After severe supply chain disturbances due to COVID-19 and the war in Ukraine, many commodities are in high demand.
Producers can’t keep up with the pace of global expansion and often fall short on deliveries.
This creates a deficit. And a great investment setup for commodity investors.
This is relevant to nickel, copper, lithium, and other metals.
Now, the aftershock of global geopolitical volatility has hit another mineral called hafnium.
Its price rose from $1,200 to $4,800 per kilogram in just a year. That’s a massive fourfold gain over a short time frame.
The reason behind the rally is the bottlenecked supply chain and propelling demand from some of the most critical sectors.
Hafnium has a unique anti-corrosive quality that finds its uses in nuclear reactors, specifically in their control rods. The metal is also vital for space and defense sectors, where it goes into aero-gas turbine engines.
But that’s not all.
The metal is also crucial for the next generation of chips. The so-called nanochips require hafnium for special coating. Without hafnium, the world can face another wave of chip shortage.
And it’s not easy to boost supply because hafnium comes as a by-product. It means that its production relies on the output of other metals, like zirconium.
Miners must process about 50 tonnes of zirconium to deliver one tonne of hafnium. That’s one of the big reasons why hafnium is in such short supply.
The global demand stands at around 90 tonnes annually, but it will take mining 50x of the minerals it’s associated with to mine a tonne of hafnium.
This is why even with a mere 10 tonnes of hafnium deficit, the metal soared 4x.
On top of that, China plans to scrap most of the available supply in the coming years. It will need hafnium to build out a massive fleet of new uranium plants all over the country.
The World Nuclear Association estimated that in China alone, 55 nuclear reactors are up and running. And over 200 more are planned.
With demand like this, hafnium will likely remain in deficit for years to come.
New And Easy Way to Invest in Critical Minerals
The global energy transition has a lot of support from major investors. One of the largest mining financiers has launched a unique line of products for investors.
Last week, Sprott released four exchange-traded funds (ETFs) that focus on critical metals.
Now investors can get access to:
- Sprott Energy Transition Materials ETF (Nasdaq:SETM)
- Sprott Lithium Miners ETF (Nasdaq:LITP)
- Sprott Junior Uranium Miners ETF (Nasdaq:URNJ)
- Sprott Junior Copper Miners ETF (Nasdaq:COPJ)
These ETFs are designed to track each sector of the critical minerals universe.
Sprott has a solid track record in funding mining deals. In the past, it launched two ETFs related to the energy transition:
- Sprott Uranium Miners ETF (NYSEURNM)
- Sprott Physical Uranium Trust (TSX:U.U, U.UN)
Both are focused on the uranium sector. And now the company is expanding beyond nuclear energy.
The new product line will provide a range of investment tools to investors looking to get exposure to copper, lithium, uranium, and other new energy metals.
And these are listed on the US and Canadian exchanges for easy access for both US- and Canada-based investors.
Thank you for your loyal readership,
The Financial Star team