Governments and investors are increasingly treating critical minerals as strategic assets – and precisely this shift in perspective, according to Sprott, could mark the beginning of a new commodity cycle.
In a market report published this week, the firm argues that commodity markets have noticeably revived with the start of 2026: stocks in the commodity sector have broken out of long-standing trading ranges to the upside, after being rather underrepresented in global portfolios for years. For Sprott, this is less a repetition of previous boom phases, but rather the potential start of a structurally different commodity rally.
In contrast to the China-driven construction and infrastructure cycle of 2000 to 2014 or the inflation-driven commodity boom of the 1970s, Sprott sees the new impulses primarily in investments in power systems, digital infrastructure, and energy security. Additionally, the report highlights overarching forces such as deglobalization, expansive fiscal policy, and rising geopolitical tensions. These factors shift the focus from “bulk commodities” to metals considered indispensable for electrification, defense, and modern infrastructure.
Sprott: Critical Minerals Become a Strategic Category
The Sprott report describes a growing prioritization of national supply chains. States are increasingly trying to gain more control over the supply and processing of raw materials relevant to strategic industries. As a result, the valuation of many raw materials is no longer solely determined by classic supply and demand curves, but also by their role in security and technology concepts.
Sprott sees a key indicator for this shift in the diverging development within the commodity sector: materials directly linked to electrification, power generation, and energy security are outperforming traditional “bulk commodities” that dominated earlier cycles. As an example, the report cites the performance of the Sprott Critical Materials ETF (NASDAQ: SETM), which, according to Sprott, has significantly outperformed broad natural resource benchmarks since April 2025. This statement serves as a signal in the report that investors are increasingly focusing their attention on “critical” metals.
At the same time, Sprott points out that many capital allocations are still heavily oriented towards sectors that played a larger role in earlier commodity phases – such as chemicals, forest products, or agriculture. Such a delay in recognizing new drivers is typical for the early stages of a bull market, the argument goes.
Copper and Uranium as Core Metals: Divergence Instead of “Commodity Basket”
At the heart of Sprott’s thesis is copper. The metal has become a kind of nexus for electrification – from grid expansion and energy storage to digital infrastructure. As a result, the supply-demand balance for copper is structurally tighter than for commodities that are more dependent on construction cycles and bulk goods chains. Sprott infers from this that copper-focused producers have recently often performed better than large, diversified mining companies whose earnings profiles are more closely tied to iron ore and other bulk commodities.
Sprott recognizes a similar divergence in energy metals – with the difference that here, not oil, but uranium is highlighted as the winner of the new narrative. While oil remains relevant, Sprott points to a comparatively comfortable supply situation and the tendency for the long-term “consumption intensity” of oil relative to global GDP to decrease. Uranium, on the other hand, enters this cycle with limited supply, while demand is picking up again as many states re-evaluate nuclear energy.
The reasoning is noteworthy: Sprott sees the resurgence of interest in nuclear energy less as an environmental policy issue, but primarily as an expression of energy security strategy. Governments are extending the operating lives of existing reactors, planning new capacities, and, after years of restraint, are again building long-term uranium contract coverage. Rising geopolitical tensions would further accelerate this process, the report states.
Beyond copper and uranium, Sprott names other critical minerals with, in the firm’s view, favorable fundamentals, including lithium, rare earths, and silver. Lithium and rare earths are classified in the report as central building blocks for batteries and highly efficient motors. Silver benefits doubly – from industrial demand and its role as a monetary metal. However, the basic idea remains crucial: critical minerals are not only valued for their market equilibrium but increasingly for their strategic importance to technology and national infrastructure.
Investment Theme “Power & Data”: Multi-Year Demand Meets Long Lead Times
Sprott expects that investments in power generation, grids, data centers, and mineral supply chains could drive demand for critical minerals for several years. At the same time, the report sees supply risks: long project lead times and a decade of comparatively low investment in new capacities could keep markets “tight” – especially where permitting, financing, and construction of mines or processing capacities require significant time.
Against this backdrop, Sprott argues that more targeted allocations to critical minerals could potentially outperform very broadly diversified commodity allocations. This statement in the report is explicitly a market assessment, coupled with the caveat that volatility is likely to remain. As examples of “targeted” vehicles, Sprott names the Sprott Critical Materials ETF (SETM), which, according to its description, focuses on companies that derive at least 50% of their revenues or assets from critical minerals, as well as the actively managed Sprott Active Metals & Miners ETF (NYSE: METL).
Ultimately, Sprott paints a picture of a commodity cycle driven less by a single demand shock, but by long-term structural changes. If electrification, energy security, and digital infrastructure indeed become the dominant investment themes of the coming years, critical minerals like copper and uranium, in the firm’s assessment, could remain at the center of capital flows – thereby reordering the dynamics within the entire commodity sector.
