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Additional Reading from MarketBeat
Investing in Rare Earth Elements: How the REXC ETF Bypasses China’s DominanceBy 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’s “Hidden” Company
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 largest proven oil reserves with more than 300 billion barrels. Australia and Russia contain 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, accounting for roughly 40% to 49% of known global reserves. The country also leads 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. China’s dominance prompted President Donald Trump to invoke the Defense Production Act in March after labeling REEs a national security priority. For investors seeking exposure to rare earths while avoiding Chinese companies—and the political and supply risks that can accompany them—a newly launched exchange-traded fund offers a pure-play option that explicitly excludes China-based firms. That can provide an extra layer of protection should Beijing impose export controls again. Global Demand for REEs Continues to GrowREEs consist of 17 metallic elements essential to tech applications, lasers, and magnets. Despite their name, they are not particularly scarce in absolute terms; they are rare because economically extractable, concentrated deposits are uncommon. According to Grand View Research, the global REE market was valued at about $3.95 billion in 2024 and is projected to reach $6.28 billion by 2030, implying a compound annual growth rate (CAGR) of 8.6% during the forecast period. While the Asia Pacific region currently commands approximately 86% of revenue share, Grand View expects the U.S. REE market to outpace global growth, with a projected CAGR of 9.2% between 2025 and 2030. That outlook is significant given China’s use of export controls as a geopolitical tool. On April 4, 2025, China instituted major restrictions on the export of seven REEs and followed with 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 is currently no expectation 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 disputes. That policy 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 targets REE producers, development-stage miners, processors, and specialty materials companies operating outside China. By taking an ex-China approach, the fund offers a thematic alternative for investors seeking diversified REE supply-chain exposure while reducing the risks associated with China’s market dominance. According to Sprott, the fund 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 gives investors access to companies in regions that are poised to expand production—particularly Australia and the United States—while avoiding direct investment in Chinese firms. Companies based in Australia make up nearly 52% of the fund’s holdings. Australia holds the world’s fourth-largest REE stockpile, 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 analysts assigning it nearly 22% upside over the next 12 months based on the consensus target. 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 can help investors avoid direct exposure to China-based REE companies, there are several considerations to weigh. First, REXC is passively managed but carries a relatively high expense ratio of 0.65%. Investors should also be mindful of thematic concentration risk and the potential for overexposure to the REE sector. Commodity-linked equities can be volatile, subject to project delays, shifting regulatory regimes, and swings in underlying commodity prices. Liquidity is another factor: as a recently launched ETF, average daily trading volume is modest—below 222,000 shares. For investors who believe in the appreciation potential of a strategically diversified, China-excluded rare-earths play, REXC may offer a convenient way to gain exposure—but only if they are comfortable with the fund’s higher expense ratio, thematic concentration, and lighter liquidity. |
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