Malaysia and Vietnam Are Redrawing the Rare Earth Map

China’s rare earth sector is still defined by scale, policy leverage, and downstream control, but the newest developments in Southeast Asia show that the regional supply chain is starting to diversify in meaningful ways. The most important shift is not a single mine, but the rise of new processing and separation capacity in Malaysia, Vietnam, Thailand, and neighboring markets, alongside continued Chinese influence in upstream feedstock and technology partnerships.257

China remains the anchor of the global system. In 2024 it accounted for about 69.2% to 70% of world rare earth mining and roughly 91.7% of refining capacity, according to USGS and IEA-based reporting.46 That dominance was reinforced in 2025 when Beijing tightened export controls on multiple rare earth elements and magnets, triggering supply disruptions across defense and industrial buyers.45 The policy signal is clear: China is willing to use midstream chokepoints, not just mine output, as a strategic tool.56

In Southeast Asia, Malaysia remains the most important rare earth processing node outside China. Lynas Rare Earths’ Kuantan plant is still the region’s flagship separation facility, and in May 2025 Lynas became the first company outside China to produce commercial quantities of dysprosium oxide at its Malaysia operation.57 In March 2026, Malaysia renewed Lynas Malaysia’s operating licence for 10 years, but with stricter conditions on waste handling and future disposal, showing that political acceptance remains a key constraint even for globally important assets.7 Lynas is also pushing downstream diversification through a heavy rare-earth separation facility in Malaysia that is intended to produce samarium, a material important for defense and advanced manufacturing.1

Vietnam is emerging as the clearest prospective growth story on the upstream side. Current reporting says policymakers are moving to classify rare earths as strategic resources and plan to process 2 million tons of ore per year and 60,000 tons of oxides by 2030.1 If even part of that capacity is delivered, Vietnam would move from a resource holder toward a more strategic supplier role in the regional supply chain.12 That matters because Southeast Asia already contributes a meaningful share of global mine output: the combined production of Malaysia, Myanmar, Thailand, and Vietnam represented 11.4% of global output in 2024.2

Thailand is positioned as a smaller but potentially useful participant in the emerging supply chain. Industry analysis places Thailand among the notable rare earth producers in the region, while also highlighting that the US and Europe are seeking to expand processing and supply relationships across ASEAN, including Thailand.24 Thailand’s strategic value is less about dominance in mining and more about being a possible host for future partnerships, beneficiation, and downstream industrial capacity.24

The broader investment picture points to a regional contest between China-centered supply chains and an emerging ex-China alternative. US, EU, Japanese, and allied financing is increasingly targeting rare earth extraction, processing, and magnet manufacturing outside China, with ASEAN countries now part of that push.25 But Southeast Asia is not simply replacing China. China still sources material from Malaysia and Myanmar, and Chinese firms remain embedded in regional projects and technology partnerships, especially where governments want rapid industrialization without fully building indigenous processing stacks first.2

The main industry takeaway is that Southeast Asia is becoming a critical battleground for the next phase of rare earth development: not just mining, but separation, licensing, waste management, and downstream magnet inputs. China still dominates the system, but new capacity in Malaysia and planned scale-up in Vietnam suggest the region could become the most important diversification corridor outside China over the next several years.1257