The competition for rare earth resources between the United States and China has expanded into Southeast Asia, with Thailand becoming a key area of focus due to its growing role in the automotive and electric vehicle (EV) supply chain.

On October 26th, the United States signed a trade and rare earth cooperation agreement with four ASEAN member countries - Thailand, Vietnam, the Philippines, and Indonesia - in Kuala Lumpur.

The agreement aims to diversify critical mineral supply chains required for EV production and to reduce dependence on China, which currently dominates global rare earth refining and magnet manufacturing.

Rare earth elements such as neodymium, praseodymium, and dysprosium are essential for high-performance magnets used in electric vehicle motors.

China currently accounts for about 71% of global production and 86% of refining capacity, giving it significant control over the EV and clean energy sectors.

Recent Chinese export restrictions on materials such as gallium and germanium have raised concerns among automakers and suppliers about possible disruptions in the EV component supply chain.

Thailand, currently the world's sixth-largest rare earth producer, has been working to strengthen its domestic supply and processing industries. The country produced approximately 13,000 tonnes of rare earths in 2024, an increase of over 260% compared with the previous year.

These developments are linked to the country's expanding EV manufacturing base, which has attracted foreign investment.

Chinese automaker BYD has invested around US$ 486 million in an EV production facility in Nakhon Ratchasima.

The investment also includes the establishment of a magnet production base through the Neo Magnequench factory, which produces permanent magnets used in electric motors for EVs, contributing to Thailand's role in the regional EV supply chain.

Australia's Lynas Rare Earths, one of the largest non-Chinese producers, is conducting a feasibility study for a rare earth processing plant in Kanchanaburi. The proposed facility would process monazite ore containing light rare earth elements such as lanthanum, cerium, and neodymium, which are used in EV motor and battery production.

The Thai Government has also signed a memorandum of understanding with the United States to promote cooperation in developing the critical minerals supply chain. This includes industrial processing, knowledge transfer, and investment promotion in rare earth-related sectors, supporting Thailand's goal of developing its EV and battery manufacturing capabilities.

With increasing rare earth exploration and production, foreign partnerships, and EV manufacturing capacity, Thailand is strengthening its position within the global automotive supply chain.

However, challenges remain in developing skilled labour, improving processing infrastructure, and ensuring environmental compliance with international standards.

If these initiatives continue, Thailand could become an important contributor to the global shift towards electric mobility by serving as a regional centre for rare earth and EV component production in Southeast Asia.