An Australian firm's production of a heavy rare earth, a first outside of China, is a "major milestone" in diversifying a critical supply chain dominated by Beijing, experts say.

But the announcement by Lynas Rare Earths also illustrates how much more needs to be done to broaden the supply of elements critical for electric vehicles and renewable technology.

Rare earth elements (REE) are 17 metals that are used in a wide variety of everyday and high-tech products, from light bulbs to guided missiles.