Lynas produced dysprosium oxide at its new facility in Malaysia, offering customers a non-Chinese source for the first time, it said in a statement Friday.

"Lynas is now the world's only commercial producer of separated heavy rare earth products outside China," said chief executive Amanda Lacaze.

It is a "significant step for supply chain resilience and provides customers with the option of sourcing product from an outside China supplier", she said.

Lynas expects to produce another rare earth, terbium, in June.

The firm said it expected pricing to reflect high demand for rare earths sourced from outside China.

Beijing has banned the export of processing technology that could help rival nations, and has been accused of using state-imposed quotas to control supply.

In an effort to loosen China's stranglehold, the US government has agreed a US$258 million contract for Lynas to build a new refinery in Texas.

Lynas operates the Mt Weld rare earths mine in Western Australia as well as the processing facility in Malaysia.