Name: A Rare Opportunity: Rare Earths Investing, Ex-China
Uploaded: 2026-04-16T18:31:36.147Z
Duration: 1 h 1 min 44 s
Description: A Rare Opportunity: Rare Earths Investing, Ex-China

Transcript for "A Rare Opportunity: Rare Earths Investing, Ex-China": Good afternoon, everyone. My name is Jillian DelSignore. I'm the head of investor distribution and insights for Nasdaq indexes. Thank you so much for making the time for us this afternoon to join our conversation, a rare opportunity, rare earths investing x China with our experts from Strat and Nasdaq index. Just before we get into our conversation today, I wanted just to give you some insight into sort of the things that you can expect to take away today. It's probably a new conversation for many of you, myself included, on rare earths. And so we wanna really dive into a couple main topics. You know, why rare earths are gonna be a strategic asset underpinning defense, AI, electrification, and many other next gen technologies shaping global competitiveness, how geopolitical tension and export controls are reshaping capital allocation towards ex China in specific rare earths, why rare earth companies may benefit from government stockpiling, investor funding, and general long term industrial policy support? And then lastly, how investors can gain exposure to ex China rare earths. I think a lot of the reasons we're here today is to learn about why and then to learn about how. Right? How can you gain exposure to this particular to this particular space, in those companies that may benefit from investment incentives in The US and its allies? So before we get started and I introduce our speakers for today's conversation, a few housekeeping items. Sprott and Nasdaq index have put a number of pieces of, content and resources for you in the console at the bottom of your screen. So please take a few minutes as we're going through, review it, download it so that you can access it after the fact. We have a lot of content to get through today, but we are planning to leave time for questions. So please take advantage of the q and a box and put your questions in there. We'll do our best to get to them. But even if we don't, someone from Sprott will follow-up with you after the event. So please put them in there either way, and we'll make sure that they get answered either live or after the event. There will be a survey at the end of the webcast, so please take a few minutes to take it. They only make it better. They only make all of these events better for you with that critical feedback you provide after all the events that we do. And lastly, CE credits. For those of you who are with us live, we have your number, CFP or CEMA, and it will process once we're done. For those that are watching us on demand, please answer the 10 question CE CE quiz at the end under the docs tab, and you'll be able to get those credits. So now to our speakers. I'm so pleased to be joined, by Steve Schofstall, who is a managing partner and head of ETFs at Sprott Asset Management, and my colleague, Mark Marics, who is the global head of invest excuse me, of index insights at Nasdaq. Steve, Mark, thank you so much for joining me today. It's great to be here. Thank you. Absolutely. Steve, why don't I flip it over to you, Mark? Great to see you too. Sorry for jumping on you there. Steve, please go right ahead. I think this is a really interesting topic timely, certainly. And, so I think maybe in the interest of time, we'd love you to just, to kick. us off. in the, conversation. you know, this is, an area of the market that I think, is probably unknown to a lot of investors, though in the investing landscape, we've been hearing more and more about it over the last six to twelve months or so. So we'll take some time going through, the presentation. We'll just introduce you to Sprott very briefly for those that aren't aware of the firm, and then we'll talk through, the demand drivers for rare earths and included in that, you know, what are rare earths and and what what does that mean for the the overall economy. We'll take a look at, you know, China's role in the rarest supply chain, and and what that means for, economic expansion going forward. And then, there are a number of policies that are are geared at moving the rarest supply chain outside of China. We'll take a look through that, and then we'll also introduce our our new fund, the Sprott Rare Earths ex China ETF, ticker r e x c or Rexy as we've taken to calling it. It's a a new offering that we're we're very excited about. Just listed yesterday actually, and and, we're seeing great traction out of the gate. Very much a differentiated product, but we'll talk on that as we go throughout the presentation. For those that aren't aware, Sprott is a Canadian based and we're listed in both Canada and The United States on the exchange. We're an asset manager that is focused primarily on metals and mining. We've gotten notoriety over the years through our physical trust. Those would cover things like gold, silver, platinum, palladium. We also have the world's largest physical, uranium trust. That's about $7,000,000,000 as well as a physical copper trust. We moved into, the critical material space now about five years ago. And with that, we've been strategically launching new ETFs around that initiative. So we've expanded our ETF footprint rather considerably. We've grown from about two ETFs back in, 2022. We're now at 13 ETFs with our latest launch. We also have a number of our products are also available throughout Europe, taking advantage of the critical materials opportunity. In addition to that, we also have managed equity capabilities and some active strategies, and then, private strategies, which, are available to larger institutions. All told, assets under management across the firm are about $60,000,000,000 with most of that falling under the exchange listed products. So we'll we'll just get started here and, apologies if this, is giving any bad flashbacks to, ninth or tenth grade chemistry classes with the periodic table here. But rare earths are a group of 17 chemically similar metallic elements. We'll talk through why they're so essential. But the main thing to know here is that, they have a number of properties that are very unique to, rare earths, and and that makes them unreplaceable, particularly in high technology applications. They're not rare, even though they are called rare earths. What makes them rare is that, they're not usually found in high concentrations where they can be easily mined. And once they are found, they're typically found together. One of the, most difficult things about, the the mining aspect of rare earths is actually separating them from one another. This is one of the most challenging and energy intensive processes in modern chemistry. They're they're they're also divided into what are called light rare earths and heavy air, rare earths. That's just basically talking about their atomic weight, is how they're classified. What we tend to see is that heavy rare earths are much more scarce, and because of that, they tend to be, more expensive than than other the light rare earths. They're also, very important for high performance, high temperature tech applications on the heavy rarer side. On light rarer, we tend to see them