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Additional Reading from MarketBeat Media
Investing in Rare Earth Elements: How the REXC ETF Bypasses China’s DominanceWritten by Jessica Mitacek. Published: 4/28/2026. 
Key Points
- China controls approximately 90% of global rare earth element (REE) refining and has leveraged its dominance by implementing strict export controls, making REE supply a national security priority for the United States.
- The global REE market is projected to reach $6.28 billion by 2030, driven by the essential role those 17 elements play in high-growth industries like semiconductors, EVs, aerospace, and artificial intelligence.
- The new Sprott Rare Earths Ex-China ETF (REXC) allows investors to bypass Chinese market risks by focusing on producers in Australia, the United States, and Canada, though it carries a relatively high expense ratio for a passively managed fund.
- Special Report: Elon Musk: This Could Turn $100 into $100,000
When it comes to commodities, individual countries often dominate global reserves. While the United States may be the world’s largest oil producer, Venezuela holds the world’s largest proven oil reserves with over 300 billion barrels. Australia and Russia have the largest unmined gold deposits, and Brazil is the largest producer of soybeans. For rare earth elements, or REEs, China dominates the market with an estimated 44 million metric tons. That represents roughly 40% to 49% of known global reserves. The country also leads in production, mining just under 70% of the world’s supply and refining nearly 90% of it.
REEs are critical to energy, aerospace and defense systems, artificial intelligence and data centers, semiconductors, robotics, EVs, and a slew of other industries. In turn, China’s market influence prompted President Donald Trump to invoke the Defense Production Act in March after the administration labeled REEs a national security priority. For investors seeking to avoid exposure to Chinese companies and the risks tied to export controls, a newly launched exchange-traded fund offers pure-play exposure while excluding China-based firms. That structure can add a layer of protection if Beijing again enacts REE export restrictions. Global Demand for REEs Continues to GrowREEs include 17 metallic elements that are essential to the production of tech applications, lasers, and magnets. Despite their name, they aren’t rare in abundance; they are rare in concentrated, economically extractable deposits. According to Grand View Research, the global REE market was estimated at $3.95 billion in 2024 and is projected to reach $6.28 billion by 2030, a compound annual growth rate (CAGR) of 8.6% during the period. While the Asia Pacific region commands an 86% revenue share, Grand View projects the U.S. REE market to outpace global growth, with a projected CAGR of 9.2% between 2025 and 2030. That outlook is notable given China's history of export controls. On April 4, 2025, China imposed major restrictions on the export of seven REEs and followed with a second wave of measures on Oct. 9, 2025; some of those October measures were later reported by Xinhua as suspended through Nov. 10, 2026. There are currently no widespread expectations that Beijing will lift those controls before the end of the decade, since the measures are viewed as tactical levers that can be applied case by case amid geopolitical tensions. That dynamic presents an opportunity for shareholders of the recently debuted Sprott Rare Earths Ex-China ETF (NASDAQ: REXC). The ETF Providing a Rare Opportunity for Rare EarthsREXC’s portfolio focuses on REE producers, development-stage miners, processors, and specialty materials companies operating outside of China. By taking an ex-China approach, the fund aims to provide a thematic alternative for investors seeking diversified REE supply-chain exposure while avoiding the risks associated with China’s dominant role. According to Sprott, the fund’s issuer, “the [REXC] invests exclusively in companies outside of China that may have significant growth potential as supply chain security becomes a national priority.” That targeted exposure gives investors access to companies in regions with REE resources and development—particularly Australia and the United States—while explicitly excluding China-based firms. Companies based in Australia account for nearly 52% of the fund’s holdings. Australia holds significant REE reserves—the fourth-largest globally—with about 5.7 million metric tons. The REXC’s second-largest holding by weight, at over 17%, is Australia-based Lynas Rare Earths Limited (OTCMKTS: LYSCF), a Buy-rated stock that analysts see as having nearly 60% upside over the next 12 months based on its consensus price target. About 36% of the portfolio consists of U.S.-based companies, including Las Vegas–headquartered MP Materials (NYSE: MP), the ETF’s largest holding by weight and market value. MP accounts for roughly 20% of the fund and is also a Buy-rated stock with nearly 22% upside by consensus targets. Companies based in Canada and the United Kingdom make up another 14.7% of the fund’s holdings. The REXC’s Targeted Exposure Comes With CaveatsWhile REXC offers a China-free way to play the REE thematic, investors should be mindful of several risks. First, the fund is passively managed but carries a comparatively high expense ratio of 0.65%. Investors should also consider thematic concentration risk and the possibility of overexposure to REEs. Commodity-related businesses can be volatile, subject to project delays, permitting and regulatory hurdles, and shifts in underlying metals prices. Liquidity can also be light. As a newly launched ETF, average daily trading volume is under 222,000 shares. For investors who believe in the long-term appreciation potential of a strategic, China-free exposure to the rare-earths supply chain, REXC may be an appealing option—provided they accept the fund’s higher expense ratio, thematic concentration and comparatively low liquidity. |
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