The Pentagon, which is chasing the rarest rare earths after insulting the Chinese, has ended up in Malaysia.
In Kuantan, Lynas Rare Earths has started pumping out separated heavy rare earths, the awkward stuff China has kept to itself, after the US threatened the country with tariffs.
Lynas Rare Earths chief executive Amanda Lacaze said: “No one had made a separated heavy rare earth outside of China in 20 years.”
When China cut off exports of heavy rare-earth elements during trade tensions last year, car plants in the US and Europe were forced to halt production.
Now Lynas is being waved around as proof that the US and its mates can chip away at Beijing’s grip, provided they are willing to spend real money and wait.
In March 2026, Lynas announced a preliminary $96 million deal in which the Pentagon would buy Lynas’s rare earths.
Las Vegas-headquartered MP Materials, fattened up by billions of dollars in US government support, is planning a large rare-earth refinery that is due to come online later this year.
Lynas scored a quick win last month by producing samarium oxide, a scarce rare earth used in heat-resistant magnets for jet fighters and missiles.
Centre for Strategic and International Studies critical minerals programme lead Gracelin Baskaran said: “There is no doubt that 2025 was the wake-up call the United States needed to undertake bold industrial policy.”
Mining is not the hard bit, because rare earths are already dug up outside China, including Lynas’s feedstock from Western Australia.
The real pain is refining, with hundreds of stages separating elements using industrial acids, which is why the West keeps finding itself dependent, even when it has the rocks.
Lynas has run a refinery in Kuantan for more than a decade, but it used to focus on light rare earths and ship heavier material to China for processing.
Last year, with the US-China trade war running hot, Lynas completed a new heavy rare-earth processing plant in Kuantan and began separating mixtures into oxides that customers can buy.
Inside, the stuff gets bathed in hydrochloric acid until it separates, with terbium turning a deep brown and dysprosium showing up as a whitish powder.
Because the volumes are small, heavy rare earths get packed into knee-high 55lb cans that can be worth tens of thousands of dollars, while cheap cerium gets shoved into 1,800lb sacks.
Those heavy elements are sprinkled into magnets so they keep working at higher temperatures.
Washington wants more than two Western suppliers, so in February the US International Development Finance Corp extended $565 million in loans to Serra Verde, a Brazilian mine with significant heavy rare-earth reserves.
Last week USA Rare Earth, a Stillwater, Oklahoma company making rare-earth magnet equipment, said it would acquire Serra Verde in a $2.8 billion deal aimed at locking in supply for the US.
The effort has not been all smooth sailing, and Lynas has said there is “significant uncertainty” about building a Texas processing facility that was allocated $258 million in Pentagon grant funding in 2023.
Costs ballooned due to wastewater-handling problems, so Lynas is instead building a second, larger heavy rare-earth processing facility in Kuantan, due for completion in 2028.
US defence firms face a 2027 deadline to ensure no rare earths in their magnet supply chains come from China, and Lacaze says Lynas is supplying Japanese magnet makers that supply the US defence industry.
Lacaze wants tax credits to push larger commercial buyers, like car and electronics makers, to choose non-Chinese magnets because military demand is too small to carry the whole market.
