Highlights

• China currently controls 90% of global rare earth processing and 99% of heavy rare earth refining, maintaining a significant technological advantage.
• Despite large reserves in Vietnam and Malaysia, the region lacks the midstream infrastructure and separation capacity to become a true supply chain disruptor.
• Diversification of rare earth supply requires more than mining licenses—it demands technological autonomy, environmental responsibility, and strategic industrial planning.

As Western governments scramble to break China's stranglehold on rare earths, a new spotlight has turned to Southeast Asia. With large untapped reserves in Vietnam and Malaysia and a growing electronics base in Thailand, the region could, in theory, emerge as a key node in the global critical minerals map.

But Rare Earth Exchanges finds that while the rhetoric is bold, the infrastructure and technological depth required for full-spectrum rare earth independence remain dangerously thin.

China still dominates with 90% of global rare earth processing and 99% of heavy rare earth refining, a chokehold reinforced by its ban on technology exports and overwhelming lead in REE patents.

Malaysia’s Lynas facility processes up to 15% of global REEs, but only light elements from Australia—leaving Southeast Asia dependent on Chinese midstream tech and heavy REE feedstock.

Vietnam’s staggering 22 million tonnes of REE reserves remain largely untapped due to limited separation capacity, a lack of transparency in heavy REE data, and unclear environmental safeguards. An essential factor many media omit remains the critical need for separation and refining capability.

The Korea Herald-style optimism echoed in some Southeast Asian commentary downplays a critical risk: most nations in the region are still locked in upstream, extractive roles. As cited by the media above, without processing sovereignty, they are merely raw material sources, not supply chain disruptors, according to Eco-Business (opens in a new tab) and others.

The region's progress is further complicated by environmental concerns, policy fragmentation, and an uncertain demand outlook as EV giants like Toyota explore magnet designs that reduce or bypass dysprosium and terbium altogether.

A final takeaway here is that Southeast Asia has the rocks, but not yet the refining. Without serious investment in midstream and downstream capacity, the region risks becoming just another pit stop in China’s global rare earth empire. Diversification requires more than mining licenses—it demands technological autonomy, environmental responsibility, and bold industrial planning.

The reality is that we are several years away from SE Asia becoming a refining player.