The global competition for critical minerals has intensified significantly following China's expansion of export controls on rare earth materials and related technologies, citing national security concerns. This action highlighted China's dominant control over essential inputs needed within the global economy, increasing urgency for developed nations to safeguard access to these strategic materials. For investors, this represents an emerging area of opportunity where exposure could yield significant benefits in coming years.
China's actions prompted immediate responses from Western nations. President Donald Trump and Australian Prime Minister Anthony Albanese recently signed a critical minerals framework after five months of talks, representing a significant step toward energy and mineral leadership goals for both countries. The agreement seeks to accelerate development of robust, allied mineral supply chains and reduce dependence on rival nations. The G7 nations have also announced a critical minerals production alliance, with Canada recently announcing the first round of investments.
The United States has taken an assertive approach to securing critical minerals access through strategic partnerships. The U.S. government recently announced a public-private partnership with MP Materials Corp., a company that produces and markets rare-earth specialty materials. Through this arrangement, the Department of Defense will hold a 15% ownership stake in the company, demonstrating the strategic importance placed on securing domestic supply chains.
Resource nationalism and supply-chain security are becoming major themes across the global economic landscape as demand for critical minerals grows. The U.S., EU, and Japan have all passed or proposed "critical minerals" strategies to reduce dependence on China for rare earths, graphite, manganese, and other strategic inputs. These policies often involve subsidies, domestic mining incentives, and stockpiling—all of which can support companies involved in critical minerals exploration, refinement, and distribution.
While energy development and storage represents a primary use case for critical minerals, governments are equally concerned with securing supply chains for defense, aerospace, and advanced manufacturing applications. Rare earths such as neodymium, dysprosium, and praseodymium are essential for jet engines, missiles, radar systems, and precision optics—not just electric vehicle motors. This dual-use nature elevates their strategic importance beyond commercial applications to national security concerns.
For investors seeking exposure to this growing sector, the Sprott Energy Transition Materials ETF (NASDAQ: SETM) offers diversified exposure to companies involved with uranium, lithium, copper, rare earths, and other critical materials. Rather than focusing on single metals or companies, SETM provides broad market exposure while reducing single-commodity risk. The ETF seeks to track the performance of the Nasdaq Sprott Critical Materials Index, which follows global securities in the critical materials industry.
Given that many critical materials face potential supply constraints due to long lead times for new mines and refineries or geopolitical intervention, upward price pressure could benefit companies involved upstream in exploration and development. SETM offers investors pure-play diversified equity exposure to upstream miners, explorers, developers, and refiners of materials deemed critical for the energy transition and broader technological advancement.
