Mining for Our Future

Podcast Transcript

Ed Coyne: Hello, and welcome to Sprott Radio. I'm your host, Ed Coyne, Senior Managing Partner at Sprott. I'm pleased to welcome Sprott's Director of ETF Product Management, Jake White. Jake, thank you for joining me today on Sprott Radio.

Jake White: Thank you for having me.

Ed Coyne: Jake, before we get into the state of copper, lithium and potentially some other metals that you might be working on today, tell our listeners a bit about yourself and the general work you do day in, day out at Sprott.

Jake White: As Director of ETF Product Management, I'm focused on product development within our ETF suite, product management and asset growth. I also provide significant support to the market through our education. We are proactively conducting extensive investment analysis to determine whether we should create a product focused on silver, silver miners, gold, lithium and related areas. There's a lot of analysis about whether we should or should not do something. I think there's significant potential in these investments in critical materials and precious metals. Sharing as much investment knowledge as possible has always been good for our investors.

Ed Coyne: Let's say you identified lithium or copper as an investment opportunity. Once you identify it, how do you turn that idea into an investment? What does that look like? How do you build that?

Jake White: Our differentiator has been primarily that we invent pure-play products in collaboration with our index providers, predominantly Nasdaq. What we mean by pure-play is that many of our ETFs focus specifically on, for example, only copper miners. At least 50% of their business would be in copper. We're going through all the publicly traded copper miners worldwide and quantifying, on a semi-annual basis, their exposure to these different metals.

There's a lot of movement and moving parts in many of these companies. Sometimes there are mergers and acquisitions. Smaller companies may have different strategic focuses. They may shift their focus. We're constantly ensuring our products are up to date and aligned with their investment strategies, and providing the purest-play exposure to these critical materials and precious metals.

Ed Coyne: You use that word, "pure-play," and you think about some of the great investors out there. One of the things many of them agree on is the importance of concentration or being very specific with their investments. The idea that at least half of that business has to be on either the extraction of or the refinement of that metal is an interesting way to think about that. You've mentioned the word copper a few times, and it is one of the metals I want to zero in on today. It seems like the last year or two have been quite good. It's been going quite well for a while here, but it seems to really be hitting the headlines a lot right now. If you don't mind going into that a bit, what's really driving the copper market?

Jake White: There are multiple factors descending on copper, all tailwinds at the same time, driving it to all-time highs. Most notably, there were major supply disruptions at the Grasberg and Kamoa-Kakula mines in the Democratic Republic of the Congo (DRC). Those two disruptions have kind of thrust the market into a supply deficit, where demand is greater than supply, faster than anticipated. That was at least one key catalyst that went, "Okay, now there's not enough copper within the space." The industry also generally has a thing called ”inventories”, which can help address short-term supply-demand imbalances by drawing down inventories, but inventories have already been declining over the past few years to strategic lows.

The amount of unencumbered inventories has shrunk to a point where the copper price couldn't handle it anymore. For example, potential tariff threats from the U.S. have brought a large amount of copper material into the U.S., making it no longer available to the rest of the world. When you have a situation where, all of a sudden, supply is much lower than you thought it would be relative to the copper market's expectations, you have tight inventories, and then you have strategic demand.

What I mean by strategic demand is that a lot of people think of copper as this Dr. Copper gauge of the general economy, but it's being increasingly used in strategic sectors of the economy, like AI, data centers, defense, especially as defense budgets are increasing across the world, and especially in electricity grids, both for their modernization and upgrading them. Many factors are converging in the copper market, driving this upswing.

Ed Coyne: You mentioned something that's worth repeating. Copper has traditionally been viewed as a bellwether of an economy's strength or weakness. If I heard you right, it's going beyond that. It doesn't really matter if the economy is shrinking or growing in the short term. The long term is we're electrifying the globe, we need more copper, period. We can't move forward without it, regardless of what's happening in the short-term economic cycle. Is that fair to say? Is that what we're seeing in copper today?

Jake White: You're correct. It's doing exactly that. For example, copper is breaking away from iron ore and other broader economic indicators that have historically been very tightly correlated. Now that's broken apart in the past few years. I think copper has moved towards, specifically, defense, advanced technologies and the future of energy. That's a lot more interesting space to be in, where there's greater price inelasticity, where they don't necessarily respond to price increases by reducing their demand, and where they're going to continue to spend more and more on copper.

