Try Fund Library Premium
Free with a 30 day trial!
Every government wants access to rare earth elements (REEs). Most investors don’t know exactly what they are or how to invest in them.
To cite Reuters, REEs possess “unique magnetic, luminescent, and defence applications.” Neodymium is a rare-earth element essential for producing the strongest permanent magnets, which are widespread in defence technologies, hard drives, medical imaging devices, electric vehicle motors, wind turbines, and more.
Without REEs, we wouldn’t have smartphones or TV sets. They are critical for green technologies, like wind turbines and EV rechargeable batteries. In defence, they are used in guidance systems, radar, sonar, and lasers in military equipment like destroyers and submarines.
In short, they’re critical to modern technology. And one country controls the global supply: China.
According to a report released earlier this year by Natural Resources Canada, China is the world’s largest producer with an estimated 270,000 tonnes of mined REEs and 215,000 tonnes of refined REEs in 2024. That accounts for 69% of global mined production and 90% of global refined production. The U.S. is second in production, at 45,000 tonnes.
What makes this near-monopoly worse is that China has strictly limited rare earth exports through comprehensive export controls. These were introduced in April and October 2025, as Beijing cited national security and dual-use concerns. These controls require government-approved licenses, targeting heavy rare earths, magnets, and technology, which has forced many foreign companies, particularly in the defence and tech sectors, to seek alternative supplies.
The restrictions particularly target foreign defence manufacturers and firms working on advanced AI and semiconductor equipment.
The result is major global shortages, impacting automotive and technology companies in the U.S. and Europe.
The recent Canadian government report says this country holds some of the largest known resources of rare earths globally, estimated at over 15.2 million tonnes of rare earth oxide in 2024. We are not yet a commercial producer of REEs, but we have projects underway in six provinces plus the Northwest Territories.
It appears that REEs will be a critical resource in the world of the future. But how do you invest in in them? Most of the companies involved in this business are private, state-controlled, or very small.
There are a few ETFs to consider. The most followed one is the VanEck Rare Earth and Strategic Metals ETF (NSD: REMX). Almost 30% of its assets are invested in China-based companies, with just over 24% in Australia. It’s been hot recently, with a one-year gain of 126.39% (market price) to March 31. However, it has a bumpy track record. Since its launch in 2010, it has posted an average annual return of -3.47%.
The Global X Rare Earth & Critical Materials ETF (NSD: EART) has only been around since 2022. About a quarter of its assets are in China, 20% in the U.S., and 14.7% in South Africa. The one-year gain is 108.65%.
Those are the only two ETFs with a 3-year+ record that I could find that focus primarily on REEs. But they also include other minerals in their portfolios, like copper and uranium.
An interesting newcomer is the Sprott Rare Earths Ex-China ETF (NSD: REXC). The company says it is the only ETF focused exclusively on REEs. “By excluding exposure to China, REXC taps into companies that may benefit from the burgeoning investment and a structural shift in rare earth supply chains,” Sprott says on its website.
The company notes that China’s dominance and past export controls have made REEs a national security priority.
“We believe rare earth companies outside China offer a compelling investment opportunity, says Sprott’s Jacob White, Director, ETF Product Management. “China’s dominant share of the rare earth market, combined with its recent willingness to weaponize that position through export controls, has sharpened the strategic importance of securing supply for defence, advanced technologies, and energy. In response, governments around the world are accelerating the buildout of ex-China rare earth supply chains.
“Critical mineral agreements and federal governments are unlocking billions in grants, loans and even equity investments for rare earth companies, helping de-risk projects and attract additional private capital. At the same time, permitting is being expedited, and regulatory hurdles are being reduced. As a result, we believe ex-China rare earth companies are increasingly well positioned to deliver strong growth and potentially outperform.”
REXC started trading on Nasdaq on April 14 at US$20.30. It’s been trading recently at about US$22. The fund has a portfolio of 34 companies. It makes big bets on some of its positions, the largest being a 22.85% weighting in Lynas Rare Earths Ltd.
Lynas is headquartered in Perth, Australia. It owns the Mt. Weld mine in Western Australia, one of the world’s largest rare earths deposits. Concentrate sourced from Mt. Weld is processed at the company’s Rare Earths Processing Facility in Kalgoorlie, Western Australia, and the Lynas Malaysia advanced materials plant in Kuantan, Malaysia. The company’s stock has recently been trading near its all-time high after a decade of flat performance.
The heavy weighting of Lynas stock makes Australia the dominant geographical position in the portfolio, with 52.44% of the assets. The U.S. is next with 36.38%, with Canada at 7.66%. No other country has more than 2.5%.
It’s too soon to make any projection as to how this ETF will perform over time, however the recent results of funds like REMX shows there is investor interest in the rare earth story.
Aggressive investors may wish to take a small position at this time, with a view to adding more if the current buying trend continues. Consult with your advisor before investing to ensure the fund aligns with your investment objectives and tolerance for risk.
Gordon Pape is one of Canada’s best-known personal finance commentators and investment experts. He is the publisher of The Internet Wealth Builder and The Income Investor newsletters, which are available through the Building Wealth website.
Follow Gordon Pape on X at X.com/GPUpdates and on Facebook at www.facebook.com/GordonPapeMoney.
For more information and details on how to subscribe to Gordon’s newsletters, go to www.buildingwealth.ca/subscribe.
Notes and Disclaimer
Content © 2026 by Gordon Pape Enterprises. All rights reserved. Reprinted with permission. The foregoing is for general information purposes only and is the opinion of the writer. Securities mentioned carry risk of loss, and no guarantee of performance is made or implied. This information is not intended to provide specific personalized advice including, without limitation, investment, financial, legal, accounting, or tax advice. Always seek advice from your own financial advisor before making investment decisions.
Image: iStock.com/aprott
Try Fund Library Premium
Free with a 30 day trial!
Fund Library
