Morgan Stanley Research has revealed that South East Asia, which possesses up to 20% of the world’s rare earth reserves, accounted for 3% of global production in 2024. The region’s strategic position in the critical minerals and rare earth value chain is set to be bolstered by recent US trade agreements aimed at reducing bottlenecks in processing infrastructure and lowering natural gas and power costs.
The report highlights that Myanmar and Laos were responsible for 21% of rare earth elements mined in 2024, although their refined market share remains small. Meanwhile, Indonesia, Thailand, and Vietnam are seeing increased investments in rare earth production, driven by favourable policies and export restrictions. These nations are tapping into over 20 million tonnes of reserves, with governments encouraging investment in liquefied natural gas (LNG), biofuels, and the electric vehicle (EV) value chain.
The US has signed new trade agreements with South East Asian countries to enhance energy supply and rare-earth sourcing. These agreements aim to deepen critical-mineral supply chains to the US and encourage investment in rare-earth-processing capabilities. Notably, Indonesia has agreed to eliminate export restrictions on critical minerals, whilst Malaysia maintains its export ban on raw rare earths, focusing on in-country processing.
The agreements also cover a range of products, including coal and agricultural commodities, potentially leading to trade flows exceeding $10b annually. As Malaysia plans to import LNG equivalent to 14% of its domestic natural gas needs, these developments underscore the region’s growing significance in global energy and materials markets.
