Energy Transition: The Metal Elephant in the Room

Following COP28, the world formally committed itself to transitioning away from fossil fuels. What was missing, however, was much recognition of the extraordinary demand this will place on a plethora of critical metals.

Essentially, the transition to a low carbon economy means a transition to a metals-intensive economy, be it for renewable energy generation, storage, or expanded transmission capacity. Take copper — in 2020, 4% of copper consumption was linked to decarbonisation, according to Goldman Sachs. By 2030 the figure is expected to rise to 17%. As a result, annual copper demand is expected to reach 60 million tonnes by 2030, up from 25 million tonnes today.

But a whole host of metals will be needed. Lithium is essential for batteries, electric vehicles, and future large-scale storage that will allow intermittent renewable energy sources to become reliable. Silver is an essential ingredient for solar panels. Rare earths make wind power possible.

Indeed, we can already see this demand putting price pressure on one metal: uranium. The price of uranium shot up in 2023, owing to growing concerns about lack of supply, following the past decade of underinvestment by uranium miners.

This price squeeze has the potential to continue as nuclear energy starts to play an increasingly vital role in decarbonisation. Primary uranium mine supply is significantly trailing demand, with a cumulative forecasted supply shortfall of approximately 1.5 billion pounds by 2040. And that forecast shortfall was before the COP28 pledge, which called for global nuclear capacity to triple.

With all these metals – from copper to rare earths to uranium – seeing increased demand, the miners extracting these materials stand to benefit. Historically, in bull markets for metals such as uranium or copper, miners have outperformed the commodity price.

HANetf provides a range of metal mining ETFs that tap into the energy transition. Each ETF was created in partnership with Sprott Asset Management, a leading mining investment house based in North America:

The Sprott Copper Miners ESG Screened UCITS ETF (CPPR) provides investors with ESG exposure to copper miners.

The Sprott Energy Transition Materials UCITS ETF (SETM) provides exposure to the companies that are providing the critical materials needed for the global clean energy transition.

The Sprott Uranium Miners UCITS ETF (URNM) seeks to provide investors with a way to invest in the growth of nuclear power through exposure to uranium miners. This comprises companies involved in the uranium industry, spanning the mining, exploration, development and production of uranium.