Sprott Asset Management has unveiled four new ETFs providing pure-play exposure to mining companies focused on energy transition minerals.

John Ciampaglia, CEO of Sprott Asset Management.

Three of the new listings target lithium miners and smaller-cap miners of uranium or copper, while the fourth fund offers diversification across the energy transition minerals industry.

Listed on Nasdaq, the funds are the 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).

The new listings notably expand Sprott’s energy transition ETF suite which also includes the $950 million Sprott Uranium Miners ETF (URNM US). URNM targets large-cap companies involved in the uranium mining industry. Its expense ratio is 0.85%.

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

John Ciampaglia, CEO of Sprott Asset Management, said: “2022 was a global wake-up call regarding the importance of energy transition and security. Certain critical minerals serve as raw materials that are required to meet the growing need for low-carbon energy, increased electrification, and the transition to electric vehicles. Due to years of underinvestment, demand for many energy transition materials now outstrips supply. We believe mining companies focused on energy transition minerals are well-positioned to benefit from the significant investments that will be required over the coming decades.”

The ETFs

The Sprott Lithium Miners ETF tracks the Nasdaq Sprott Lithium Miners Index and comes with an expense ratio of 0.65%.

The index consists of companies from both developed and emerging markets that derive at least 50% of their revenue or assets from the mining, exploration, development, or production of lithium. Eligible firms must have market capitalizations greater than $40 million. Constituents are weighted by float-adjusted market capitalization subject to a cap of 9.75% on the five largest positions and 4.75% on any other stock.

The Sprott Junior Uranium Miners ETF tracks the Nasdaq Sprott Junior Uranium Miners Index and comes with an expense ratio of 0.80%.

The index covers mid, small, and micro-cap companies deriving more than 50% of their revenue or assets from the mining, exploration, development, or production of uranium. The index also includes firms that are holding physical uranium, owning uranium royalties, or engaging in other non-mining activities that support the uranium mining industry. Companies must have a market capitalization between $30m and $3 billion to be eligible for inclusion. The index is also weighted by float-adjusted market capitalization subject to a cap of 12% on each of the top four positions and a cap of 4.75% on any other stock.

The Sprott Junior Copper Miners ETF tracks the Nasdaq Sprott Junior Copper Miners Index and comes with an expense ratio of 0.75%.

The index covers mid, small, and micro-cap companies deriving more than 50% of their revenue or assets from the mining, exploration, development, or production of copper. Constituents are weighted by float-adjusted market capitalization subject to a single stock cap of 4.75%.

The Sprott Energy Transition Materials ETF tracks the Nasdaq Sprott Energy Transition Materials Index and also comes with an expense ratio of 0.65%.

The index covers companies that derive at least 50% of their revenue or assets from the mining, exploration, development, production, recycling, refining, or smelting of energy transition minerals which may include uranium, copper, lithium, nickel, cobalt, graphite, manganese, rare earth metals, and silver. Firms must have a market capitalization in excess of $100m to be eligible for inclusion. Constituents are weighted using a combination of float-adjusted market capitalization and their ‘intensity score’ which reflects the proportion of the company’s business that is dedicated to energy transition minerals. A single stock cap of 4.75% and a group commodity cap of 25% are applied.