Sprott Asset Management has launched a new ETF in the US providing pure-play exposure to nickel mining companies.

Nickel is a vital component in rechargeable batteries.

The Sprott Nickel Miners ETF (NIKL US) has been listed on Nasdaq with an expense ratio of 0.75%.

The fund is the latest addition to Sprott’s suite of ETFs targeting mining companies focused on ‘energy transition’ minerals – minerals that are poised to play a key role in the global shift from fossil-based systems of energy production and consumption to renewable energy sources.

According to Sprott, these mining companies are expected to see surging demand for their minerals, driven by governments worldwide introducing mandates that require sharp reductions in carbon emissions.

Nickel, in particular, is a vital component in the rechargeable batteries used for hybrid and electric vehicles (EV) and clean energy storage. Recent discoveries have shown that adding more nickel to EV batteries increases their drivable range, leading the International Energy Agency to estimate that nickel demand for use in EVs and battery storage may increase nearly 20 times by 2040 relative to 2020.

Contrasting this growth in structural demand is the inherent limited supply of these minerals and the challenges of bringing them to market, leading to rising commodity prices which upstream mining companies should be well-positioned to benefit from.

NIKL gains its exposure to nickel mining companies by tracking the Nasdaq Sprott Nickel Miners Index. The index consists of both developed and emerging market companies deriving at least 50% of their revenue or assets from the mining, exploration, development, or production of nickel. Eligible firms must have market capitalizations greater than $30 million.

Constituents are weighted by float-adjusted market capitalization subject to a cap of 24% on the largest position and 25% on the aggregate weight of all other stocks with individual weights above 5%. The index is rebalanced on a semi-annual basis.

Sprott offers a further five ETFs within its energy transition suite. Four of the funds target large-cap miners of uranium or lithium and smaller-cap miners of uranium or copper, while the fifth fund offers diversification across the energy transition minerals industry.

Also listed on Nasdaq, the funds are the Sprott Uranium Miners ETF (URNM US), Sprott Lithium Miners ETF (LITP US), Sprott Junior Uranium Miners ETF (URNJ US), Sprott Junior Copper Miners ETF (COPJ US), and Sprott Energy Transition Materials ETF (SETM US).