Mining Investment and the Future of Materials: A Critical Crossroads

I think what this is doing is just putting an emphasis on critical materials and then how Western governments are viewing them as it relates to national security. You're watching Metals in Motion and I'm Thalia Hayden with ETF Guide. We're glad to see you again. If you missed any previous episodes of Metals in Motion, we've got you covered.

Just hit the description section below to see everything we've aired this year. All episodes on our season 2 playlist are neatly organized, archived, and ready for you to watch. From uranium to rare earths, the US is going all in on critical minerals, and the stakes are rising fast with new government equity moves, global agreements, and a $1.5 trillion private sector push. We're breaking down how metals markets, nuclear energy, and national security are colliding in real time. Helping us get to the bottom of all of this, Steve Shavestall, director of ETF product management at SPAT Asset Management. Welcome to the show, Steve. Great to see you again.

Yeah, it's great to be back. Thank you.

The US Department of the Interior is responsible for managing the nation's natural resources. Their 2025 list of critical minerals includes 60 minerals deemed vital to the US economy and national security. What are some of the critical minerals on the list and what is the significance of their inclusion?

Yeah, it's a great question. It's a very important list because it guides the federal strategy and investment as it relates to reducing reliance on foreign supply chains. Before this announcement included things like battery metals. So you think about lithium, nickel, other battery metals, rare earths, platinum, palladium. So a lot of common metals that are vital to the US economy and energy security. This most recent round of updates actually added copper, silver, and uranium along with seven other metals to the list.

So these are areas where we're really starting to see the federal government step up their game and add additional investment to the space, particularly in copper and uranium where they're concerned. We've seen a lot of action whether it comes through investments in infrastructure or companies directly and that's really all geared at solidifying the supply chain.

Makes sense Steve. Now as rhetoric moves to action the US government has recently taken equity stakes in several mining companies. What impact are these actions having on the mining sector?

Yeah, there's really been about three or so high-profile equity stakes that the government's taken over the last two to three months. These equity stakes range anywhere from about 5 to 15%. It's a very important step that we've seen because what this does is encourage additional investment in the space. It's all geared toward really making a robust domestic supply chain, and it does provide some level of not only additional capital for these miners but I think more importantly is the clarity that it gives the mining industry overall.

Lithium Americas was one of the benefactors of an equity stake, about a 5% stake was taken by the US government. This is a Canadian listed company. They have a large lithium deposit in Nevada, which if we were to talk about this 18 months ago, GM actually made a $650 million investment in the same company, in the same mine. Trilogy Metals, which has some copper reserves that they're looking to open up in the Ampler Mining District in Alaska, is also seen an equity stake that will be about 10%. And probably the most high-profile would be MP Materials.

They're a rare earth producer. This is one that's been increasingly important as we see the tensions that we've seen with China and really the strangle hold that they have on the rarest market. This is also even more significant than we've seen maybe from some of the other targets that the government's taken because it does two important things. So first the Department of Defense has agreed to purchase 100% of the output of the new 10X facility.

That's important because it provides some foresight into what could go on. And something that's different than we've seen in the past with other deals is that they're also putting a price floor in place. So this also gives MP materials in this case some stability as it relates to financing. That combined with the Department of Defense being the only company that will step in if that price floor isn't met, I think are two very important signals as to how the government's viewing rare earths and other critical materials.

Now, you mentioned this particular interest has been placed on rare earths in recent months. Why are these materials or metals receiving so much attention?

They're very important across the economy. They're used in and I know we've discussed this in the past, wind turbines, EVs, but they're also used in fighter jets and missile guidance systems all across a technology spectrum. If you think about your cell phone, the thing that makes it vibrate is rare earths and the magnets that are in there. This is of particular concern where Western countries are concerned because if you go back to the early 1990s the US was actually the leading producer of rare earths and throughout the 1990s and early 2000s what we saw was a very concerted effort by China to take ownership not only of rare earths but other aspects of critical materials and really internalize that supply chain.

So now we're in a situation where a lot of that knowledge industry knowledge and the processing knowledge and technology has been lost, and we're starting to build that back and that's really been a focus of I'd say the last 12 or 18 months that we've seen now particularly as the geopolitical tensions have risen. China's really used rare earths as an important step in their negotiation tactics.

