China's move to use rare earths as leverage against the world has prompted Western countries to seek independence from Chinese rare earths. US media reports that Australian rare earth producer Lynas, a key supplier of rare earths to the US military, has begun producing heavy rare earths—still dominated by China—in Malaysia, making it a central part of the Pentagon's risk-diversification strategy. Brazil and other countries are also being developed as new supply sources for the US.
According to The Wall Street Journal, Lynas CEO Amanda Lacaze stated that aside from China, no other country has produced separated heavy rare earths in the past 20 years. The report describes Lynas as being at the forefront of US and allied efforts to prevent China from wielding rare earths as a global threat.
The report said that in March, the Pentagon signed a preliminary agreement worth $96 million (RM379 million) with Lynas to procure rare earth products. That same month, Lynas began producing the highly rare and militarily sought-after samarium oxide, which is used to manufacture heat-resistant magnets for fighter jet engines and missiles.
In addition, mining giant MP Materials, backed by billions of dollars in funding from the US government, is planning to build its own heavy rare earth refining plant, which is expected to come online within this year.
The report pointed out that the challenge in breaking away from Chinese supply lies in building refining capacity. Separating rare earths using industrial acids typically requires hundreds of steps. Over a decade ago, Lynas owned a refinery in Kuantan, Malaysia, but it only produced the more common light rare earths, while heavy rare earths were processed in China. However, during the height of the US-China trade war in 2025, Lynas finally established a heavy rare earth processing facility locally.
Moreover, due to previous wastewater treatment issues faced in its plan to build a rare earth processing facility in Texas, Lynas shifted to constructing a second, larger heavy rare earth plant in Kuantan, scheduled for completion in 2028.
At the same time, Lynas achieved a rapid victory in the commercial production of samarium in March. Global samarium output was previously almost entirely refined in China, making it one of the minerals most at risk of supply disruption, with shortages potentially causing billions of dollars in losses for US industries.
Although the US government has set a deadline of 2027 for military contractors to source “no rare earths from China,” Jane Baskaran, head of critical minerals at Washington think tank CSIS, stated that efforts to become independent from Chinese rare earths remain in early stages. Although there is a real trend emerging, it will still take several years for it to be translated into production.