Geopolitical Tensions Spark Rally in Critical Minerals Sector

A sudden escalation in South America, marked by confirmed U.S. military operations in Venezuela and the arrest of Nicolás Maduro over the weekend, has jolted markets for strategic commodities. This development has refocused investor attention squarely on supply security, triggering a significant influx of speculative capital into sectors tied to defense and energy independence. As the sole major Western producer in its field, Lynas Rare Earths finds itself a primary beneficiary of this macro-driven shift.

The market movement has been broad-based, indicating a sector-wide repricing of risk rather than a company-specific story. On Monday, shares in Lynas surged 6.67 percent to AUD 13.03. The momentum carried into Tuesday's session, with the stock testing levels around AUD 13.24—a gain of over eight percent from Friday's close. This pattern was mirrored by competitor MP Materials in the United States, which posted an 8.81 percent advance on the same day.

The rally represents a clear macro bet. Investors are rapidly reassessing the fragility of global supply chains and seeking reliable alternatives to reduce dependencies, particularly on Chinese sources. For Lynas, with its established supply chain stretching from the Mt Weld mine in Australia through processing in Malaysia and into the United States, this has translated into a renewed strategic premium.

Operational Headwinds Temporarily Overshadowed

This geopolitical catalyst arrived at an opportune moment for Lynas. The company had been under pressure following an operational setback in November 2025, when power outages at its Kalgoorlie facility led to production losses equivalent to one month's output. By the end of December, its shares were in technically oversold territory.

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

However, the recent geopolitical events have effectively pushed these near-term concerns into the background. Market experts now anticipate that Western governments will intensify support for producers of critical minerals in light of the escalating tensions, a tailwind for companies like Lynas.

All eyes are now turning to the quarterly report, expected around January 22, 2026. Investors will scrutinize this update for confirmation that the power issues at Kalgoorlie have been fully resolved and that production targets for 2026 remain achievable.

From a technical analysis perspective, the stock has already breached a key resistance level at AUD 12.60. Analysts suggest that if the current geopolitical risk premium persists in the market, the share price could have potential to advance toward the AUD 14.00 zone. Such a move would close the gap created by November's operational warning.