Why the Defense Sector Needs Rare Earths

It’s well known at this point that the United States, among other countries, is looking to amp up its domestic supply chain when it comes to rare earth materials. Of course, this is playing out because China holds such a dominant position on the rare earths market, and trade relations between the U.S. and China remain strained. 

Key Takeaways:

• The United States is looking to build up robust rare earth supply chains to compete with China, but it’s crucial to understand why rare earths are so important.
• Not only are rare earth materials used in AI and electric vehicles, but they are employed in a wide variety of different aspects within the defense sector.
• The Sprott Rare Earths Ex-China ETF (REXC) offer distinct exposure to ex-China rare earths companies, which can tap into the themes of commodities, ex-China, and defense spending, all within a single ticker.

However, some may be wondering — why exactly does the United States need these materials so badly? Well, rare earths offer a variety of different applications, be it for electric vehicles, artificial intelligence, semiconductors, and more. 

One area where they can be especially crucial is the defense sector. Recently, the experts at Sprott released an infographic to help illustrate the role rare earths play amid defense sector mobilization. 

See More: Rare Earths Are Helping to Power the AI Revolution

Sprott’s infographic explained that rare earths are employed in a multitude of ways to power the F-35 fighter jet alone. Elements like neodymium, praseodymium, terbium, and yttrium are used in the jet’s electronic systems. Meanwhile, neodymium, praseodymium, samarium, dysprosium, and yttrium are needed for the jet’s propulsion as well. Also, Sprott notes that scandium is used in the construction of the jet’s airframe. 

It’s important to remember all these applications are simply for the F-35 fighter jet alone. This just illuminates how extensively rare earths are employed across different aspects within the defense sector.

See More: Summer of Silver: The Case for Buying and Holding

The Ex-China Rare Earths Opportunity Set

Keeping this in mind, maintaining exposure to rare earths—especially ex-China rare earths—can help portfolios tap into a surprising amount of defense momentum. This helps add further incentive to an already compelling commodities play. 

Those looking to build more investments towards ex-China rare earths might want to look at the Sprott Rare Earths Ex-China ETF (REXC). As one would expect, REXC provides exposure to companies engaged in the rare earths industry that operate outside of China. 

This sort of exposure can help advisors and investors ride a couple of favorable trends—ex-China, commodities, and defense spending. And considering how distinct these trends could be from one another, REXC could offer a highly compelling path to growth over the long-term.

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