Could Rare Earth Companies Outside China Be a Rare Opportunity?

April 14, 2026 | (6 mins 49 secs)

Rare earth elements play a critical role across technology, defense and global energy. In this interview with Asset TV, Steve Schoffstall, Managing Partner and Head of ETFs at Sprott Asset Management, discusses the importance of rare earths, the implications of China’s dominance in the supply chain and how the Sprott Rare Earths Ex‑China ETF (REXC) is designed to provide targeted exposure to the sector. 

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

Kristin Myers: Welcome to Asset TV. I'm Kristin Myers, ETF Editor in Chief, and I'm here today with Steve Schoffstall, Managing Partner and Head of ETFs at Sprott, to chat about Sprott's newly-launched ETF, REXC. That's the Sprott Rare Earths Ex-China ETF. The fund is the only ETF exclusively focused on rare earth companies. Steve, thank you so much for joining us today.

Steve Schoffstall: It's great to be here. Thank you.

Kristin Myers: We're going to get into the fund in just a moment, but I first want to talk to you about rare earth minerals. We've heard about it a lot. It's been in the news. I think a lot of people hear it, but they don't exactly know what it is.

Can you explain what rare earth minerals are, and why they're so important?

Steve Schoffstall: That's a question we're getting a lot. It's a group of 17 chemically similar elements. They're considered to be critical materials, so if you think of critical materials, that's a big umbrella term. Rare earths would fit in under that umbrella. Despite their name, they're not rare. What makes them rare is that finding them in concentrated amounts where you can profitably mine them is the rare piece of it.

They're critical to things like defense, where we see them used in anti-missile technology, sonar, drones and missile guidance systems. We see them used in technology. In smartphones, that's what makes your phone vibrate; it's used in the speakers. Also, they are used for energy in things like EVs, solar panels and nuclear reactors.

Kristin Myers: I mentioned that the fund name included "Ex-China," so I imagine China has some role to play in all of this. Walk us through exactly how China plays in the supply chain of rare earths and why that's a concern.

Steve Schoffstall: It's a huge concern because they make up about 70% of rare earths mining, and when you start looking down the supply chain at refining and magnet production, it's now over 90% that they control. This is an industry where, if you go back to the early nineties, the U.S. was the leader in rare earths production. Through a series of events in the nineties and early 2000s, China gained a leadership position and has used it to weaponize its rare earth production.

Since they have a virtual monopoly, anytime a country tries to stand up a rare earths deposit or companies try to wrest that control away from China, they'll flood the market with cheap rare earths, effectively putting their projects out of business. Last year, on two different occasions, China put export controls on its rare earths, not only on the permanent magnets that it manufactures, but it went so far as to reach outside of Chinese territory, and if the material was sourced within China, it could no longer be shipped without going through these export controls. It's a very important aspect because it controls the strategic parts of the economy, like defense, technology and energy.

Kristin Myers: You just laid out the concerns clearly about China's involvement in this supply chain. Then what do more developed markets and countries do to really maintain that access to those very important rare earths?

Steve Schoffstall: It’s a great question, and we're seeing a lot of things happen over the last 12 to 18 months across the critical material space, and all of that pertains to rare earths as well. One thing is permitting, so they're trying to make the permitting process easier for building production facilities or mines.

Another thing that's really started to take hold, particularly over the last year or so, is governments investing directly in projects and rare earths companies. MP Materials is the poster child for that, where the government made an investment. They have a 15% stake in the company, and as part of that, they're setting guaranteed price floors for much of the output from these manufacturers and refiners. What that does is give certainty to companies looking to move into domestic rare earth production.

Finally, when you start looking across borders, the U.S. has entered into agreements with Japan and Australia on critical materials. Australia has significant rare earth reserves, and there are ongoing discussions with the European Union on similar cooperative agreements as well.

Kristin Myers: As I mentioned at the start of this, Sprott has a newly-launched fund for rare earths, REXC. Walk us through the fund a little bit.

Steve Schoffstall: We're excited to bring this to market. Three things really set REXC apart. The first is that it doesn't have Chinese exposure. Given that most of their products contain rare earth elements, you would expect to see significant Chinese exposure. REXC, as its name implies, leaves that out.

The second thing, and probably the biggest of them all, is that it's the only ETF out there that focuses specifically on rare earths. That's the key differentiator. Then the last thing we do is bring in what we're known for in our ETFs: our pure-play methodology. Basically, to be included in the index, there's a big focus on companies with at least 50% of their revenue or assets tied to mining, development, exploration, and we even include refining, separation, and production.

This stands out as a pure-play methodology because, when you look at the overall exposure, it's over 95% to rare earths in this product. If you look at competing ETF strategies, they can allocate as little as 5 to 10% of their exposure to rare earths. Given the rare earths movement we've seen in the last 12 to 18 months, these other strategies are increasingly being marketed as rare earth strategies. There's one instance where we see a strategy with about 50% exposure to lithium, yet they market themselves as a rare-earth-type strategy, but it's just a small portion. We think a pure-play strategy really sets it apart from other market segments.

Kristin Myers: Are there other differences in the strategy, or is it mainly Sprott's pure-play strategy that really sets this fund apart?

Steve Schoffstall: That's going to help us hone in on the exposure, but the Ex-China is a huge piece, and then, as well as being the only one just dedicated to rare earths. We have other products with some rare earth exposure, but this is the only ETF with a dedicated focus on rare earths, helping investors access the sector while reducing unintended exposure to other metals.

Kristin Myers: Steve Schoffstall, Managing Partner and Head of ETFs at Sprott, thank you so much for joining us today and for tuning in to Asset TV.