using magnets, catalysts, you know, things like glass polish polishing, all sorts of uses, which we'll talk through as we go throughout here. One of the questions I get asked a lot, as we are in the critical materials space and some of our other products do have exposure to rare earths is, are rare earths critical materials or critical materials rare earths? That's a common question we get. The easiest way to say that is, you know, critical materials is the the broader based term, for these different materials like uranium, copper, silver, lithium, nickel, rare earths that are, essential to electrification, energy storage, technology, and other aspects of the economy. Typically, a material is going to be considered a critical material if it has high strategic uses and there is significant supply chain risk. Usually, those two things come together to to classify something as a critical material. Rare earths are a subset of critical materials, and and the easiest way to say that is, all rare earths are critical materials, but not all critical materials are rare earths. So if you were to think of critical materials as the larger basket of metals, rare earths would provide more targeted exposure to some of these applications. This is listing out the 17 rare earths that are out there and just giving a sense of how interconnected they are and how much they're used across industry applications. The main takeaway here would just to be to show that interconnectedness that we see. And and a lot of the the uses and and things that we'll talk about throughout this presentation are around permanent magnets or, a lot of times, NDPR will be used as that's a predominant magnet type. This would be two of the elements, neodymium and presodiminium. What you'll find with rare earths is, it seems like each name is harder to say than the one before. These permanent magnets are the strongest type of permanent magnet, that's commercially available. The reason they're called permanent magnets is because they don't need, an outside energy source to remagnetize, the elements. Some magnets can lose their, ability to, magnetize things over time. That's not the case with rare earths. We typically see that permanent magnets are are heavily used in clean energy technologies. In EVs, each vehicle is gonna use about four and a half pounds. If you were to look at a wind turbine, over 1,300 pounds of rare earths used in each wind turbine. But we'll talk a little bit more about that as we go as well. Some of the, the key areas where we see rare earth being used, and it it really goes across, all aspects of the economy. Obviously, been in the, the news recently would be, the defense aspect of it. If you were to think of a f 35 fighter jet that's going to use about, a 100 or excuse me, 900 pounds of rare earths. We also see them being used extensively in anti missile defense, drone technology. It it allows for guidance systems, whether that's an anti missile defense or or miss guided missiles. Also, it enables communication through satellites and and radars. Typically, what we'll find, with the satellite and radar systems and what we see with aerospace technology is that rare earths can be added to different alloys, to make you know, if you're saying a satellite to space, can make the satellite, much lighter, allow it to get to space much easier with less fuel. We also see some, uses in technology, particularly high end technology. That would be around lasers, AI data centers, and the semiconductors. Another aspect that we we tend to see is, you know, the humanoid robots. This is an area that, you know, if we were to think twenty years ago what we thought of artificial intelligence, that's probably about what most people are thinking about humanoid robots at this point. It's an area that's small but expected to rapidly grow over the next decade as technology and artificial intelligence really catches up to the the sector. Morgan Stanley estimates that out through 2050, the market may pass 5,000,000,000,000, dollars. So very significant, growth expected here. I won't get too hung up on the, you know, the the dollar amounts or or growth expected in humanoid robots. Just understand they are a thing. They're dependent, to be rarest are dependent, as part of that outpouring of of, the adoption of humanoid robots, and that's something that we're seeing as a high growth area from many economic models. We also see on the energy side, I mentioned the wind turbines, but we also see, you know, the EVs, batteries, solar panels, all using, significant amounts of rare earths. And then finally, on the consumer side, we're seeing significant, uses pretty much in everything, you know, that you come in contact with, through through your normal day to day life, whether it's in the monitors you're looking at now or air conditioning or ceramics. So a lot of vast uses, and and you're coming in touch with rare earths more than you know, on a daily basis. One of the things that's really impacting Rare Earths now, is the structural changes that we're seeing to many of the sectors that are really driving the growth. If you were to look at you know, if you classified it as defense, energy transition, artificial intelligence, these are three very high growth sectors. Currently, you know, we've seen about $5,000,000,000,000 annually now being spent just on these three sectors alone. That represents about a 78% increase from 2020. What this is doing is is, you know, really causing a a new level of demand, a resilient demand that can make rare earths companies and and those involved in the supply chain much better capable of weathering, economic downturns, can also decrease price sensitivity. And the main thing is when you start integrating rare earths into these aspects, of the supply chain and and, the global economy, it now becomes paramount that you, really secure your supply chain and and don't just that leave that up to to one nation really to rule what goes on there. When we start looking a a little deeper at, defense uses, it really comes down that modern defense really can't function, without the use of rare earths. About, magnets are going to make up about 50% of all rare earths. These are very important in the the guidance systems, and and, those little movements that you might see for missile interceptors that allow them to be agile and track their, track their targets to, defend, you know, buildings and and and human lives. That is made possible because of rare earths, and and these, magnets, represent almost 50% of the uses of rare earths, and a very significant portion of that, is going to many of these different defense aspects. We this is an area where we expect to see significant growth in the coming years. Just, I think it was in the last few weeks now, where the administration actually is going to Congress and expects to ask for about a 44% increase in the defense budget, which would take it from about a trillion dollar annual spend up to $1,500,000,000,000. And one of the things that, the ongoing conflict with Iran has showed, is that, you know, building up these stockpiles that, you know, in a few weeks in Iran, we were able to blow through those in about, you know, several years worth of stockpiling. And with that, we expect to see, you know, some some different