems can trap excess energy during periods of high generation and release it when demand exceeds supply. This helps to maintain grid stability and enhance the power grid's resiliency during extreme weather events or emergencies.

Advancements in energy storage technology have led to cost reductions and improved performance, making these systems increasingly attractive for utilities, businesses and consumers. As the technologies evolve, they may likely become more efficient, affordable and widely adopted across various applications, such as grid-scale storage, behind-the-meter systems for businesses and residences, and EV integration.

Energy storage systems are a crucial enabler of clean energy in the push for sustainability and decarbonization. The storage landscape is dynamic and evolving, but battery storage systems have an early lead, given their high energy density, fast response time, long-duration discharge and scalability. Furthermore, they are a known technology with declining costs. Alongside EVs, energy storage systems are a major factor in the rising demand for batteries.

Figure 9. The Landscape of Energy Storage Technologies

Storage Method
Description
Application
Pros
Cons

Battery Energy Storage Systems

Large lithium-ion batteries store excess electricity for use during high demand

Solar, wind and grid balancing

High energy density, fast response, known technology, scalable

Limited cycle life, raw material shortage

Pumped Hydro Storage

Uses excess electricity to pump water uphill for later power generation

Hydropower plants and grid balancing

Large scale, capacity, high efficiency, long life

Limited environmental site-specific, upfront cost

Compressed Air Energy Storage (CAES)

Compresses air for later expansion through turbines to generate electricity

Grid balancing and power plants

High energy density, storage in known geological formations, long life

Energy-efficiency loss, limited locations, upfront cost

Flywheel Energy Storage

Stores excess electricity as rotational energy in flywheels

Grid balancing and rapid response

Fast response, high power density, long life

Limited storage, high upfront cost

Thermal Energy Storage

Captures excess heat or cold for later use in power generation or heating/cooling

Solar thermal and district heating/cooling systems

High energy density, multi-use, long life

Limited scalability, thermal loss, upfront cost

Hydrogen Storage

Produces hydrogen using excess electricity for various applications

Industrial processes and power generation

High energy density, carbon neutral, multi-use

Efficiency losses, upfront cost, safety

Source: Sprott Asset Management. As of July 30, 2023.

V2G Technology: EVs Meet the Power Grid

As the U.S. grapples with peak demand during heat waves, officials have urged residents to avoid charging electric vehicles during peak hours to prevent rolling blackouts. However, despite these concerns, EVs are not the primary strain on the grid. According to Bloomberg NEF, the current three million EVs in the U.S. account for less than 1% of total electricity demand. Even with a projected increase in EV adoption, their impact on electricity demand will likely remain relatively low. If the EV fleet in the U.S. were to reach 41 million by 2030, it is expected to represent only about 5% of annual electricity usage, according to IEA data.

Moreover, as EVs become more prevalent, they have the potential to enhance grid resilience by contributing electricity back to the network when it is needed most. Vehicle-to-grid (V2G) technology is an innovative concept that allows EVs to interact with the power grid, enabling the bidirectional flow of electricity between the grid and the vehicle's battery.

V2G technology offers several key features and benefits (Figure 10) and could make the power grid more robust as the number of EVs on the road rises. EVs can be managed smartly to charge during off-peak hours, such as overnight when electricity demand is low. Owners can also schedule charging to find the optimal time for their vehicle to be fully charged. Utilities offer lower rates for electricity during off-peak hours, making it convenient for EV owners to charge their vehicles at home. Utilities have implemented "demand response" programs, encouraging EV owners to participate by interrupting charging during peak demand to reduce energy usage and avoid blackouts.

V2G technology takes this further, allowing utilities to draw power from EVs during high-demand periods. With V2G, EV owners can set rules for how much energy they will give back to support the grid and can even earn money selling electricity to utilities at higher prices.

While V2G technology is promising, some car manufacturers have concerns about battery degradation affecting warranties. However, other carmakers like Ford and GM are exploring ways to use their EVs to supply electricity during blackouts and enhance grid resilience.

The fears of EVs straining the electric grid are generally unfounded. With proper management and the advancement of V2G technology, EVs can contribute to grid resilience and stability. As the EV market grows and more car manufacturers explore innovative solutions, the future of EVs and the power grid seems increasingly promising.