Ed Coyne: One of the things I've read about copper is that you can recycle it over and over again, and it doesn't lose any of its connectivity. Why isn't scrap or recycling stepping up and filling that gap? What's going on there?

Jake White: Copper recycling is less than 20% of the overall copper supply. There has been an increasing role for recycled copper, also known as copper scrap. At the end of the day, there's been some interesting analysis, for example, by S&P Global, where there's only so much copper that's not currently in use. You have to wait until it's no longer economically viable, then extract and re-refine, even if you stress-test that assumption to 25% or 30% of the overall copper supply.

The problem is that these strategic demand sectors are increasing the demand so much that it’s not nearly enough copper to fill the supply deficit. We're in a situation where, in 2025, we were  thrust into a supply deficit. That deficit is forecast to grow over time. Even though copper scrap will play an increasing role in the overall copper supply chain, it won't be able to plug the gap. We're going to need more mined copper at the end of the day to meet these demands.

Ed Coyne: Speaking of mines, what is the health of that industry right now? I've also heard that the easy stuff has been largely taken, and we're having to go to more exotic and maybe riskier jurisdictions. What is the state of that? What's that look like? What do the inventories look like in the current mines that are in production right now?

Jake White: We're hitting all-time highs, currently around $13,000 per metric ton, and the profitability at that level is extreme. I think somewhere in the 90th percentile of all copper mines are profitable. That's saying, unless you're maybe in the top 1% of mines in terms of cost, which there's probably some strategic reason that that's being operated, you're profitable, and the profitability is extreme. You're talking about 45% basic margins, or even higher, on average. The question then is, why aren't more copper mines being developed? It's a very lengthy process.

These commodities have been subject to boom-bust cycles in the past, where miners don't want to outlay billions of dollars in capital expenditures unless they're certain there's enough premium and that it stays constant. It's not fluctuating too much. We've only been recently hitting these all-time highs. At current levels, existing copper miners are extremely profitable. At the same time, to bring on that next level of production, which we need to intensify now, given the long lead times, we still need higher copper prices to come.

Ed Coyne: If someone's looking to invest in copper today, I understand the supply-demand side of it. I understand the inventory side of it. What are some of the risks? What could go wrong if I decide to put money in today? What should I be paying attention to in the broader markets?

Jake White: There are so many tailwinds right now. We've moved very significantly over the past year. There's always this opportunity for commodities to trade with convexity and then consolidate. What I mean is that they typically rise very quickly, then chop and trade up and down for a while. As long as investors have a long-term investment horizon and are aware of the fundamentals we've been discussing, trading the market is much more difficult. More investors are seeing this as a strategic long-term investment, whether in copper, copper miners or critical materials in general.

Ed Coyne: You make a good point of knowing why you're going into it, sticking to your knitting and managing that weight or that percent in your portfolio. You and Paul Wong just crafted a great letter at the end of the year, the top 10 themes to look out for, and talked about catalysts and stuff. Maybe reference that letter a bit. What did you write about as it relates to copper in that letter that people should be interested in reading to learn more about what's going on in that space? What are some of the things you'd have them think about?

Jake White: One of the biggest things right now is deglobalization and rising geopolitical risk. One thing we can agree on in today's world is that there has been a rising risk and geopolitical tensions worldwide. What that means for metals markets is that there is a problem: China controls so much of the supply chains. Because of China’s control and now-weakening relations with Western allies, you're going to see a lot of strategic investment in these commodities so they can build their own supply chains and ensure their own security of supply.

I think we've seen a lot of security of supply within the energy sector, for example, where we've seen these nuclear tailwinds with a lot of people wanting that. They're trying to wean themselves off Russia and other things. Now, governments around the world are really trying to invest. For example, the Trump administration took an equity stake in a copper miner. They also did with lithium, which I'm sure we'll talk about later. They're talking about stockpiling in both the U.S. and China. Governments are going to be stockpiling and building reserves of critical minerals. They're talking about potential price floors and all these sorts of things.