initiatives. There's there's been more and more discussions about using the Defense Production Act, which would compel industries to help build out the, replenishing of these stockpiles. All of those would be those types of actions in our view would be, you know, positive for not only the short term demand for rare earths but also, for the longer term, demand of rare earths as well. When we start looking at, you know, defense spending and and just sticking with that topic for a moment, the graph on the right does, I think a pretty good job of showing how that's changed now over the last several decades. Coming out of the Cold War, where we were seeing, you know, percentage of GDP spent on, defense was, you know, about four to four and a half percent of, global economic spending. It cratered, you know, between that two to 2.2%. What we've seen now is that, NATO has agreed to increase their defense spending from two and a half percent of GDP up to 5% of GDP. We're already seeing significant increases, over the last eight to ten years now in, global defense spending, which now tops about $2,600,000,000,000, on a global basis. And the, a lot of this has to do with what we're seeing from geopolitical tensions that are are rising. And and given the nature and the way that, conflicts are now being fought of fought, the next generation systems, such as drones and and guidance systems, and interceptors are all heavily relying on rare earths, and we expect that to be, a significant driver of demand going forward. One of the things that, and we'll talk through some of the, actions that the administration's taken over the last twelve to fourteen months or so. But what militaries across the globe are waking up to is the fact that they can't just be reliant on, China as a virtual monopoly and a lot of these rare earths. And so, the US Department of War and other, agencies are looking at, ways and and instituting efforts where they can really establish a mind to magnet supply chain for rare earths, so that we're not dependent on any one foreign power. Going back to, you know, kind of the consumer side of things for a moment. If you think about your cell phone, there there's a lot of ways that rare earths are used. It's used, you know, in the color, the the vibrant colors that you get out of your phone. But, also, anytime you see a very compact speaker, whether it's in your phone, in your earbuds, those are all utilizing rare earths, so very significant exposure there. Whenever your phone vibrates, that's the magnets that are, created using rare earths, that allow the phone to to vibrate. So a lot of a lot of uses in your everyday life that you might not have necessarily realized that are are very much dependent on these these critical materials. Another aspect that is, you know, gaining in a lot of traction here is the AI build out and what that's doing, not only for critical materials generally, but rare earths across the board. This is an area where we've seen significant build out now over the last several years. The five largest hyperscalers actually have increased their capital expenditures in 2025, by 72%. So just those top five now are, expected to spend about $400,000,000,000 in CapEx spending. So very significant spending boost that we see, and and and we'll talk about some of the actions as we go through here later, how that's directly impacting rare earths and and how large technology companies are adapting to, the need to secure the supply chain. Typically, what one of the ways that that rare earths are are significantly, important as it relates to the, AI data center build out is that, they're very essential in helping everything run much cooler than they otherwise would. And that's a very significant cost for data centers where if you were to look at their total electricity consumption, about 20% is going to be dedicated to cooling. So there's a vested interest by a lot of these data centers and hyperscalers, to utilize rare earths to keep those electricity cost much lower. That's also a headline risk for a lot of data centers as they seek to to build up their capacity. One of the first questions tends to be around how are you going to source the electricity. Anything they can do to keep those electricity costs lower, tends to make rolling out these new data centers easier. Another area, where we see them being used is in the magnets for the storage infrastructure. It's what allows the, semiconductors to to read and write data. So it's a very important use there, obviously. And then when we start looking at communication, the fiber optics and other high speed ways of communicating, again, utilize rare earths. It's expected that by the time we get to twenty thirty, that, these data centers alone will consume about 3% of the, permanent magnets. So very significant growth and and growing aspect, that we're seeing coming out of this space and and sector as well. Another area, where we're seeing a lot of growth is as it relates to the energy sector. The energy transition spending just last year, has now topped about $2,300,000,000,000. It's a very considerable growth that we've seen since 2021, which was the the the first time that this spending topped $1,000,000,000,000 So very significant growth. Typically, what we see is, these permanent magnets are being used in electric motors. What that does is it allows, a lot of these motors to be able to run without gears. And despite what we're seeing from slow adoption of of EVs in The United States, actually, on a a global scale, it's, we're still seeing very strong adoption in this regard. About 24,000,000 EVs are expected to be sold just this year alone. To put that in perspective, in 2020, only 3,200,000 were sold. So very significant growth in EVs, even though we don't necessarily see that in United States. Other countries like China and Europe, which either in Europe's case have a lot of clean energy mandates or in China's case is looking to diversify away from fossil fuel reliance. And given the urban nature of a lot of other aspects of the globe, we do see much higher EV adoption rates than we do in The United States. An area where we expect to see maybe a stepping stone for The US would be in hybrids. They use rare earths, not to the same extent that we see out of EVs, but still a significant component, particularly as it relates to the battery. I I mentioned, wind turbines earlier in the, you know, 1,300 pounds that each turbine uses for rare earths. A lot of this has to do because it, you know, does allow them to operate without, you know, a gearbox. And what that does is it increases the reliability, of the underlying, mechanics of the of the the wind turbine. But at the same time, because that reliability is increased, it can help extend the life and and reduce maintenance costs. This becomes exceedingly important when you start to think about offshore installations. As we start to move forward over the next several decades, demand is expected to increase by over 300% for some of these rare earths that are key to many of these, technology uses here. So very significant growth and important aspect of the economy that we're seeing here. So I think, you know, the the next, the next logical question then becomes, you know, what's what what's making all of this so