Figure 10. V2G Technology: Key Features

Key Features of V2G Technology
Applications and Benefits
Bidirectional Charging

Allows EVs to receive power or send excess electricity back to the grid, providing cost savings and potential revenue for EV owners

Grid Stabilization and Peak Shaving

EVs may act as energy storage and may help to stabilize the grid by providing power during peaks that reduce stress on the grid

Renewable Energy Integration

Facilitates integration of solar and wind energy into the grid and increases its utilization

Energy Storage

EV batteries store significant energy for grid load balancing, which enhances grid resilience and the integration of renewable energy

Demand Response

EV owners adjust charging and discharging, enabling more efficient grid management and energy usage

Grid Support During Emergencies

V2G-enabled EVs serve as emergency backup power during outages, enhancing resiliency and disaster response capability

Financial Incentives

Payments to EV owners for providing grid support services lead to reduced electricity cost during off-peak charging and encourage EV adoption

Carbon Emission Reduction

Promotes a sustainable energy system with less reliance on fossil fuels and lowers carbon emissions

 Source: Sprott Asset Management. As of July 30, 2023.

 

Critical Materials: July 2023 Performance

 

Metric 7/31/2023 6/30/2023 Change Mo % Chg YTD % Chg Analysis 
Miners
Nasdaq Sprott Energy Transition Materials™ Index1 1,005.62 964.81 40.81 4.23% 7.68% Copper miners led in July as commodities rallied on the falling risk of recession and increasing anticipation of future China stimulus in response to its very weak economic data.
Nasdaq Sprott Lithium Miners™ Index2 1,044.35
1,084.64 (40.29) (3.71)% 13.23%
North Shore Global Uranium Mining Index3 2,648.23 2,578.76 69.47 2.69% 9.12%
Solactive Global Copper Miners Index4 155.62 139.49 16.13 11.56% 19.44%
Nasdaq Sprott Nickel Miners™ Index5 856.18 848.34 7.83 0.92% (5.92)%
Nasdaq Sprott Junior Copper Miners™ Index6 1,041.40 949.30 92.10 9.70% 21.32%
Nasdaq Sprott Junior Uranium Miners™ Index7 1,006.70 1,021.54 (14.84) (1.45)% (1.92)%
Physical Materials
Lithium Carbonate Spot Price $/lb8 16.80 19.23 (2.43) (12.65)% (50.83)% Fell on launch of futures
U3O8 Uranium Spot Price $/lb9 56.21 56.02 0.20 0.35% 16.35% Flat after significant outperformance
LME Copper Spot Price $/lb10 3.99 3.77 0.22 5.74% 5.20% Rises in sentiment and optimistic outlook
LME Nickel Spot Price $/lb11 10.01 9.23 0.78 8.50% (26.13)% Strong increase with continued volatility
Benchmarks
S&P 500 TR Index12 4,588.96 4,450.38 138.58 3.11% 19.52% Stronger-than-expected Q2 GDP, declining risk of recession, and the expected end of Fed tightening rallied risk assets further this month. Pro-cyclical assets rallied strongly.
DXY US Dollar Index13 101.86 102.91 (1.06) (1.03)% (1.61)%
Bloomberg Commodity Index14 107.34 101.48 5.86 5.78% (4.85)%
 S&P Metals & Mining Select Industry TR Index15 2,759.16 2,602.45 156.71 6.02% 8.14%

Source: Bloomberg and Sprott Asset Management LP. Data as of July 31, 2023.
Past performance is no guarantee of future results. You cannot invest directly in an index. 

  • For the latest standardized performance of the Sprott Energy Transition ETFs, please visit the individual website pages: SETM, LITP, URNM, URNJ, COPJ and NIKL. Past performance is no guarantee of future results.

 