Now a number of agreements related to critical materials were reached during the president's trip to Asia in late October. What impact is this having on metals markets?

Yeah, this is becoming very important and I think one of the things this recent trip throughout Asia was the number of deals that he was able to get signed. There were some agreements to reach with Malaysia and Thailand both of which have significant critical materials resources. Those deals are aimed at making sure that those resources can actually be exported to the United States and other Western countries. Not necessarily in Asia but also as part of that trip is Australia and on the backs of that trip actually signed an $8.5 billion deal with Australia again aimed at joint ventures to increase the supply of critical materials for the United States and this is an important step.

Earlier this year, Australia actually announced that they were going to have their own critical materials stockpile. We've since seen the US make similar statement about two months ago, where they're looking to have a $1 billion critical material stockpile. So I think what this is doing is just putting an emphasis on critical materials and then how Western governments are viewing them as it relates to national security. Also with this Australian deal, what it's going to do is establish some price floors that will help to stabilize the markets and also provide an incentive and attractant for other investment in the space.

Now, switching gears a bit, Steve, nuclear energy also getting attention as the US government announced an $80 billion partnership which is being called one of the most ambitious plans in US atomic energy in decades. What impact will this have on the outlook for nuclear energy?

Yeah, this is another instance of the government moving past rhetoric and starting to move to action. It's a very significant investment where we see the US government looking to take this $80 billion investment with Westinghouse which is owned by Kamico which is the largest uranium miner in the world by market cap and with Brookfield. So this is a joint venture where the US government can not only finance and work through the permitting process to bring nuclear reactors to the United States through the Westinghouse technology but it also can convert to an equity stake as there's a profit sharing incentive in there as well.

So, not only do taxpayers have a potential benefit from increased nuclear energy capacity, the government gets it through energy security, but this equity stake or the potential for an equity stake is also in there to limit taxpayer involvement or risk as it relates to some of these stakes. It's different than what we've seen in the past where we've seen the government through various grants just provide funding. The equity stake is really a move we're starting to see. This was a large announcement when it came out about 3 weeks ago. We saw uranium miners ETF, ticker URM, and also our junior uranium miners ETF, URJ, were both up on the news on that day.

Okay, Steve, one last thing before you take off here. Government investment in critical materials has been in the headlines and private investment is following suit. JP Morgan announced a $1.5 trillion initiative related to industries that are critical to the economic security of the United States. What should investors know about this initiative?

Yeah, so this was one that again really moved markets for critical materials when it was announced about a month ago. It's been a busy six or eight weeks as critical materials are concerned. JP Morgan stepped up and said they would finance, facilitate or invest directly in a number of different industries that are critical to national economic security. Within this they have 27 areas that they're willing to invest.

Specifically they call it nuclear energy as well as critical materials mining and processing. So what we've really seen from investors as we start to see these investments come out this is by far the largest that we've seen from the private sector. It's been many years now that we've started to see hyperscalers or those AI data centers really turn to nuclear energy. We've seen as I mentioned GM and other auto makers invest directly in battery metals or the supply chain as it relates to battery metals.

But what we've seen in this case is investors now are really starting to take notice, and we've seen record flows actually in the spat critical materials ETF ticker SETM and also our newly launched active metals and miners ETF ticker METL both provide significant critical materials exposure whereas the active strategy has a little bit more diversification in it as it relates to the buildout of the grid and the infrastructure required for the really bringing in the supply chains as it relates to all things critical materials and I think this is noticeable shift where we've seen investors still in cases are focusing on uranium and copper but it's a much more broad approach and what we hear from advisers is that they like that approach because they don't necessarily have to pick any one market that will have winners and losers and I think the main takeaway that we've seen from all of these announcements is it's not just rare earths it's not just uranium or just copper where we're seeing investment come in it really is across the critical material spectrum.

All right, Steve, thank you so much. We appreciate your timely insight. Keep up the great work.

Looking forward to coming back. Thank you.

See you soon. And for us investors, SPRAT offers several ways to participate with ETFs linked to high demand critical minerals like uranium, rare earths, copper, and more. Visit spraetfs.com for those details. And that does it for today's episode of Metalsin Motion. If you enjoyed the show, please tell us in that comment section below by hitting that like button. I'm Thalia Hayden with ETF Guide. Thanks for watching and we'll see you next time.