Can Australia Become a Global Rare Earth Export Powerhouse?

China’s move to restrict rare earth exports to the U.S. has sent shockwaves through global markets and exposed a critical weakness in western supply chains. These elements—vital for electric vehicles, semiconductors, and advanced military systems—are now a tool of geopolitical leverage. But with China stepping back, could this be the moment Australia seizes a once-in-a-generation opportunity to become a global rare earth powerhouse?

Which Aussies companies will benefit from China stepping back?

As a key U.S. ally, Australia is uniquely positioned to offer stability, transparency, and a reliable partnership. ASX listed player Lynas Rare Earths (ASX:LYC), the largest producer outside of China, stands out as a major beneficiary. The company has already seen its share price surge in recent days, driven by its strategic positioning. With processing facilities in Malaysia and plans for a refinery in Texas, Lynas is ready to seize this opportunity. Meanwhile, Iluka Resources (ASX:ILU) is also stepping up, building a rare earth refinery in Eneabba to deliver high-grade oxides directly from Australia.

However, transporting materials across the Pacific comes with its challenges and costs. This could prompt the U.S. to explore domestic options, such as the reserves in Wyoming, or turn to countries like Brazil and South Africa, where supply routes are shorter. Nations like Vietnam and Russia are also being reevaluated for their untapped potential.

For investors, this is a wake-up call because the broader trend is about resilience—building supply chains that prioritise control and strategic independence over cost. Therefore, as the U.S. scrambles to secure its supply lines, Australian miners are poised to play a pivotal role. However, the question remains: can they scale quickly enough, and will the U.S. remain committed to its allies?

What are the best and worst-performing sectors this week?

The best performing sectors include Materials and Financials, both up over three per cent, followed by Energy, up over two per cent. The worst performing sectors include Communication Services, down under half a per cent, followed by Consumer Staples, up under half a per cent and Information Technology, up over half a per cent.

The best performing stocks in the ASX top 100 include Lynas Rare Earths, up over 13 per cent, followed by Bank of Queensland, up over 10 per cent and Evolution Mining, up over nine per cent. The worst performing stocks include IDP Education, down over six per cent, followed by Flight Centre, down over four per cent and WiseTech Global, down over two per cent.

What's next for the Australian stock market?

This week, buyers held firm, driving the All-Ordinaries Index up by more than one per cent. What's particularly noteworthy is that the index is now closing above March's low—a level that seemed out of reach just two weeks ago and that’s the key takeaway here: buyers have made their presence felt. This is still their market.

Also consider the fact that most of the volume moving the market comes from institutions which tells us the big end of town viewed the recent sell-off not with fear, but as a buying opportunity.

Adding to the positive sentiment, investors rotated out of the defensive sectors—consumer discretionary and consumer staples—and into Financials and Materials. That shift is significant. It’s a “risk-on” move, and it strengthens the case that a low is in, and the market could be gearing up to challenge the 8400-level next.

But don’t expect a straight line up. While the momentum is clearly turning, a slower, more deliberate move higher over the next couple of months is likely, especially with May and June typically being weaker periods for the All Ords.

So, with risk-on signals in Financials and Materials and both sectors coming off healthy pullbacks, now is the time to get ready. There are likely to be standout opportunities on the table—ones that may not come around again any time soon.

For now, good luck and good trading.

Dale Gillham is the Chief Analyst at Wealth Within and the international bestselling author of How to Beat the Managed Funds by 20%. He is also the author of the bestselling and award-winning book Accelerate Your Wealth—It’s Your Money, Your Choice, which is available in all good bookstores and online.