Sprott's Schoffstall on Rare Earth Portfolio Drivers & More

Sprott’s Schoffstall on Rare Earth Portfolio Drivers & More Nick Wodeshick July 17, 2026 Those who have been keeping an eye on geopolitical developments likely know that rare earths are an increasingly valuable resource for both China and Western countries. After all, tensions continue to escalate on this front. The United States is seeking to build its own rare earths supply chain while China extends its arsenal of sanctions. Key Takeaways: VettaFi and Sprott Asset Management recently held a webcast, hosted by by Kirsten Chang, senior industry analyst at VettaFi, and Steve Schoffstall, managing partner and head of ETFs at Sprott, to discuss the opportunity set within the rare earths industry. Schoffstall explained how AI is an important driver for rare earths, why the U.S. is building stronger rare earth supply chains, and more. For those looking to amplify their exposure to rare earths, especially companies domiciled outside of China, the Sprott Rare Earths Ex-China ETF (REXC) could help. However, it may not be exactly clear exactly why all these countries are bickering over these elements in the first place. Recently, VettaFi and Sprott Asset Management held a webcast to help answer these questions. The webcast, hosted by Kirsten Chang, senior industry analyst at VettaFi, and Steve Schoffstall, managing partner and head of ETFs at Sprott, examined the strategic role of rare earths , how countries are pushing back against China’s dominant position, and more. The Growing Drivers for Rare Earth Demand Early on in the webcast, Chang posed a question to the webcast’s audience: What do you believe will be the primary driver of rare earth element (REE) demand in client portfolios over the next 3-5 years? AI was the top choice, with 42% of the vote. Defense followed at 39%, energy transition at 15%, and consumer electronics at 4%. Schoffstall noted that these responses are consistent with what he and the team at Sprott are seeing when they speak to investors. Investors are beginning to understand the crucial importance of what rare earths offer — not just from a national security perspective, but from an investor perspective as well. Given that the AI buildout is likely not going to slow any time any time soon, Schoffstall identified this as a notable area of growth for rare earths. “{These} strategic uses really start to become much more important for the overall demand for rare earths,” Schoffstall added. “It can really take out the cyclical nature that we tend to see with a lot of commodities.” See More: Summer of Silver: The Case for Buying and Holding The Ex-China Factor Schoffstall explained why the U.S. is looking to regain ground as a self-reliant producer of rare earths. He noted that the country used to have a more major role in global rare earths production until the ’90s, through the Mountain Pass Mine in California. Currently, the United States only accounts for about 13% of rare earths production. Meanwhile, China accounts for 69% of REE mining and 91% of rare earth element production. This has left the United States — and other countries — largely dependent on imports to accommodate rare earth manufacturing needs. In response, many countries, including the U.S., are building up more resilient supply chains to reduce their reliance on China. “We think that there’s a change in the geopolitical landscape here,” Schoffstall noted. “Although China will continue to be a major player in the rare earth sector going forward, we’re seeing that its grip is expected to loosen over the coming years.” REXC: Accessing Ex-China Rare Earths Within the ETF Wrapper These shifting supply chains could bode well for the Sprott Rare Earths Ex-China ETF (REXC) . REXC invests in companies engaged in rare earth mining and production outside of China. This approach can tackle multiple favorable tailwinds at once. Those include the fundamental industrial applications that rare earths of...