As the world deglobalizes and these risks rise, the strategic bid for critical minerals, including copper and lithium, intensifies. It's no longer necessarily even just about incentive pricing, where, for copper, you're in a supply deficit. Economics say that the price, we believe, should go higher, but it's more than that. It's that this is now strategic for national security. They need to ensure they have enough copper or rare earths for their defense applications, energy and other technologies.

Ed Coyne: Few things are hotter right now than lithium. I was looking at the year-to-date price movement, as well as over the last 12 months or so. Lithium seems to have caught the attention of many investors again, and it wasn't that long ago that it was selling off. Let's talk about that. What changed in the last 12 months or so, for the price to stop dropping and then go up as much as it has? What have been some of the general fundamental changes that we've seen in the lithium market in the last year or year and a half?

Jake White: Lithium is really moving into a new phase where the market was trading on a simple surplus narrative, and now it's no longer. Demand is broadening. It's increasing significantly more than people thought with grid-scale energy storage, and the marginal supply is coming down. To give some context, the lithium price is just coming off an extreme boom-bust cycle. In 2020, we were at about $2.50 a pound, and we ran all the way up to $38.

That's nearly 15 times. Since then, in November 2022, we've come back down and bottomed out in June 2025 at just under $4 a pound. That level was uneconomical for a lot of the lithium supply chain. It was being unfairly subsidized. Now we're finally off this boom-bust cycle, trying to find a relative clearing level we can hope to model future profitability around.

Ed Coyne: Let's take a step back for just a minute. Most of our listeners know what copper is. They've seen it and used it. They can visualize it, but lithium might be a little bit different. Let's take a step back and talk about what lithium actually is, how it is mined, and its primary uses today.

Jake White: It's a soft, silvery-white metal. It's the lightest metal in the world. Its primary application is within lithium-ion batteries. What makes it so unique is that it has small lithium ions. It's got the highest electrochemical potential, but basically what that means is that an ion of lithium inside the battery can very easily pass between the anode and cathode. This enables higher voltage, faster charging, and rechargeability. Basically, it has these properties that enable the best type of large-scale battery we can make.

Ed Coyne: From a mining standpoint, is there anything unique about mining lithium, or is it largely similar to the mining of gold, silver, copper, where you're basically digging a hole, or you're going into an open pit versus a closed mine? Is there anything over and above that, or is it the same type of process, just pulling something different out of the ground?

Jake White: There are multiple types of lithium mining. One is more similar, where you've got lithium spodumene^[1] in Australia, the world's largest producer of lithium. You also have lithium brines. You can think of that as a giant pool in the desert where miners extract lithium; Chile is the largest producer of lithium brine. You have this deposit of lithium, which is very unlike gold and silver mining and unique to the lithium space.

Ed Coyne: Outside of electric vehicles, what other uses is lithium being applied to then? We're probably going to have gasoline-powered cars for the next five or six decades in some way, shape, or form. How else is lithium being consumed outside of battery technology for EVs?

Jake White: A lot of what's been going on in the energy sector lately is that they've realized that they need a lot more reliable energy, and there are a couple of ways you can do that. Nuclear power has been one of the primary benefactors. Another way is to offset the intermittency of many of these renewables that have been deployed. You could store that energy and use it later during peak times when you need it.

There's been greater demand for power, whether from AI and data centers or from the reshoring of manufacturing as the U.S. tries to make it a manufacturing powerhouse again. Many of these factors could be addressed by adding large-scale energy storage. Storage demand grew by 44% in 2025. Storage is about a quarter of total global battery demand. It's emerging as the fastest-growing pillar, and is becoming the swing factor for lithium relative to electric vehicles.

Ed Coyne: You mentioned Australia and Chile, the two primary sources of lithium worldwide that we're finding today.

Jake White: We're also talking probably about refined lithium as well. It would also be remiss not to mention China, and this is a key development that has recently ignited the space. China was producing lithium rather than spodumene and lepidolite^[2], which are lower-grade. It was basically very uneconomical when lithium prices were so low, but you had these vertically integrated players subsidizing it. Now China has launched an anti-pollution campaign, basically saying it doesn't want to dump lithium at uneconomical prices anymore. Because of that, and they've also been doing environmental crackdowns, we've seen mining permits cancelled. We've seen one of CATL's (Contemporary Amperex Technology Co., Limited), the largest lithium-ion battery manufacturer in the world, mines close in August of 2025. That's helped ignite the lithium space, where you're going from a supply surplus to now. The peak surplus is behind us, and we're inching closer to deficits in the years to come.

