The nation's largest current processor of rare earths is the Lynas Corporation, which has just received a green light from the Malaysian government to begin cracking and leaching rare earths, said progress was being stalled by regulatory red tape.

"This is another significant milestone for Lynas," Lynas executive chairman Nicholas Curtis said of the breakthrough in Malaysia.

Until now Australia still did not have an actual producer of rare earth metals.

During the next three to four months Lynas Corporation's extraction units and production will continue to ramp up.

He said following Malaysia announcement the company's shares rose 14 per cent. Rare earth companies' share prices also rose worldwide.

He said within three to four years Australia should have several rare earth mines in operation and would be a major player on the world stage.

"The Toongi prospect for instance is a site in the central west [near Dubbo] is potentially a world-class source of rare earth elements," he said.

"China has dominated the world in terms of supply and demand of rare earth elements but Australia now has the opportunity to dominate international trade of certain rare earth metals, including yttrium, europium, terbium and dysprosium.

"These metals are highly prized for their use in low weight-high power magnets that are required for electric vehicles and wind turbines, along with europium, also supplying our much loved high-definition screens, LED lighting, computer hard-discs, CAT scanners.

"They've been nominated by the US Department of Energy as being critical to the global green energy future but they are in short supply around the world.

"Australia is just beginning to tap its rare earth resources and the prospects for growth in this sector are extremely promising.

"At present it's estimated to hold 6 per cent of the world's rare earths but according to CSIRO this is not the full story."

He said several other Australian rare earth exploration companies were waiting to get under way with their production; Arafura Resources (ARU) was one with a major project in late stages of its development.

It has a mine life expectancy of more than 20 years with yearly production capacity of 20,000 tonnes of rare earth elements, along with phosphate, uranium and gypsum.

Other exploration companies waiting to get under way with production are Peak Resources (PEK), Hastings Rare Metals (Ltd) and Victory Metals.