Lynas Rare Earths (ASX:LYC) plans to build a new heavy rare earth (HRE) separation facility at its Malaysian operations, aiming to boost the global supply of HRE oxides outside China amid rising demand, according to a Wednesday Australian bourse filing.

The new facility is expected to initially process 5,000 tonnes of HRE feedstock per year, sourced from the company's Mount Weld deposit in Western Australia, as well as upcoming Malaysian ionic clay deposits, per the filing.

The facility, building on its current production of dysprosium and terbium oxides, will expand to produce samarium, gadolinium, yttrium, and lutetium, with the potential to include europium, holmium, ytterbium, and erbium, depending on future commercial agreements, the filing said.

The AU$180 million self-funded project will start with samarium by April 2026, reaching full HRE capacity within two years, subject to approvals and offtake agreements, the filing added.

Lynas Rare Earths' shares were up nearly 2% in recent Wednesday trade.