Highlights

• Lynas Rare Earths achieves first non-Chinese heavy rare earth production in Malaysia, but does not fundamentally disrupt China's near-total market control.
• China dominates 60% of mining and nearly 100% of rare earth refining, processing, and magnet production, making supply chain decoupling extremely challenging.
• Successful rare earth diversification requires massive investments in technology, infrastructure, environmental controls, and strategic public-private partnerships.

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A recent Asia Times report (opens in a new tab) by Patricio Faúndez casts a hopeful light on Southeast Asia’s capacity to break China’s rare earth monopoly. The article highlights a milestone achievement: Australia’s Lynas Rare Earths has successfully produced heavy rare earth elements (HREEs)—notably dysprosium and terbium—at commercial scale in Malaysia, marking the first non-Chinese HREE production globally. This is indeed a significant technical breakthrough. However, the broader premise—that Southeast Asia could soon serve as a viable counterweight to China’s dominance in rare earths—is optimistic at best and strategically premature.

At Rare Earth Exchanges (REEx), we welcome progress where it’s due—but remain clear-eyed about the realities of the global rare earth element (REE) supply chain. As of 2025, China dominates not just mining (~60%) but nearly 100% of HREE refining and over 90% of global magnet rare earth oxide separation, sintering, and magnet production. This control stretches upstream, midstream, and downstream, and it is reinforced by decades of state-backed investment, price control mechanisms, and export leverage.

A First, Not a Shift

The Asia Times article rightly celebrates Lynas’ success in Malaysia, which represents a vital diversification step for Western-aligned supply chains. However, portraying this as a “geopolitical shift” risks overstating the situation. Lynas’ production volumes remain small, and the infrastructure is fragile, heavily reliant on Australian government subsidies and subject to political scrutiny within Malaysia itself. Furthermore, Lynas still ships mixed rare earth carbonate from its Australian Mount Weld mine to Malaysia, highlighting the continued segmentation and interdependence of the current supply chain.

The article further references Vietnam’s significant REE reserves—potentially the largest outside China—but notes that the country contributes less than 1% to global REE output today. This discrepancy highlights the core issue: geology alone is insufficient. Processing infrastructure, environmental controls, refining capacity, skilled labor, and regulatory clarity are all either missing or underdeveloped in the region.

Environmental, Technological, and Strategic Hurdles

Faúndez briefly acknowledges some of the serious constraints facing Southeast Asia’s REE ambitions:

• Environmental concerns, particularly those related to radioactive byproducts such as thorium, continue to hinder domestic extraction projects.
• Lack of technical expertise and infrastructure hampers local refining capacity. China maintains a near-total monopoly over solvent extraction and separation technologies, which are essential for producing high-purity oxides.
• Geopolitical risk is underestimated. Southeast Asian nations are heavily dependent on China's economy, making large-scale decoupling efforts politically delicate and economically risky.

To be blunt: no nation in Southeast Asia today possesses the ability to independently mine, refine, and manufacture REEs at an industrial scale outside of Chinese input or influence.

The Donetsk Mirage

The article also references a U.S.-Ukraine mineral deal as part of broader Western efforts to diversify supply. Yet this too underscores the fragility of current diversification efforts: Ukraine’s most promising REE reserves lie in Russian-occupied Donetsk, rendering them geopolitically inaccessible for the foreseeable future. Relying on contested or unstable jurisdictions for critical minerals is no strategy for resilience—it is a liability.

The Bigger Picture

What is missing from the Asia Times piece is a more critical recognition of China’s entire vertical integration model—from upstream mining to midstream refining to downstream magnet manufacturing. China is not simply a “producer”; it is a strategic monopolist. Its dominance is backed by central policy, dual-use industrial planning, and active pricing manipulation. Any serious challenge to its monopoly will require:

• Long-term public-private partnerships are akin to defense procurement models.
• Strategic insulation for emerging producers against Chinese retaliation and market flooding.
• Technology transfer and intellectual property (IP) development, particularly in solvent extraction, magnet production, and recycling.
• Massive investment in environmental controls, permitting frameworks, and human capital development.

The Asia Times article rightly urges Western support for Southeast Asia’s nascent rare earth element (REE) sector—but omits the scale, coordination, and geopolitical insulation required to turn potential into true diversification.

Incremental Progress, Not Structural Parity

Southeast Asia’s geology offers hope, but that hope has yet to materialize into real independence from China. Lynas’ milestone is welcome. Vietnam’s reserves are promising. However, without aggressive investment, robust alliances, and supply chain resilience planning, Southeast Asia will remain, at best, a supplement to—rather than a substitute for—China’s rare earth dominance.

The road to REE supply chain diversification runs through policy, capital, and technology, not just ore bodies. The sooner the USA, under President Donald Trump, understands this, the sooner an industrial policy may emerge that can accelerate rare earth and critical mineral decoupling from China.

About Rare Earth Exchanges

Rare Earth Exchanges (REEx) delivers investor-focused news, analysis, and data on global rare earth markets, technologies, and geopolitical supply chain risks.  REEx is developing a suite of tools to help retail investors navigate rare earth element and critical mineral supply chains, from upstream to midstream and downstream. Based in the United States, REEx serves retail and institutional investors, industry professionals, and policy leaders shaping the future of critical minerals.  See discussions on various topics at the REEx Forum (opens in a new tab).