Rare earth elements consist of 17 metals essential for producing magnets critical to manufacturing vehicles, including electric cars, automotive components, military equipment, and electronic devices. And one of the easiest ways to gain exposure to them is surprisingly cheap for the current climate.
U.S. Rare Earth Price Floor
The U.S. on the U.S. Defense Department establishes $110/kg minimum pricing for neodymium-praseodymium oxide to boost American production and counter Chinese market control.
This represents a direct government intervention to secure critical material supply chains for national security purposes, ensuring domestic rare earth producers can compete economically against heavily subsidized Chinese operations.
Set at nearly 2x China’s current market rate of approximately $60/kg, the U.S. floor is designed to stimulate domestic manufacturing of high-performance magnets essential for electric vehicle motors, wind turbines, and military applications.
The floor is part of the multibillion-dollar deal for the U.S. government to be the largest shareholder of MP Materials (the sole rare earth miner in the U.S.), with producers and buyers agreeing price floors, especially if a single buyer is acquiring the full supply or close to it.
VanEck’s REMX a Solid Spread Bet
VanEck’s Rare Earth and Strategic Metals ETF (REMX) is one of the easiest ways to gain exposure to the entire market as a whole. Although Lithium miners jumped on the MP Materials news and are tempting to jump into, as well as Lithium being very cheap at the moment (due to a supply glut), Lithium is not a rare earth metal.
REMX reached an ATH of $14,000 in 2011, and is still -75% below that price.
What happened in 2011? The same tension between the U.S. and China – the former limiting rare earth exports – with The Guardian covering it well:
The same headlines are beginning to appear.
China’s Ministry of Commerce announced on 4 April – in response to the first tariff salvos (of this Trump term) – that it would limit overseas shipments of seven rare earth elements (REEs) along with certain magnets incorporating them. In July, China lifted them, leading to a massive surge.
Although the U.S. and China have announced another 90-day tariff pause, and U.S.-China talks on rare earths are “halfway there“, according to US Trade Representative Jamieson Greer, what the U.S. says and what it is doing are two separate things.
The Speculatour’s Disclosure: Not financial advice. No guidance is provided for any particular investor, asset prices can fall as well as rise. The Speculatour is not a licensed securities dealer, broker, investment bank or advisor.
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