VanEck green metals ETF
VanEck, the Wall St giant behind the $14.5M gold miners ETF (GDX), has launched an ETF that buys shares in mining companies that dig up metals used to produce clean energy.
The VanEck Green Metals ETF (GMET) will invest in “green metals” miners. The approach is very simple: companies can be included in the ETF if they make 50% of their revenue digging up or refining green metals. VanEck regards the following elements as green metals: cerium, cobalt, columbium, copper, dysprosium, erbium, europium, holmium, indium, iridium, lanthanum, lithium, lutetium, manganese, molybdenum, natural graphite, neodymium, nickel, niobium, osmium, palladium, platinum, praseodymium, rhenium, rhodium, ruthenium, samarium, scandium, terbium, thulium, tin, vanadium, ytterbium, yttrium, zinc, zircon, and zirconium.
This list of obscure elements may sound intimidating. But looking at the portfolio, the fund seems most interested in copper and the battery elements zinc, lithium, nickel and cobalt.
The fund invests heavily in Chinese companies, with A-shares taking almost 40% of the fund. To access these Chinese miners, VanEck will use the northbound Stock Connect.
Stocks are capped at 8% of the index weight. The cap is presumably there to stop Freeport-McmoRan and Glencore, the two biggest companies in the fund, becoming too influential.
GMET charges 0.59%.
Bernie’s commentary – who is the hypocrite?
“A mine is a hole in the ground owned by a liar,” Mark Twain famously said. Everyone that’s invested in or worked for a mining company knows it to be true.
Just go to the Wikipedia page of any big mining company. There’ll almost always be “Controversies” section, detailing environmental degradation, bad treatment of indigenous people, human rights abuses, etc. Barrick Gold in PNG. Freeport in Indonesia. Glencore in Western Sahara. The list goes on.
That mining companies should thus be paraded as “green”, and that their input into clean energy should be centralised strikes me as unusual. (There are some superannuation funds in Australia that refuse to touch mining companies altogether). But it does raise interesting moral questions. The crucial question it raises, to me, is: who is the real hypocrite here?
On the one hand, you might be thinking a green mining ETF is just greenwashing.
But on the other hand, you can’t have solar power without batteries and battery materials. You need mining companies to pull the nickel and lithium out of the ground. And companies included in this fund are crucial to the energy transition. So on this view, the hypocrite would be anyone that buys into clean energy or ESG, while spurning miners.
I’m not sure I know the answer, if any of the ESG advocates want to add their comments i will willingly add to this blog....