Highlights

• China imposes strict export controls on rare earth elements, demonstrating its 70-90% global market dominance and strategic leverage.
• Non-Chinese rare earth producers like MP Materials and Lynas Rare Earths see significant market potential as Western governments seek mineral independence.
• The emerging REEx ETF offers investors exposure to ex-China rare earth miners, refiners, and magnet manufacturers amid geopolitical supply chain shifts.

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Beijing’s latest export control expansion on rare earths has sent a clear message: resource policy is now geopolitics in action. According to Luis Flavio Nunes, China’s new rules require government approval for any export of products or magnets containing even trace Chinese-origin rare earth content or processing technology—a mirror image of Washington’s semiconductor export restrictions.

China’s dominance remains unchallenged: 70% of mining, 90% of refining, and 93% of global magnet manufacturing. This level of control means the new regime effectively places Beijing’s thumb on the supply valve feeding electric vehicles, smartphones, wind turbines, and defense technology worldwide.

Market reactions were swift: MP Materials (NYSE: MP) jumped over 14%, Texas Mineral Resources (OTC: TMRC) surged 18%, and Lynas Rare Earths (OTC: LYSDY) added nearly 5%. These moves reflect investor awareness that non-Chinese capacity—especially mine-to-magnet operations—will command strategic premiums.

Winners, Risks, and Open Questions

MP Materials and Lynas Rare Earths remain the top ex-China integrated producers, each backed by Pentagon or allied government support. Yet, scaling beyond pilot or single-site separation capacity takes time. Permitting, environmental review, and heavy-REE processing remain bottlenecks.

Beijing’s timing—just ahead of the Trump–Xi summit—suggests a calculated negotiation lever, not a random escalation. But questions linger:

• Will China selectively approve exports for civilian use while restricting military-linked materials?
• Can U.S. and allied refiners meet defense-grade purity standards quickly enough?
• How might supply chain financing adjust if Western firms can’t match Chinese throughput?

The REEx ETF Advantage

For retail investors navigating this complex landscape, the Rare Earth Exchanges U.S. & Allied Rare Earth Supply Chain ETF (REEx ETF), now in development, could offer pure-play exposure to non-Chinese miners, refiners, and magnet manufacturers. In our retroactive analyses, the REEx ETF has outperformed both the S&P 500 and NASDAQ 100, returning 207.7% over five years with a 21.7% CAGR, reflecting its focus on ex-China producers and processors.

As Western governments deploy tens of billions toward mineral independence, REEx offers not just a portfolio diversification tool but also a front-row seat to the remapping of global industrial supply chains.

Past performance is not indicative of future results.  See the recent review (opens in a new tab).

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