essential at the moment? And and I think the biggest single thing here is if you were to look at the growth in electricity demand on a global scale, it's expected to increase about 155, 160% or so over the next couple of decades. With that, countries are scrambling to have energy independence, so they're not reliant on, fossil fuels, which are are typically trade dependent. Just anecdotally, if we were to look at, once the conflict in Iran started, natural gas prices in Europe spiked almost 70% immediately. The news is flooded with stories about how China and other parts of Asia in particular are sourcing most of their, oil and natural gas from, The Middle East and how the the closing the Strait Of Hormoz has impacted that. By moving toward either renewable energy or things like nuclear energy, these countries are able to diffuse some of the geopolitical tensions that happen when we do have these times when conflicts start to flare up in these mineral and resource intensive regions of the globe. When you start looking at electrification, in our view, this is really the only way to really scale up energy diversification. And when you start looking at China, for example, and this is what the graph here shows is is their, growth in clean energy, and adoption. And and, what that means from a a global scale is that they're actually becoming huge consumers of a lot of these critical materials that go into building things like wind turbines, solar panels, nuclear energy. All of these are are being heavily relied upon, by China to diversify away from fossil fuels. They're doing this not necessarily for clean energy purposes like you might see coming out of Europe, but more from an energy resource, security perspective. Either way, the, the outcome is the same. Sure. And, Steve, before you before you pivot, those use cases, I mean, it's just wild because everything you named is everything we're all engaging with every single day, or you can clearly see sort of directionally up into the right in terms of need for all the things you just mentioned, whether it's EVs or AI or all all of the technological and energy related items. That's gonna take a lot of rare earths. Stop me if you're gonna get to this, but what is the forgive, perhaps not the right word, but the the mining of that, what is that gonna look like? What is the how are we gonna solve for that piece of this story? I'm quite curious. I'm sure our audience is is probably think thinking something similar. And so, again, if you get to that, please stop me, but I'm very curious your thoughts there. Yeah. We have a whole section dedicated to that. What but what. you'll see is that it's going to be, you know, there's there's a lot of international international efforts and, allied partnerships that are popping up to really solve for this problem. We'll talk through that in one of the sections here as we're coming up, but great question. Sorry. Actually, it was, like, very much on top of my mind after you went through all of those use cases because it's so it's very dramatic, right, in terms of the need, given the way we're positioned currently as as an economy. It it is, and it's a great question, particularly when you look at it, you know, in view of, China's dominance, which is, really our next section here, Sure. talking through, you know, kinda how they control the supply chain. This is an area which, you know, if if you were to look at the mining aspect, about 69% of rare earth mining is conducted by China. They have some of the the world's largest deposits of rare earths, though not all the deposits. And when you look past mining and start looking at things like refining and magnet production, they can control over 90% of those industries as well. So just to not not not to go too historical here, but if you were to look back at the recent history of rare earths, going back to, you know, as as recently as the early nineties, this was really an area that The United States dominated, the globe in. So we were the primary rare earths, producer, basically from mine to magnet, which is what we're trying to get back to now. In in 1991, China passed a law where they were started classifying rare earths as strategic, and and they started to restrict foreign mining companies from working with local companies at certain sites within China. This is one of those areas where we've seen that, China's really been ahead of the curve as it relates to, securing resources on a global scale. And and the way we see that play out today, is they're increasingly, getting more and more involved with investment in Africa and the mineral resources that are there, trying to make inroads in South America and then obviously other parts of of Asia. But this is something that started way back in the early nineties. These, Chinese state like companies were able to get permission by the US government to start to buy key rare earths businesses within United States. Often that was done under the guise of wanting to set up their own domestic, rare earths capabilities. What actually ended up happening was, they were, hiring engineers, US engineers, or paying engineers to be consultants. They would learn the technology. They would take that back to China, and then they would close down the assets that they bought in The United States. So what was left was we had this this flood of, technology and and human capital that, you know, we didn't really invest in The United States for a while. So, China spent the last two to three decades basically building out this rare earth supply chain, and they've really gotten to a point now where they'll use that to actually weaponize, their leadership position in this this aspect, and we'll talk about that a bit on the next slide. But it's really led to some very important national security concerns, and and we're seeing, you know, national and economic initiatives or initiatives on national and economic security, that are leading to affecting everything from defense to energy and consumer electronics. And if you were to look at how dependent major economies are on China, of the rare earths that are imported into The United States and into Japan, about 70% of that comes from China. If you were to look at the, European Union and just Europe in general, of their imports, about 98% of that comes from China. So they have, a stranglehold on the the largest, economies as it relates to this and as it relates to the broader economy. So one of the things and and I mentioned the weaponization of rare earths and and we really saw this play out, most recently last year. But as geopolitical, tensions started to flare, there was a a number of policies that that China did just last year around export controls, where they started to restrict, the movement of not only, rare earths, but also technology as it relates to, producing magnets or refining or separation, from leaving China. They've also, expanded, that to be outside of Chinese borders, and it's to the point now that, say, you have a, a processing plant in India or some other country, if that has more than one tenth of 1% of material that originated in China, those also fall under the export controls. So it's a very far reaching aspect of the of the supply chain, and and this is why, we're seeing, you know, over the last twelve