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Investing in Rare Earth Elements: How the REXC ETF Bypasses China’s DominanceWritten by Jessica Mitacek. Article Posted: 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.
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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 accounts for approximately 40% to 49% of known global reserves. The country also leads in global production, mining just under 70% of the world’s supply and refining nearly 90% of it.
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REEs are critical to energy, aerospace and defense systems, artificial intelligence and data centers, semiconductors, robotics, EVs, and many other industries. In turn, China’s influence over the market led President Donald Trump to invoke the Defense Production Act in March after the administration labeled REEs a national security priority. For investors looking to avoid exposure to Chinese companies amid the trade tensions and broader geopolitical risks, a newly launched exchange-traded fund offers pure-play exposure to REEs while excluding China-based firms. That approach can add a layer of protection if China again enacts export controls. Global Demand for REEs Continues to GrowREEs comprise 17 metallic elements that are essential to the production of tech applications, lasers, and magnets. Despite their name, they are not particularly rare in absolute abundance; they are rare in concentrated, easily extractable deposits that can be mined economically. According to Grand View Research, the global REE market size 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 forecast period. While the Asia Pacific region currently 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—an important dynamic given China’s past export controls. On April 4, 2025, China instituted major restrictions on the export of seven REEs, followed by a second wave of restrictions on Oct. 9, 2025; some of those October measures were later reported by Xinhua as suspended through Nov. 10, 2026. There are currently no expectations that China will lift those controls before the end of the decade, as they form part of a tactical strategy that uses case-by-case authorizations as levers in geopolitical tensions. That backdrop creates 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 offer a thematic alternative for investors seeking diversified exposure to the REE supply chain while avoiding risks associated with China’s dominant market position. 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.” This targeted exposure still provides investors access to the Asia Pacific region’s REE activity while tapping into the United States’ higher projected CAGR. Companies based in Australia account for nearly 52% of the fund’s holdings. Australia holds substantial REE reserves—the fourth-largest on Earth—with about 5.7 million metric tons. The REXC’s second-largest holding by weight (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 companies based in the United States, 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’s portfolio and is also a Buy-rated stock with analysts’ consensus implying about 22% upside over the next 12 months. Companies based in Canada and the United Kingdom make up the remaining roughly 14.7% of the fund’s holdings. The REXC’s Targeted Exposure Comes With CaveatsWhile the fund could benefit from the same headline-driven upside that affects Chinese REE stocks, investors should be mindful of several issues. First, the fund is passively managed but carries a comparatively high expense ratio of 0.65%. Prospective investors should also consider the fund’s thematic concentration risk and the possibility of overexposure to REEs. Commodity-related investments can be volatile and are exposed to project delays, permitting and regulatory risks, and swings in prices driven by demand and geopolitical developments. Liquidity is another consideration. As a newly debuted ETF, average daily trading volume is modest—below 222,000 shares—which can result in wider bid-ask spreads and execution risk for larger trades. For investors who believe in the long-term potential of a strategy that reduces China exposure in the REE supply chain, REXC can be a useful tool—but it should be used with awareness of the higher expense ratio, thematic concentration, and limited liquidity. Consider position sizing, limit orders, and consulting a financial advisor to determine whether the ETF fits your objectives and risk tolerance. |
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