US firm plans two refineries in Malaysia to reduce reliance on Chinese rare earth supplies

A US-controlled company plans to invest US$600 million (about S$767 million) in rare earth refineries in Malaysia, aiming to turn the country into a regional processing hub. Analysts see the move as part of a gradual shift in US supply chains towards Malaysia to reduce dependence on Chinese rare earths.

Bloomberg reported that the start-up, DTEC Mineral and Metal Technology (DTEC Mineral in short), is the first company authorised to export unprocessed rare earth materials to the US since the Malaysian government recently announced an easing of rare earth export controls.

Chief executive Milan Perlly said in an interview that the company plans to build rare earth refineries in Malaysia over the next three years. Its long-term goal is to turn Malaysia into a regional hub for processing rare earths from ionic clay deposits.

Perlly said the company plans to build two refineries in Malaysia in phases to meet its US shareholders’ target of raising annual rare earth output to 10,000 tonnes.

“The US wants us to build 10,000 metric tons output,” he said. “My goal is to put one plant on the east coast for 5,000 metric tons, a second plant on the west coast.”

He said the company has held talks with state government officials in Kedah, Terengganu, Perak and Negeri Sembilan, and is looking for suitable sites for the plants.

Malaysia’s Ministry of Natural Resources and Environmental Sustainability confirmed last Thursday (22 October) that it had approved the export of a batch of unprocessed rare earth materials, but did not disclose details of the company that applied. This is the first such export approval since Malaysia imposed restrictions on exports of unprocessed rare earths in 2024.

Perlly confirmed that the company has been authorised to export up to 700 tonnes of unprocessed rare earth materials to the US. It is preparing to ship about 30 tonnes there for research to determine their composition and identify the most suitable processing technology.

The company also plans to develop Malaysia’s ionic clay rare earth resources and eventually own rare earth mines.

The Malaysian government estimates that about 16.1 million tonnes of rare earth resources have been identified nationwide, with a substantial share found in ionic clay deposits. These rare earth elements are mainly bound to clay rather than contained in rock, making them relatively easier and cheaper to extract.

Such deposits may also contain heavy rare earths, which are in high demand and can be used to make high-performance magnets and other advanced technology products.

However, most of Malaysia’s identified rare earth resources have yet to be shown to be commercially viable to mine.

Rare earths are widely used in electric vehicles, electronics, wind turbines and advanced weapons, among other applications. China still dominates global rare earth processing.

DTEC Mineral’s plans in Malaysia will not only help the US diversify its rare earth supplies beyond China, but also significantly expand Malaysia’s domestic processing capacity. This will allow Malaysia move away from its long-standing reliance on a single refinery operated by Australia’s Lynas Rare Earths in Kuantan, Pahang.

DTEC Mineral is one of the companies involved in the trade and critical minerals cooperation agreements signed last year by US President Donald J. Trump and Malaysian Prime Minister Anwar Ibrahim.