months or so, this heightened security and attention being paid to rare earths. This isn't anything that's new. We've seen in the past where they've really weaponized what we've seen out of the rare earth space and typically the playbook, you know it's kind of on repeat. If we were to look back in 2009, we saw that China restricted rare earths exports and they cut off shipments to Japan. What resulted was about two and a half year spike where prices increased about 26 times over, what they were before these export restrictions. When we see these large price increases, particularly ones that start to stay around for a while like they did back then, you tend to see a supply response coming from some of these other countries. Now these supply responses aren't immediate. It takes time to, you know, find the assets, develop them, build out the, the facilities to to mine the rare not only mine the material, but also process it. And and when China started to get wind of of countries and other companies going down this route, they'll then flood the market with cheap material. It it craters prices, and and what we're left with is a, you know, an industry that never got off the ground, because they were basically boxed out of the industry. So this is a playbook that we've seen go over and over, the last few years and and something that, you know, they're attempting to, do again. We'll talk in a couple slides why we believe it's a little bit different this time and and what that might mean. But when we start to look at, what this is doing from a geopolitical perspective, you know, it's really, you know, in a lot of cases, they might be overplaying their hands here a bit, as there there are signs that, their grip is starting to loosen and expected to loosen into the, the coming decades. If we focus on the left graph here, this is looking at the, you can look on the left hand axis, the x axis the y axis there, which will show you the overall production of rare earths. The main takeaway here is that we're seeing significant amounts of new rare earths hit the market, over the last, you know, even for 2020 to 2024. As we go out into the future, we expect to see that to continue to increase. The interesting piece of this is that we continue or expect to see China's, hold on this industry decrease over that same period of time as, the industry outside of China is being incentivized and supported. So we'll take a a look here, you know, in the coming slides to take a look at the the changing policy landscape and why we believe that outside of China, we're starting to see some investment opportunity that we think is very structure in nature and well supported. So one of the things, you know, to focus on is if we think about critical materials, typically, you know, every country at this point, particularly all the developed countries, have a critical materials list that they maintain. Some call it strategic lists, some critical minerals, critical materials, all the same thing, at the government level. And what this does is it looks to find those industries that are at high risk, and also high risk for supply shocks, but are also extremely important to economic health and and continuing economic growth and prosperity. So rare earths are included on all of the major economies, critical minerals list which you'll see here on the graph, the globe below. The important thing to look at and I think The UK does a good job of summarizing this on on the chart here on the right. If you were to look at the top right quadrant, materials that are over here are extremely important from a economic standpoint and they're also extremely at risk for supply disruption. You can see rare earths with the green star around it there, falls in the upper echelon of that classification. Very extremely important to global economies and at the same time, very much subject to supply disruption as we've seen from from past actions with China. So what does that mean from a policy perspective and and how's that supporting, industries outside of China? I I think the first to to realize is that while China's mining about, you know, 60%, 70% or so of or 69% of, rare earths. Most of the reserves are not located within China. On a global basis, China has 48% of the reserves, little less than that. When you start to look at, you know, other countries like Brazil, India, Australia, these are countries that tend to have more favorable relations with The United States, also have very significant reserves. We also do have, you know, some reserves here in The United States and a country that, you know, came up a lot in the news, you know, six months ago, Greenland, also has significant, rare risk reserves, and I think that's one of the reasons why you were hearing so much about it in the news. So last year, the administration started a February review of markets, and this is basically a review to look at critical materials and understand, what threats are there to to national security as it relates to these materials. The the review went through and it determined that imports of critical materials were a threat to national security and and pursuing options to secure supply chains around different critical materials, what was, you know, to be, a focus of the, of this country going forward, and and we're seeing that really, you know, cascading through allied nations as well. We've seen, similar discussions happening in Europe and, elsewhere as well. But a few things to highlight out of that is, just last October. So if you'll recall, this is when, the last round of Chinese export, export restrictions happened with rare earths. There was a trip throughout Asia where The US signed a framework with Australia as part of that. They're providing financing for different, critical materials projects, but that includes rare earths mining and separation and processing facilities. There's also a commitment there to help accelerate and streamline permitting timelines. This is an aspect of mining that typically makes takes mines a very long time to go from discovery to production. We're also seeing, the potential for price floors being added, across some of these, rare earths in particular, and and we've seen some financing come as a result out of that. We've also saw on that same trip, it was actually a few days later, there's a very similar framework, between The United States and Japan. So this is a, a thing that we expect to see continued as we move forward. Just a week and a half ago, some news broke that there are similar discussions now underway between The United States and European Union. So a lot of, a lot of activity happening on this front, and we expect to see these, agreements continue to not only have move past just having an agreement, but to start to see action, behind each of these agreements. So I mentioned price floors. This is an area that has been, kind of a change in in what we've seen in how governments operate, particularly in The United States, as it relates to standing up new industries. Price floors are starting now to emerge as a primary, policy tool in order to help incentivize domestic production. MP Materials, who is one of the the leading US, rare earth companies, locked in a ten year price floor, with the, with the Department of War. This was last year. At the