REXC ETF Targets Rare Earth Producers Outside China
REXC invests in rare-earth companies outside China as governments pledge funding and speed permitting; China supplies about 69% of mining and 91% of processing.
The Sprott Rare Earths Ex-China ETF (REXC) invests in companies that mine and process rare earths outside China as multiple governments pledge billions to build independent critical-minerals supply chains and accelerate permitting. China currently accounts for about 69% of rare-earth mining and roughly 91% of processing globally.
Rare earths are 17 minerals used in defense equipment, artificial intelligence hardware, clean-energy technologies and other industrial applications. Specific elements are needed for permanent magnets, batteries and components in electric vehicles and wind turbines, driving steady demand from those sectors.
Jacob White, CFA, director of ETF product management at Sprott Asset Management, noted: “Having these governments as partners and building these supply chains comes with additional benefits. For example, they’re expediting permitting, where permitting takes many years, in order to be able to go from the discovery of your rare earth to building a mine that can produce. They’re expediting and reducing these regulatory hurdles.”
REXC’s portfolio selects producers and developers located outside China, including firms in Australia and North America. The fund offers a way to gain exposure to companies working to supply Western and allied markets while governments provide financing and policy support intended to move projects from discovery through permitting to production.
Market participants point to concentrated processing capacity in China as a factor behind recent government agreements and funding for non-China projects. Public and private financing can increase access to capital and may shorten development timelines for some projects.
The fund focuses on small- and mid-cap companies, which can have higher price volatility. ETFs trade intraday and provide liquidity, but higher portfolio turnover can raise transaction costs and produce taxable events in taxable accounts. Past performance is not a guarantee of future results. Investors should read the fund prospectus and consider objectives, fees and risks before investing.
