Inside the Rare Earths Opportunity

May 15, 2026 | (6 mins 09 secs)

Rare earth elements are a group of 17 minerals essential to powering today’s most critical industries—from AI and data centers to defense systems and clean energy—yet their supply chain remains heavily concentrated in China. Sprott’s Jacob White, CFA, joins Bloor Street Capital’s Jimmy Connor to discuss the growing global push to diversify rare earth supply and to introduce the Sprott Rare Earths Ex-China ETF (REXC), which is designed to give investors targeted exposure to rare earth companies outside of China.

For the latest standardized performance and holdings of Sprott Rare Earths Ex-China ETF, please visit REXC. Past performance is no guarantee of future results.

Video Transcript

James Connor: Jake, you and your team at Sprott have created a new product which enables investors to invest in rare earth elements. Before we look at this product in more detail, let's start with the basics. What exactly are rare earth elements?

Jacob White: Rare earths are a group of 17 elements. They have names like neodymium, terbium, cerium and others that investors may not recognize. They are critical and indispensable to some of the world's most strategic sectors today. That's because they have unique properties. Most importantly, they exhibit powerful magnetic properties, enabling high-tech applications. There are three strategic sectors that they are key for. First, defense: anything from anti-missile defense systems to radar to fighter jets. Second, advanced technologies: AI, data centers, semiconductor chip manufacturing and robotics. Third, energy: everything from electric vehicles to wind energy. They're not just used in these strategic sectors. They're used in people's everyday lives as well. They're used in everything from air conditioning to enabling your phone to vibrate.

James Connor: Jake, quite often, I hear rare earth elements used in conjunction with critical materials. What is the difference between the two?

Jacob White: Rare earths are a subset of critical materials. Critical materials are elements that a nation deems essential to its economy and that pose supply risks. Rare earths fit within that category, but critical materials also include uranium, lithium and copper, among others. Critical materials vary by country in what they consist of, but rare earths remain a standout, as they are generally included in all these critical material lists.

James Connor: Jake, one of the things I keep hearing and reading about is that China dominates so many aspects of the rare earth supply chain. Maybe you can just speak to that.

Jacob White: China definitely does dominate. They account for about 69% of global rare earth mine production. They have 91% of rare earth refining and 94% of rare earth magnet manufacturing. That's a problem for a couple of reasons. One: these strategic sectors do not want to rely on China. Western militaries do not want to rely on rare earths from China, as they risk exposure. Two: because China has historically and continues to weaponize its control and stranglehold over the world's rare earth supply chain. For example, they placed export restrictions on rare earths to Japan in early 2026. They've added U.S. defense and aerospace companies to export control lists in 2025 and imposed significant export controls on seven of the 17 rare earth elements today.

James Connor: Jake, these numbers are staggering. China is responsible for 69% of rare earth production and mining, and 91% of rare earth processing. The first question that comes to mind is whether anyone can catch up to them or build their own supply chain.

Jacob White: That's exactly what countries are trying to do today. Countries around the world are signing critical mineral agreements. Countries with reserves are building supply chains, while those without are signing agreements to access them. These agreements are unlocking billions of dollars of funding. For example, there have been equity deals in which governments have taken actual equity stakes in these rare earth companies and provided them with capital, helping de-risk the projects and improve their economics.

They've also provided grants and loans to further de-risk it. 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. They're also introducing price floors, which they commit to setting at a level generally above the market price at the time, so miners will be paid for their rare earth elements. Overall, these countries are investing billions of dollars in order to build out their supply chains and reduce their reliance on China.

James Connor: Jake, why don't you tell us about the new Sprott ETF?

Jacob White: Yes, we've launched the Sprott Rare Earths Ex-China ETF (REXC). This ETF was the first and only ETF to provide targeted exposure to rare-earth companies outside China, helping investors access this compelling opportunity.

James Connor: Jake, maybe you can provide some details behind the mechanics and the creation of this new ETF.

Jacob White: Absolutely. We partnered with Nasdaq to create a targeted index of pure-play rare earth companies. What pure-play means is that the companies we target have the majority of their exposure to rare earths, either through revenue or assets. This is a dynamic universe and a rapidly changing industry. At every rebalance, we continue to monitor all of these companies and ensure they provide investors with pure-play exposure to rare earths. We also specifically exclude China, whether that be from the listing exchanges or from any countries domiciled there with projects.

James Connor: Jake, Sprott does an excellent job in educating investors on the benefits of investing in resources. If someone would like to learn more about investing in rare earth elements, where can they go?

Jacob White: Please visit sprott.com. We have an entire section of our website dedicated to educational content on rare earths, from commentary on the latest industry developments to podcasts. Then we also have sprottetfs.com, where investors can learn more about the Sprott Rare Earths Ex-China ETF (REXC).

James Connor: Jake, thank you very much for being with us today.

Jacob White: Thank you for having me.