time, the price floor of a $100 per, kilogram was actually, well above what the current prices of of rare earths were at that time. A similar agreement was reached with Linus, rare earths, which is an Australian firm with, a Japanese counterpart. We're also seeing that, the g seven and EU economies are also considering price floors, and how they can use that to build up their industries. So in our view, this is something that can not only incentivize capital expenditures, but can improve, planning certainty, which is of utmost importance and also decrease volatility in the space. The export controls, as that China enacted, did, you know, one thing major that, is really helping, really helping stand up the, allied nations and and western, mining jurisdictions and and their rare earth pursuits. And that is it's really bifurcated the pricing that we're seeing for rare earths. In some cases, we're seeing rare earths that are coming outside of China are commanding prices that are, you know, four to six times higher, than those prices that are originating from, the material with inside China. This all helps. It it's one of the aspects that really helps when we start to look at some of the other levers that are being pulled, whether it's these strategic alliances, direct investment, financing, and then you throw in the price floors, and then the, permitting process, which is, you know, working to, really stand up, these assets outside of China. Another aspect, that we're seeing particularly, you know, the MP Materials is kind of the poster child for this, but the US government through the Department of War is, looking to build out that that mine to magnet production. They've taken an equity stake in MP Materials. They signed that off take agreement, for ten years where they'll take all the material if they can't find a buyer. And with this, equity stake, they now own 15 of the company. Similar commitments that we've seen, for companies like, USA Rare Earths. That that's another, you know, investment that kind of follows the same MO. But it's not just governments that are investing. We see that, JPMorgan and Goldman, have facilitated about a billion dollar loan agreement with MP Materials. Apple committed about $500,000,000 around the same time. And JPMorgan actually, last year, late last year, actually rolled out a $1,500,000,000,000 initiative around economic and, national security, initiatives supporting that within The US. With that, it includes things like mining and all industries, basically, that rarer sort of paramount to things like aerospace and defense. So that's. a Oh, yep. sorry. Keep going. I was just getting ready to pass it back to you, so good timing. Oh, okay. Perfect. Yeah. So we have some questions that have started to come in. I'm gonna save, most of them for for for the end. But, before we turn it to Mark, who's gonna take a dive a deep dive into the index of which the ETF that we'll talk about after that tracks, sort of aligned with the question I was asking earlier around sort of availability of of such, critical materials. Someone was asking, and you you noted, in more of a general term that it takes a long time, right, to get it out of the ground and get on. Someone was asking, like, you look at gold and silver timeline, they say, is ten years. Like, do you have a sense for the timeline from from getting it out of the ground to a material? Yeah. I mean, it could take fifteen years or more. Right? So some of the, production facilities, you know, not the mining aspects, but downstream are are looking to get online, you know, hopefully within the next year to two. So those. assuming the technology is there and the equipment's there and readily available, that aspect of it wouldn't take as long as the mining aspect. If you look at it can vary drastically across the industry. A good rule of thumb is probably, you know, ten to fifteen years, generally. for mining. Could be a little more, a little less depending on, you know, the permitting process and and, you know, how far along, you know, the production process is. That's very helpful. I mean, I think, thank you for those slides. It was extraordinarily helpful. I think so timely and topical for those of us that sort of as you see, the ways that you might not have realized. I certainly didn't. The way that these materials play a role in daily life, and the trend going forward. So with that, let me go ahead and welcome Mark into the conversation, who, as I mentioned, can go through the index for which this product, is tracking now that we've set up the investment case. Thank you, Jillian. And, thank you, Steve, for providing, I feel like, the the expert level, sort of quick, lesson in how to understand this market. I feel like a lot of people in the audience, probably like myself, have heard a lot about rare earth sort of in passing, especially over the last year or two, and sort of understood the investment case, and a lot of the use cases, but not in that level of detail. And I think it's it's important, at least from my perspective, to stress that, you know, this is a metals and mining type of strategy at the end of the day. It is a commodity exposure, but it is a thematic exposure more than any other. When I think about it at a high level, the things that Steve emphasized in his presentation, especially talking about defense, energy transition, electrification, grid infrastructure, and, of course, AI, which is everybody's, you know, sort of front of mind, thematic that people are paying attention to day to day. I mean, this is a way to get exposure from an equity standpoint. Right? You're investing in equities to get underlying commodity exposure to some of these megatrends and megathemes that are really sort of driving, not just economic growth in the twenty first century and all the opportunity associated with that, but, a lot of these really significant policy changes and, movements that I think are gonna influence, right, the direction of different pathways from a sector perspective, from a geographic perspective of how to generate, returns in equity and commodity markets alike. So, I really appreciated that. I thought it was a a a really, really powerful way to kinda summarize the investment case, and so I'm not gonna rehash that. I'm gonna talk about the index that we launched here at Nasdaq just under a month ago. So not much of a live track record to talk about yet, but I did take a look earlier today. And since we launched, since we went live, on March 20, we are up about 15% on the index already. And so what I'm gonna talk to you about instead is sort of, like, how do we actually construct the index with Sprott paint playing a leading role here. And I'll just emphasize for the audience, this is kind of a a a very well trodden model that we've, had here at Nasdaq for close to two decades in launching, what we think is sort of an industry leading lineup of thematic indexes, where we don't do all the work at Nasdaq necessarily. We bring in, experts, in the form of external research contributors, in this case, Sprott, to help us with the work of really scanning the universe of companies that are out there that may be doing something related to rare earths, right, or either a pure play or kind of a more diversified mining company that does