Published on 18 Sep 2023 on Insider Monkey via Yahoo Finance
10 Best Materials ETFs
In this article, we discuss the 10 best materials ETFs. If you want to skip our discussion on the materials sector, you can go to the 5 Best Materials ETFs.
The global economy heavily relies on basic materials like chemicals, concrete, and metals. Base industrial metals like aluminum, copper, and iron ore are integral for appliances, buildings, equipment, and other infrastructure projects. In addition to these traditional materials, there is a growing emphasis on the importance of metals like lithium in the context of reducing carbon emissions and moving toward renewable energy sources. For instance, the increasing adoption of electric vehicles (EVs) is driving the demand for specific metals. An average electric car uses 53.2 kilograms of copper as opposed to 22.3 kilograms used in a conventional car. Furthermore, an electric car uses 39.9 kilograms of nickel, 8.9 kilograms of lithium, and 13.3 kilograms of cobalt, all of which are not used in a conventional car.
As the transition towards renewable energy is gaining pace with every passing day, leading management consultancy firm McKinsey & Company believes that materials companies will be required to increase the pace of mining from historical levels for several materials. This could only be ensured by increasing investments in mining, refining, and smelting to roughly $3 trillion to $4 trillion by the end of this decade. This would reflect a 50% increase from the previous decade. Furthermore, there will be an additional demand of 300,000 to 600,000 mining professionals to support these expanded operations. China is also working aggressively to increase the total output of its material sectors. The country is aiming to achieve a total output of $1.38 trillion (10 trillion yuan) by 2025 from $962.3 billion (7 trillion yuan) in 2021.