Rare Earths: China and the Battleground for Defense, Technology and Energy

Why It Matters

Rare‑earths are essential to defense, AI and clean‑energy technologies, and diversifying away from China’s dominance reduces geopolitical risk while unlocking significant investment upside.

Key Takeaways

• Rare earth market $14B, set to double by mid‑2030s.
• AI, defense, and energy transition drive 78% demand surge since 2020.
• China controls ~69% mining, >90% refining and magnet production.
• US, EU, Japan forming partnerships, price floors to curb China reliance.
• Sprott’s REXC ETF offers 95% rare‑earth exposure, ex‑China focus.

Summary

The video examines the rapidly expanding rare‑earth market, now valued around $14 billion and projected to more than double by the mid‑2030s. Host Talia Hayden interviews Steve Schoffstall of Sprott Asset Management to explain why these 17 magnetic elements are critical to smartphones, electric vehicles, AI data centers, and defense systems.

Demand is being driven by three strategic sectors—artificial intelligence, defense, and the energy transition—fueling a 78% increase in related investment since 2020, amounting to over $5 trillion. Rare earths are irreplaceable in missile guidance, drones, F‑35 fighter jets (which contain roughly 900 lb per aircraft), wind‑turbine generators, and EV motors.

China dominates the supply chain, owning about 69% of global mining and more than 90% of refining and magnet production, and has leveraged this dominance with export restrictions and price manipulation. In response, the United States, Europe, Japan and Australia are forging agreements, financing new mines, and instituting price‑floor mechanisms to secure non‑Chinese sources. Sprott’s newly launched REXC ETF reflects this shift, allocating over 95% to rare‑earth companies while explicitly excluding Chinese exposure.

For investors, the convergence of geopolitical risk and structural demand makes rare‑earth exposure a compelling diversification tool. The ETF’s pure‑play, ex‑China focus offers a way to capture upside from the sector’s growth while mitigating supply‑chain vulnerabilities that could affect broader critical‑materials portfolios.

Original Description

Today, the rare earth metals market sits at roughly $14 billion. It's on track to more than double by the mid 2030s. Sprott Asset Management Head of ETFs Steve Schoffstall discusses what rare earths elements are and why they're so important to today's economy.

In this episode of Metals in Motion, Thalia Hayden @etfguide chats with Steve Schoffstall, Managing Partner, Sprott Inc. and Head of ETFs at Sprott Asset Management about trends in rare earths metals markets, and how investors can take advantage of the trends.

#rareearthminerals #mining #etf

*****

Important Video Disclosures

An investor should consider the investment objectives, risks, charges, and expenses of each fund carefully before investing. To obtain a fund’s Prospectus, which contains this and other information, contact your financial professional, call 1.888.622.1813 or visit https://sprottetfs.com/. Read the Prospectus carefully before investing.

Exchange Traded Funds (ETFs) are considered to have continuous liquidity because they allow for an individual to trade throughout the day, which may indicate higher transaction costs and result in higher taxes when fund shares are held in a taxable account.

The funds are non-diversified and can invest a greater portion of assets in securities of individual issuers, particularly those in the natural resources and/or precious metals industry, which may experience greater price volatility. Relative to other sectors, natural resources and precious metals investments have higher headline risk and are more sensitive to changes in economic data, political or regulatory events, and underlying commodity price fluctuations. Risks related to extraction, storage and liquidity should also be considered.

Shares are not individually redeemable. Investors buy and sell shares of the funds on a secondary market. Only market makers or “authorized participants” may trade directly with the fund, typically in blocks of 10,000 shares.

Sprott Asset Management USA, Inc. is the Investment Adviser to the Sprott ETFs. ALPS Distributors, Inc. is the Distributor for the Sprott ETFs and is a registered broker-dealer and FINRA Member. ALPS Distributors, Inc. is not affiliated with Sprott Asset Management USA, Inc.

© 2026 Sprott Inc. All rights reserved.