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, traded slightly lower last Friday, but the ETF’s performance can be seen as decent against the backdrop of higher quotas out of China.
Even with those headlines, REMX, the first and only ETF dedicated to rare earths, surged nearly 6% last week.
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.
“China lifted its annual rare earth output quotas on Friday by 10% to record-high levels for 2019, potentially easing fears the world’s dominant producer of the group of 17 prized minerals will restrict supply,” reports Reuters.
Riding With 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.
For its part, REMX has recently displayed some momentum, rallying more than 11% off its 52-week low notched in September. China controls about 85% of the global supply of rare earth minerals.
“The full-year rare earth mining quota has been set at 132,000 tonnes for 2019 and the smelting and separation quota at 127,000 tonnes, the Ministry of Industry and Information Technology said in a statement,” according to Reuters.
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This is the second consecutive year in which China has hiked rare earths quotas.
“China typically issues the rare earth quotas twice a year for six-month periods. In March, the first-half quotas were set at 60,000 tonnes for mining and 57,500 tonnes for smelting and separation,” according to Reuters.
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