stuff in addition to rare earths, and really trying to construct an index with thematic purity in mind as well as, you know, casting a wide enough net where you are really getting the right type of exposure and the right levels of exposure. Right? So the most important thing I think people should take away from this is even though this is a Nasdaq constructed and Nasdaq maintained index, we're calculating it day in and day out. Sprott is the research and sort of subject matter expertise partner in this index in the sense that they have to classify a company as being a rare earths company to even qualify for index inclusion. And they apply something called an intensity score, which is basically just a fancy way of saying, what is the revenue attribution, to the rare earths industry of an individual company? You must have an intensity score of at least 25% to qualify for index inclusion, meaning at least a quarter of your revenue that you earn in a given year comes from rare earths activities. We have a bunch of additional eligibility criteria on top of that. A lot of it is focused on China. So this is an ex China strategy. You can't be domiciled or incorporated in China. Doesn't include Hong Kong or Taiwan, but that is a major rule, and you can't be listed in China on either Shanghai or Shenzhen stock exchanges. You can't have a bunch of special share class types as a company that pertain only to the Chinese market. All that stuff is sort of formulaically systematically screened out. There are also some eligibility criteria around sort of minimum size, minimum liquidity. So we target around through 30,000,000 for new ads, $20,000 for, minimum, daily trading volume, and you have to be seasoned for at least three months. So at least three months of trading, on an exchange track record. And then in terms of how we, weight the index on the right hand side, the right hand funnel here, that also largely relies on Sprott's sort of subject matter expertise, the intensity score. We split companies into those that we consider kind of more of the pure play types in group one. You've got more than 50% of your revenue coming from it rare earths versus group two where you've got somewhere between 2550%. And then we weight the companies in those two groups, specifically according to those classifications. So, group two, you're capped out at 15%, in aggregate. And then your max security weight for individual companies within group two is capped at 4.75%. It's not a straight market cap weighting. We adjust the weighting based on your intensity score. Right? So let's say I have a market cap of 10,000,000,000. You have an intensity score of 25% versus 50% for another company. So those adjusted market caps become 2 and a half or 5,000,000,000 respectively for the purposes of weighting those companies differently. Right? So the company that has more revenue exposure basically ends up getting more proportional weight in the index if you're in group two. In group one, there's no adjustment. You are weighted according to your unadjusted free flow market cap with a single security cap at 20%. And there are some other caps on top of that to kind of limit the amount of concentration that we have in the index for all the names that are sort of greater than 5% individual weight. We rebalanced the index quarterly. We reconstitute it every six months semiannual basis. That's when Sprott sort of updates its list of eligible constituents for the index. I'll turn now just to sort of a quick picture, like a quick cursory glance at what performance looks like in the rare earths and critical materials space versus some of the other kind of broad commodity benchmarks that we like to look at. I've also got the S and P 500 here in purple. So this is looking at year end 2021, through, March. So you can see the S and P up 37% there. And then you've got the Bloomberg commodity ex precious metals index. So think of it as just broad commodity basket excluding gold and silver. That's up about 14 and a half percent. And then you've got Bloomberg industrial metals, in the white or the light gray there. That's about flat. And then you've got this UBS rare earths and critical minerals index that we showed as a kind of directional benchmark. Actually, if I look at the historical sort of simulated returns for our index, it's a little bit better than this UBS index. The exposure is different. But this kinda shows you directionally, right, that this type of product trades very independently of something like the S and P 500, the broader equity market. It trades according to its own rhythm, and is potentially a very good diversifier in a broader portfolio and why you would potentially think about this as, sort of almost like an alternative sleeve, as opposed to a standard equity sleeve. I'll end by giving you just a picture of what the exposure actually looks like today. So it's 34 companies in the index. The top two names, which Steve referred to earlier, Linus, the big name out of Australia, and then MP Materials, the big name out of The US. Those two together have been capped at 20% each. So you see their weights after trading a little bit for a few weeks. They're a little bit over or under 20%, but those are your top two biggest holdings in the index of about 40% in total. And then you've got other companies sort of capped around that 5% area, and then the smallest companies have kinda lumped altogether. But that kinda gives you a sense of, you know, this index being a little bit top heavy. There's sort of like a handful of companies, I would say, at the top that have market caps in the range of, you know, several billion dollars, Linus and MP being the biggest ones there. But you've also got, you know, names like Ramaco Resources, which is not a pure play, but is a pretty substantial, miner with, you know, over half 1,000,000,000 of revenue in 2025. So a good mix of names in that space. And then on the right hand side shows you your sort of country geographic exposure basic view. You can see Australia, figures very prominently here, about half the exposure. US is about 30%. Canada, UK, and New Zealand sort of round out the remaining 20%. So a nice sort of diversified anglosphere mix of, of exposure here for, the rarest miners. I'm gonna cut it there. Hopefully, that gave you a sense of what the index looks and feels like. And, Steve, I'll pass it back to you. Yeah. Thanks, Mark. So we'll just take, you know, quick two, three minutes just to to run through this the the fund itself here as you did a great job running through the strategy that underlies the fund. The first thing to note here around, RECC is that it's the only ETF, that is focused specifically on rare earths. Right? So, there's other funds out there that may include rare earths exposure. This is the only one with that dedicated focus of the product. As Mark mentioned, there's a a pure play screen that underlies the entire, basis of this fund. The 50% revenue is what we're targeting, so 50% of a company's revenue or assets dedicated to mining, exploration, development, separation, refining, production of rare earths. This goes a little bit past just the mining. There's about 13% or so that's in that midstream, separation, refining, production aspect of rare earths. And as Mark mentioned, we do have a small