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. The trade war between the U.S. and China conveyed the significance of critical minerals to the global economy, making them an emerging area of opportunity for investors.
China's actions prompted the U.S. and other countries to address their lack of control over critical minerals. 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. 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 U.S. has taken an assertive approach to securing critical minerals access through a public-private partnership with MP Materials Corp. (NYSE: MP), a company that produces and markets rare-earth specialty materials. Through this strategic investment, the U.S. government, via the Department of Defense, will hold a 15% ownership stake in the company. As of December 2, 2025, MP Materials Corp. is a current holding in the Sprott Critical Materials ETF with a weight of 7.21%.
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, which can support companies involved in critical minerals exploration, refinement, and distribution.
While energy development and storage are top-of-mind use cases for critical minerals, governments want secure supply chains as these materials are essential for defense, aerospace, and advanced manufacturing. Rare earths such as neodymium, dysprosium, and praseodymium and other specialty metals are crucial for jet engines, missiles, radar, precision optics, and electric vehicle engines.
The Sprott Critical Materials ETF (NASDAQ: SETM) aims to capitalize on this growing demand by offering diversified exposure to materials companies involved with uranium, copper, lithium, rare earths, and other critical materials. Rather than picking one metal or company, SETM facilitates capturing broad market opportunities and reduces single-commodity risk. Given that many critical materials could face supply constraints due to long lead times for new mines or geopolitical intervention, this could result in upward price pressure benefiting upstream companies.
SETM provides "pure-play" diversified equity exposure to upstream miners, explorers, developers, and refiners of materials deemed critical to meeting the world's growing energy demands. These include uranium, copper, lithium, nickel, cobalt, graphite, manganese, rare earths, and silver. The ETF seeks to provide investment results corresponding generally to the total return performance of the Nasdaq Sprott Critical Materials Index. Investors can visit https://sprottetfs.com/setm-sprott-critical-materials-etf/ for a complete list of all SETM holdings, which are subject to change.
