(Reuters) -Australia's Lynas Rare Earths ( LYSCF ) said on Wednesday it would set up a new heavy rare earth separation facility in Malaysia for around A$180 million ($116.96 million) to meet strong market demand for oxides sourced outside China.  

The new facility will have the capacity to separate up to 5,000 tonnes per annum of heavy rare-earth feedstock, solidifying Lynas' position as the world's largest rare-earth producer outside China.

Feedstock will by supplied from Lynas' Mt Weld operations in Western Australia as well as other developing sources. 

The timeline for the project's construction is subject to regulatory approvals, the company said. 

Lynas said it was currently in discussions with a range of offtake partners to secure deals for the expanded range of products at fair prices.

($1 = 1.5389 Australian dollars)

(Reporting by Sneha Kumar in Bengaluru; Editing by Anil D'Silva)