With some help from electric vehicle market ebullience, the VanEck Vectors Rare Earth/Strategic Metals ETF (NYSEArca: REMX) is higher by more than 32% over the past 90 days and there could be more to come for the only rare earths ETF.
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.
REMX could get a sympathy boost from MP Materials, which is going public via a special purpose acquisition company (SPAC), marking the first US-based rare earth’s initial public offering in nearly a decade.
“US rare earth’s miner MP Materials will go public in a $1.47 billion deal by merging with a private-equity backed blank-check company, underscoring Wall Street’s rising interest in efforts to boost US production of the strategic minerals,” reports Reuters. “The listing on the New York Stock Exchange would be the first for a U.S. rare earths company since Molycorp went public a decade ago. Molycorp filed for bankruptcy in 2015 and MP Materials bought California’s Mountain Pass mine and other Molycorp assets in 2017.”
Good News for REMX
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.
News of MP Materials’ IPO could be seen as yet another sign of a commitment by the U.S. to produce more rare earths here rather than relying on China for imports of the crucial minerals.
“MP is by far the most advanced player in the U.S. rare earths industry, given no rival project has even broken ground. But the company has to ship more than 50,000 tonnes of concentrated rare earths per year to China for final processing because its California equipment is not operational. Chinese customers account for all of MP’s $100 million in annual revenue,” according to Reuters.
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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.