Geopolitical Tensions Fuel Rare Earths Rally, Spotlight on Lynas

Mounting diplomatic friction between China and Japan has reignited urgent concerns over the security of supply for critical minerals. This market anxiety has translated into significant gains for Lynas Rare Earths, the only major producer of these materials operating outside of Chinese control. The company's shares surged more than 18% in a single week, prompting investors to question whether the move is built on solid fundamentals or speculative fervor.

The rally was triggered by a January 7 report from the New York Times indicating Japan was on high alert over potential Chinese export restrictions. While China's commerce ministry did not specify any particular commodities, state media commentary suggested that medium and heavy rare earth elements could be a primary target.

Market reaction was swift and pronounced. On January 7 alone, Lynas stock jumped as much as 16%, marking its most substantial single-day gain since July. From a four-month low of AUD 12.15 on January 2, the share price recovered to AUD 14.10 by the close of trading on January 9.

Beyond immediate geopolitics, the company's operational outlook is also brightening. Consensus estimates from S&P Global point to a robust financial year 2026:

Should investors sell immediately? Or is it worth buying Lynas?

• Rare earths production is forecast to increase by 53% to 16,100 tonnes.
• Average selling prices are projected to rise 47% to AUD 72.50 per kilogram.
• Revenue could nearly double to approximately AUD 1.1 billion.

This positive trajectory is bolstered by Lynas's unique strategic position. The current situation echoes events from 2010 when Beijing halted exports to Japan during a territorial dispute. With China controlling around 60% of global production and over 85% of processing capacity, Western governments are actively seeking diversified sources.

Analysts view potential new restrictions as a clear tailwind for Lynas. The company, which operates the Mt Weld mine in Western Australia and processing facilities in Malaysia, is considered pivotal to reducing reliance on China. Its standing was recently reinforced by an October 2025 partnership with U.S. firm Noveon Magnetics aimed at establishing a American magnet supply chain. Furthermore, Lynas became the first Western company to produce commercial quantities of heavy rare earths in May 2025.

Cautious Analyst Stance Ahead of Key Report

Despite these growth drivers and strategic advantages, analyst sentiment remains measured. Of 15 market experts covering the stock, only about 47% currently recommend buying, with the majority advising investors to hold their positions. The average price target sits at AUD 15.30.

The market now awaits crucial insights on Wednesday, January 21, 2026, when Lynas is scheduled to release its quarterly results. Investors will scrutinize whether CEO Amanda Lacaze confirms the optimistic production targets and how the recent recovery in neodymium-praseodymium (NdPr) prices is reflected in the company's financial performance. This update will provide a fundamental check on the sustainability of the recent geopolitical-driven rally.