Ed Coyne: We've talked a lot about copper and lithium. You mentioned uranium briefly. Are there any other metals out there right now that have your attention that might be interesting from an investment point of view?

Jake White: One stands out in particular, and that's rare earths. Rare earths are a group of 17 elements commonly found together. These materials are used in a way that you would not have that functionality without them. You would not have important defense systems, ships and all these things that are really dependent on these critical minerals, even in very small quantities. Because they are at the forefront of national security, and because China, in particular, for rare earths, because of their geology, happens to dominate the market, both in terms of mining, but especially in terms of refining, all of a sudden, you're seeing a lot of attention on these rare earths.

Ed Coyne: For our investors, can you name a couple of rare earths? You said there are 17 elements out there. What are some of the ones that people might be familiar with from a name standpoint, because rare earths seem like they're just blanketed in this mystical basket of metals? What are some of the rare earths out there?

Jake White: There's scandium and yttrium. There are four commonly used within magnets, especially in the applications I was talking about. Their chemical symbols are Nd and Pr. There's terbium, and then there's another one with the chemical symbol Dy.

Ed Coyne: How would you guide an investor? How would you have an investor think about this space? If they're looking to allocate some capital to it within their portfolio, what should that look like? How should they think about it?

Jake White: In terms of lithium and rare earths, for example, there's not a physical commodity that you could invest in there. There's no product that would exist. What you're talking about is the miners of these sorts of things, and at the end of the day, they are equities. We would treat them as such, although they have strategic tailwinds that lower their correlation with the overall market. With copper, you have the option of copper miners and physical copper, so physical copper would obviously have less volatility and a different risk-return profile.

Ed Coyne: Would the miners be viewed more as an opportunistic risk-on allocation, and then the other metals, the physical metals, would they be similar to gold from a performance pattern standpoint? Would they all be considered diversification risk-off allocations, or does it go metal by metal?

Jake White: Yes, I think it goes metal by metal. There are diversification benefits of the physical commodities. For example, if we talk about uranium, it is generally insulated from many of these other financial market stressors, as it's not very financialized or collateralized. What that just means for investors is that in a large market selloff, there aren't many market participants seeking liquidity, whereas, for example, in the silver market, there would be.

Ed Coyne: If someone wants to dive deeper into this and learn more about, not just the metals you're talking about, but also you and the material you're producing, where is the best way to find your work and keep track of what you're doing?

Jake White: On our website, sprott.com, there's the Insights page. I write a monthly uranium and copper commentary that you can find there. There are also a lot of other experts at Sprott who do a lot of different types of commentary or produce reports that you can find on gold, silver, and all these sorts of things that we've been talking about. I would also encourage investors to check out sprottetfs.com for additional content.

Ed Coyne: Is there anything you were hoping to talk about today that I didn't bring up that you thought the listeners may benefit from?

Jake White: At the end of the day, we're entering into a new world era. I think that there's the potential for a commodity supercycle^[3]. I say that with a grain of salt. I think it's going to be certain metals that are strategic to specific sectors. That, by definition, is critical materials and precious metals as well. I think that these metals in particular are set for all the reasons that we've been talking about to do really well over the next 10 years.

Ed Coyne: Jake, I just want to thank you for carving out some time this afternoon to talk with me, and for joining me on Sprott Radio.

Jake White: Thank you, Ed.

Ed Coyne: Once again, my name is Ed Coyne, and thank you for listening to Sprott Radio.

[1] Spodumene is a lithium‑bearing mineral and one of the primary hard‑rock sources of lithium used to make lithium‑ion batteries. It is most commonly found in lithium‑rich granite and is commercially important for producing lithium carbonate and lithium hydroxide.

[2] Lepidolite is a lithium‑rich mineral best known for its pink, lilac, or purple color and its role as a source of lithium.

[3] A long‑term period—often lasting a decade or more—of broadly rising commodity demand and prices, driven by structural economic changes such as industrialization, urbanization, large‑scale infrastructure spending, or major energy transitions.