potential allocation in the 25 to 50% revenue test. That's, you know, not a significant holding in the index. Currently, companies that fall within that bucket make up about 4% of overall exposure. When you look across the entire fund you're getting about 95% exposure, to rare earths miners and and, production type companies. So very concentrated in rare earths, and I think the pure play strategy that we have there is is really, set the fund up well, to to kind of deliver on that exposure. That pure play is extremely important because when you look at more diversified type strategies, you can be left with a lot of unintended exposure, which is why we tend to favor the pure play route. And as Mark mentioned, the, other unique aspect of this and as it's in the name, it excludes China. So that's, you know, those companies domiciled within China or some of those Chinese securities that might be listed on other exchanges, but our Chinese securities, those are all excluded out of the index. This is a theme that, you know, in our view has gained a lot of attention over the last twelve months or so. Typically, what you're going to see is a lot of ETF strategies are marketing themselves as rare earth strategies. But when you start to look under the hood, what you'll see is that they generally have very minimal exposure to rare earths. In some cases we can see it around 10% or even less, although they may market themselves as a rare earth strategy. In one instance, there's a competing strategy that has about a 50% exposure to lithium, yet emphasizes the rarer exposure that it does have. So there's, a lot of, due diligence to look into when you start looking at, you know, and I would say this for any product, really understand what you're investing in, look past the name, and look at actually what the fund seeks out to achieve. And just one last aspect here of, you know, how the index looks from a market cap perspective. You can see pretty even weights between large cap and small cap companies in here about 45% apiece, with some mid cap exposure in there as well. As I mentioned, over 95% exposure to rare earths. That 4% is what you're seeing from that 25 to 50% revenue bucket. Market cap across the index is about, dollars 49,000,000,000, 34 issues in there currently. And and what you'll find is if you were to look at, this strategy versus, you know, competing strategies and and other ETF strategies, is that you would find a very low overlap, given that we are so concentrated in in the the rarest, sector. With that, I think we have a few minutes. We can open it up for questions. I'll thumb through some performance and disclosure slides here. The fund just launched yesterday, so no performance to report. This would be a look at our entire ETF lineup. If you do like the more diversified approach, two funds I would point you to would be SETF, which is our Critical Materials ETF. This provides about a 14% allocation of rare earths, also provides exposure to things like uranium, battery metals, copper, silver as well, and then METL, which is a active diversified metals and mining ETF. This is focused, you know, also provides some some rarest exposure in there. Similar to SCTM, there's some differences there, but it is an active ETF wrapper. So, Jillian, as we, flip through some disclosure slides, I'll hand it back to you. You're muted. Sorry, guys. My first time using webcast. Just kidding. I, I didn't want you to hear me taking notes here. What you just said about the because one of the questions we had come through was about sort of competing strategies, and I think it's important what you just said. I always said in this industry as long as I've been, know what you own. Right? Know what you own. Pop the hood. Understand what you're investing in and making sure that it matches the title. Right? And I think in this case, you you made an an incredibly elegant point about that. So one question I think would be important here for us to end on because we do just have a minute. Long term potential. Right? Clear. Short term versus long term potential. Right? What are your thoughts on, folks investing in it now and the the opportunity to take advantage of something today, and what we're seeing by way of opportunity in the markets outside of China given the dominance they have today versus what we're gonna see in the future. Not that you. can predict a great future, just from that perspective. question. And, you know, one thing we always focus on and and one of the the first things we look at in a product development standpoint is we look at the long term picture. Is this a strategy that we think over the long term, would benefit investors to have exposure to? If the answer to that's yes, we we kinda move on to the next step and look at the universe and say, is there a way we can improve upon that? And if so, you know, we'll continue down the process. And if we launch a fund, it it's a a sector that we believe in the long term potential, and also we feel that is, differentiated, from other offerings out there. And and, you know, we often get asked about short term what that means. I I think, you know, what I say about all the critical materials is that, you know, you should expect some volatility in, in your allocation. That kinda comes with the territory when you're you're investing in something that's more emerging and the news flow is changing rapidly. I'll say in the, in the immediate term, you know, the higher oil prices have, weighed on mining stocks a little bit here, though they've continued to perform very well, over the last couple of months, in spite of that. And I think a lot of that, owes to the fact that, there's a lot of tailwinds behind critical materials, and it doesn't take, producing, you know, material out of the ground to start to see investment flow into these underlying companies, whether it's through public or private partnerships. You know, when you talk about, you know, Apple or Goldman or or JPMorgan making, you know, billions of dollars available. Those capital inflows can benefit these companies in the shorter term while also setting them up for success in the longer term. But I think the the biggest thing I would say is regardless of your time horizon, just be comfortable with some volatility, as the market, continues to adapt and and, you know, we start to see how the, the future's playing out in a lot of these critical materials and and what that, the structural changes the economy impact are having on those critical materials. That's a great answer. I think to Mark's points earlier, right, these are ways to play some of the most important thematics we're seeing in the market today, and going forward. So, thank you both, Steve, Mark, incredible conversation over the last hour. I hope our audience took away as much as I did on such an important topic in such a really groundbreaking, I guess no pun intended, groundbreaking strategy that, that you all have have put into place here. So, thank you everyone for joining us. Really appreciate it. For those that we didn't get to your questions, again, someone from Sprott will have the opportunity to follow-up with you directly. Please take your time to take the survey. We really appreciate the feedback, and thank you again for joining us. We'll see you next time.