Analysis from bodies such as the International Energy Agency shows that there will be significant growth in demand for metals that are needed to support the energy transition to reduce the use of fossil fuels in the energy mix.
There are a number of challenges on the supply side to meet the forecast growth in demand. These include:
Commodity price levels too low to justify undertaking development projects
Ability of mines to finance projects because of negative ESG screening
Lead time to develop new projects rising because of complexity and length of permitting process
Mining companies’ concerns about resource nationalism, such as tax regimes becoming more onerous
As an institutional product created for a European pension fund looking to make strategic allocation, access to daily liquidity is important. This is made available through the primary market that references an industry benchmark to establish the daily value per ETC security.
Elementum ‘s specialisation is transition metals is based on partnerships with integrated and specialist mining companies, as well as commodity trading houses and operators of secure bonded warehouses.
A daily record of the metal held in warehouses is published on the Elementum website. The physical exposure enables investors to participate in the movement of the spot price of a particular metal less the total expense ratio (TER).
These ETCs have lower Total Expense Ratios (TERs) than those listed ETCs providing exposure to futures-based commodity exposures.