The VanEck Vectors Rare Earth/Strategic Metals ETF (NYSEArca: REMX), which is comprised of global companies involved in producing refining and recycling rare earth and strategic metals and minerals, is often driven by Chinese output of the essential minerals, but that could change as the U.S. boosts production.
REMX seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the MVIS Global Rare Earth/Strategic Metals Index (MVREMXTR), which is intended to track the overall performance of companies involved in producing, refining, and recycling of rare earth and strategic metals and minerals. REMX offers investors the opportunity to participate in the rare earth metals arena, without as much of the risk presented when investing in an individual rare earth stock.
“The US Geological Survey (USGS) announced Thursday that US mines produced approximately $86.3 billion in minerals in 2019 –- more than $2 billion higher than revised 2018 production totals,” reports Mining.com. “US metal mine production in 2019 was estimated to be $28.1 billion, or almost $500 million higher than in 2018. The principal contributors to the total value of metal mine production in 2018 were gold (32%), copper (28%), iron ore (19%) and zinc (7%).:
Crucial Earth Factors
Rare earth metals are crucial factors in the 21st century, as they are a part of industries as disparate as electronics, mobility, and sustainable energy. Strategic Metals include rare earth elements as well as specialty metals used in nuclear reactors, LEDs, magnets, electric motors, sensors and many other components used in smartphones, flatscreens, hybrid vehicles, and our homes. Now they are becoming available for physical investment, including secure storage in bonded warehouses.
The increased production in the U.S. is important because the Defense Department is trying to stockpile reserves of these minerals in an effort to reduce dependence on Chinese imports.
China is the world’s dominant supplier of rare earths, controlling more than 85% of the market, allowing it set quotas throughout the year that affect prices and supply.
“The domestic production of critical rare-earth mineral concentrates increased by 8,000 metric tons (over 44%) in 2019 to 26,000 metric tons, making the US the largest producer of rare-earth mineral concentrates outside of China,” according to Mining.com. “The steel, aerospace and electronics industries processed nonfuel mineral materials creating an estimated $3.13 trillion in value-added products in 2019, which represents a 2.5% increase over 2018.”
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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.