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Additional Reading from MarketBeat
Investing in Rare Earth Elements: How the REXC ETF Bypasses China’s DominanceAuthored by Jessica Mitacek. Originally 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.
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When it comes to commodities, individual countries often dominate global reserves. While the United States is the world’s largest oil producer, Venezuela holds the largest proven oil reserves with more than 300 billion barrels. Australia and Russia host the largest unmined gold deposits, and Brazil is the top 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 in 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 dominant position prompted President Donald Trump to invoke the Defense Production Act in March after the administration designated REEs a national security priority. For investors seeking to avoid exposure to China-specific risks and potential fallout from geopolitical tensions, a newly launched exchange-traded fund offers pure-play exposure while excluding Chinese companies. That approach can add a layer of protection if China again restricts REE exports. Global Demand for REEs Continues to GrowREEs encompass 17 metallic elements essential to the production of high-tech applications, lasers, and magnets. Despite their name, they are not especially rare in abundance; they are rare in concentrated, economically mineable 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% over the forecast period. While the Asia Pacific region commands an estimated 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 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 are currently no expectations that China will fully lift those controls before the end of the decade, as the measures form part of a tactical strategy that includes case-by-case authorizations used as levers in geopolitical disputes. That backdrop creates an opportunity for investors in the recently launched Sprott Rare Earths Ex-China ETF (NASDAQ: REXC). The ETF Providing a Rare Opportunity for Rare EarthsThe REXC’s portfolio targets REE producers, development-stage miners, processors, and specialty materials companies operating outside of China. By excluding China, the fund aims to provide a thematic alternative for investors seeking diversified exposure to the REE supply chain while avoiding risks tied to 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 ex-China focus still gives investors access to the Asia Pacific region’s REE resources while also capturing the United States’ higher projected CAGR. Companies based in Australia make up nearly 52% of the fund’s holdings. That is notable given Australia’s substantial REE reserves—the fourth-largest stockpile on Earth at about 5.7 million metric tons. The REXC’s second-largest holding by weight, at just over 17%, is Australia-based Lynas Rare Earths Limited (OTCMKTS: LYSCF)—a Buy-rated stock with analysts projecting 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 represents roughly 20% of the fund and is also a Buy-rated stock with analysts estimating nearly 22% upside over the next 12 months based on its consensus price target. Companies based in Canada and the United Kingdom account for the remaining 14.7% of the fund’s holdings. The REXC’s Targeted Exposure Comes With CaveatsWhile the fund can benefit from the same headline-driven catalysts that affect Chinese REE stocks, investors should be aware of several caveats. First, REXC is passively managed but carries a relatively high expense ratio of 0.65% compared with many broad-market ETFs. Prospective investors should also consider thematic concentration risk and the potential for overexposure to REEs. Commodity-linked sectors can be volatile and are sensitive to project delays, regulatory changes, and shifting demand projections. Liquidity is another consideration. As a newly launched ETF, average daily trading volume is modest—under 222,000 shares. For investors who see the appreciation potential of a strategic, non-China-focused REE play, REXC offers a straightforward way to gain diversified exposure to the supply chain outside China, but they should be comfortable with the fund’s higher expense ratio and lower liquidity. Investors should assess their time horizon and risk tolerance and consider consulting a financial advisor before investing. |
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