Russia’s invasion of Ukraine further underscores the need for global governments to commit capital to renewable energy and clean technology. Spending is expected to skyrocket in the coming years, creating growing demand for green metals.
It is an investment concept that is achievable with the VanEck Green Metals ETF (GMET). GMET debuted last November as an original exchange-traded fund dedicated to green metals, or materials powering electric vehicles, solar panels, and more.
While renewables are more environmentally friendly than fossil fuels, the former are more metal-intensive than the latter, underscoring a long, potentially attractive growth streak for GMET member companies.
“A typical electric car, for example, requires six times more mineral input than a traditional internal combustion vehicle, according to the International Energy Agency. An onshore wind farm requires nine times more minerals than a gas-fired power plant,” reports Pippa Stevens for CNBC.
GMET tracks the MVIS Global Clean-Tech Metals Index, which includes producers and recyclers of cobalt, copper, lithium, manganese, nickel, rare earths and other critical metals mined for the renewable energy business.
Adding to the long-term appeal of GMET is the fact that as demand for the aforementioned metals grows, some could fall into supply shortfalls, which would further increase prices. For countries seeking to meet the goals of the Paris Climate Agreement, minerals, including those produced and mined by GMET components, are a critical part of that goal.
“The data underscores that future technology solutions are highly dependent on commodity markets that are relatively small, increasing the risk that minor shortages could cause severe disruptions,” according to Bank of America. “Strategic reliance on a number of relatively small commodities is a major problem, as is [with] the likelihood of potentially exponential growth in demand.
Like banknotes, a standard solar photovoltaic system requires 17 different products. Add to that that there is a lot more copper in an electric vehicle than in an internal combustion engine vehicle.
While the newly minted GMET only holds 48 stocks, this list is large enough to hit an array of corners in the green metal space. Undoubtedly, this is a favorable trait at a time when prices and demand for so many of these metals are skyrocketing.
“Nickel and cobalt are also at multi-year highs. Aluminum is trading around its highest level since the CME began tracking data in 2014. Copper hit a record high in May 2021 based on data dating back to 1988. Although prices have fallen since then, the contract is still being negotiated. high relative to the historic price,” according to CNBC.
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Opinions and predictions expressed herein are solely those of Tom Lydon and may not materialize. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.