Sunday, September 19, 2021

Renewable Energy Powering Rare Earths Upside - ETF Trends

Last updated Monday, September 13, 2021 14:45 ET , Source: NewsService

Rare earth minerals are essential to producing an array of clean energy technologies, and with demand for the latter soaring, the rare earths investment thesis is experiencing a renaissance.

Following a long period of anonymity, the VanEck Vectors Rare Earth/Strategic Metals ETF (REMX) is back in style. REMX, which turns 11 years old next month, now has $1.1 billion in assets under management — a testament to a broad audience of investors discovering the importance of rare earths in the clean energy equation.

More importantly, REMX is up 78.38% year-to-date. That’s confirmation that the fund’s 20 member firms are positively correlated to demand trends facilitated by the renewable energy industry. After all, minerals such as lithium, nickel, cobalt, manganese, graphite, rare earths, copper, silicon, and silver are pivotal pieces in the global decarbonization puzzle.

“The minerals intensity of clean energy technologies may accelerate demand by as much as four to six times, depending on the technology,” says VanEck analyst Charl Malan. “An offshore wind plant requires thirteen times more mineral resources than a similarly sized gas-fired power plant. The use of individual minerals such as cobalt, graphite and lithium (to name a few) could jump some 21, 25 and 42 times, respectively, during the next decade as the result of an aggressive push for clean energy use.”

There’s a long-term case for REMX as well, one buoyed by a variety of global governments targeting ambitious...

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