Rare Earth Tensions Flare Again — Is The REMX ETF a Buy?

Rare earths are back in the geopolitical spotlight. About a week ago, tensions between the United States and China reignited after U.S. officials accused Beijing of holding back exports of key rare earth metals, despite a temporary trade truce reached in May.

The dispute stems from China’s response to punitive tariffs imposed earlier this year by the Trump administration. In retaliation, Beijing added seven rare earth metals to its export control list. 

While Chinese officials later agreed to reduce tariffs and suspend non-tariff actions during a meeting in Switzerland, they didn’t explicitly promise to increase rare earth shipments—an omission the U.S. is now calling out.

All of this underscores how strategically important rare earths have become and how dependent the world remains on China for these exports.

What Are Rare Earths?

Rare earths are a group of 17 elements used in everything from smartphones and electric vehicles to wind turbines and military systems.

Mining and processing rare earths often involve toxic chemicals and even radioactive waste. That’s part of the reason most countries have backed away from production, while China—willing to bear the environmental burden and already decades ahead in refining infrastructure—has come to dominate the global supply chain.

That dominance has created a real geopolitical risk. When China tightens the rare earths tap, there are few alternative sources ready to ramp up quickly.

Rare Earth Exposure with REMX

For investors, one way to gain exposure to rare earths is through the VanEck Rare Earth/Strategic Metals ETF (REMX). The fund has $273 million in assets and tracks the MVIS Global Rare Earth/Strategic Metals Index, which includes companies involved in the production, refinement and recycling of rare earths and other strategic materials.

But despite the seemingly bullish headlines, REMX’s performance has been disappointing. The ETF is up just 1% year to date; over the past five years, it’s returned 13%; and since its 2010 inception, it’s down a staggering 74%.

China exposure, which makes up around a third of the portfolio, has been a major drag. The fund’s largest holding is China Northern Rare Earth Group, which makes up 7.8% of the ETF. That’s followed by Lynas Rare Earths, based in Australia and the largest rare earths producer outside of China.

Other top holdings include Albemarle Corp. (ALB), which makes up about 7% of the fund and is primarily focused on lithium production. Sociedad Química y Minera de Chile (SQM), another major lithium player, holds a 6.6% weight. MP Materials Corp. (MP), the only fully integrated rare earth producer in the U.S., rounds out the top five with a 6.5% allocation.

So while REMX includes some pure-play rare earth names, it’s more broadly a bet on the strategic metals and minerals sector. Lithium names have a significant presence, and many of the rare earth producers that are in the portfolio have struggled in recent years.

Could that change? Maybe. 

If China’s export controls persist or widen, the pressure to secure alternative supply chains could grow, potentially giving a boost to companies in the REMX portfolio. But for now, the ETF remains a mixed bag of underperformers tied together by a strong geopolitical narrative.

So far, that hasn’t been enough.