Footnotes

1 The Nasdaq Sprott Energy Transition Materials™ Index (NSETM™) is designed to track the performance of a selection of global securities in the energy transition materials industry, and was co-developed by Nasdaq® and Sprott Asset Management LP.
2 The Nasdaq Sprott Lithium Miners™ Index (NSLITP™) is designed to track the performance of a selection of global securities in the lithium industry, including lithium producers, developers and explorers; the Index was co-developed by Nasdaq® and Sprott Asset Management LP.
3 The North Shore Global Uranium Mining Index (URNMX) is designed to track the performance of companies that devote at least 50% of their assets to the uranium mining industry, which may include mining, exploration, development and production of uranium, or holding physical uranium, owning uranium royalties or engaging in other non-mining activities that support the uranium mining industry.
4 The Solactive Global Copper Miners Index includes international companies active in exploration, mining and/or refining of copper. The index includes a minimum of 20 and a maximum of 40 members. The calculation is done in USD as a total return index. Index adjustments are carried out semi-annually.
5 Nasdaq Sprott Nickel Miners™ Index (NSNIKL™) is designed to track the performance of a selection of global securities in the nickel industry.
6 Nasdaq Sprott Junior Copper Miners™ Index (NSCOPJ™) is designed to track the performance of mid-, small- and micro-cap companies in copper-mining related businesses.
7 Nasdaq Sprott Junior Uranium Miners™ Index (NSURNJ™) is designed to track the performance of mid-, small- and micro-cap companies in uranium-mining related businesses.
8 The lithium carbonate spot price is measured by the China Lithium Carbonate 99.5% DEL. Source Bloomberg and Asian Metal Inc. Ticker L4CNMJGO AMTL Index. Data converted to pounds and to USD with Bloomberg FX Rates.
9 The U3O8 uranium spot price is measured by a proprietary composite of U3O8 spot prices from UxC, S&P Platts and Numerco.
10 The copper spot price is measured by the LME Copper Cash ($). Source Bloomberg ticker LMCADY. Data converted to pounds.
11 The nickel spot price is measured by the LME Nickel Cash ($). Source Bloomberg ticker LMNIDY. Data converted to pounds.
12 The S&P 500 or Standard & Poor's 500 Total Return Index is a market-capitalization-weighted index of the 500 largest U.S. publicly traded companies.
13 The U.S. Dollar Index (USDX, DXY) is an index of the value of the U.S. dollar relative to a basket of foreign currencies.
14 The Bloomberg Commodity Index (BCOM) is a broadly diversified commodity price index that tracks prices of futures contracts on physical commodities, and is designed to minimize concentration in any one commodity or sector. It currently has 23 commodity futures in six sectors.
15 The S&P Metals & Mining Select Industry Index comprises stocks in the S&P Total Market Index that are classified in the GICS metals & mining sub-industry.
16 China’s Path-Setting Lithium Futures Tumble on Trading Debut
17 IEA, “Critical Mineral Markets Review 2023”, July 2023
18 Energy Transitions Commission, “Material and Resource Requirements for the Energy Transition”, July 2023
19 McKinsey & Company, “The net-zero materials transition: Implications for global supply chains”, July 2023
20 Bloomberg, “Copper Hits Three-Month High Amid Demand Hopes, Supply Risks”, July 30. 2023
21 Mining sector's failure to seek new copper jeopardizes entire energy transition
22 BHP, Presentation to Bank of America Global Metals, Mining & Steel Conference, July 2023
23 Mining.com, “Codelco says 2023 copper production further hurt by heavy rains”, July 5, 2023
24 LME forced to halt nickel trading, cancel deals, after prices top $100,000
25 WMO, July 2023 is set to be the hottest month on record.
26 Stated Policies Scenario (STEPS): this scenario maps out a trajectory that reflects current policy settings based on a detailed assessment of what policies are actually in place or are under development by governments around the world. Announced pledges and net zero emissions are omitted here, which would dramatically increase copper demand.

 

Please Note: The term “pure-play” relates directly to the exposure that the Funds have to the total universe of investable, publicly listed securities in the investment strategy.

Important Disclosures

The Sprott Funds Trust is made up of the following ETFs (“Funds”): Sprott Gold Miners ETF (SGDM), Sprott Junior Gold Miners ETF (SGDJ), Sprott Energy Transition 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.

This material must be preceded or accompanied by a prospectus. A prospectus can be obtained by calling 888.622.1813 or by clicking these links: Sprott Gold Miners ETF Prospectus, Sprott Junior Gold Miners ETF Prospectus, Sprott Energy Transition 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. Sprott Asset Management LP is the Sponsor of the Funds. 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.

 

 

Paul Wong
Paul Wong, CFA, Market Strategist
Paul has held several roles at Sprott, including Senior Portfolio Manager. He has more than 30 years of investment experience, specializing in investment analysis for natural resources investments. He is a trained geologist and CFA holder.
View Full Bio
Jacob White
Jacob White, CFA
ETF Product Manager, Sprott Asset Management LP
View Full Bio

SETM

Sign-Up Now for Sprott Insights

Invest Now

You can purchase and trade shares of Sprott ETFs directly through your online brokerage firm; these firms may include:


U.S. Investors


Canadian Investors

 

Important Message

You are now leaving SprottETFs.com and entering a linked website.

Important Message

You are now leaving SprottETFs.com and will be directed to the Sprott website at Sprott.com. ALPS Distributors, Inc. is the Distributor for the Sprott ETFs and is a registered broker-dealer and FINRA Member. Sprott Asset Management LP is the adviser for the Sprott ETFs.

Continue