Malaysia aims to position itself as a key player in the global critical mineral supply chain, which is currently dominated by China.
However, the nation lacks the advanced technology required to separate and refine rare earth elements into usable components.
“STRIKE WHILE THE IRON IS HOT”
Hence, the nation is welcoming investments from global partners, including China.
During Chinese President Xi Jinping’s visit to Malaysia in April, rare earth processing was highlighted as a key area for bilateral cooperation.
Malaysia is seeking Chinese investments for a rare earth refinery in the country, hoping to gain access to such processing technology. This comes despite Beijing’s export ban on rare earth extraction and separation technologies since December 2023.
“We have the resources, we already have Lynas, which is strategic to (our goals). If we can really pull off the China processing plant, then that will be a huge win,” said Nik Nazmi Nik Ahmad, former Malaysian natural resources and environmental sustainability minister.
However, he cautioned against rushing into mining and processing without the right policies and environmental safeguards in place.
“I keep telling the state governments: Don’t go in for the quick buck but think long term,” he said. “Think about how people can have that assurance when they buy from you that it is being done properly.”
The federal government has set strict guidelines for rare earth mining and licensing requirements under existing laws.
However, analysts said implementation remains a problem because land matters are controlled by each state government, which can degazette forest reserves for rare earth elements mining without having to go through the federal government, despite a ban on mining in forest reserves. Illegal mining is also difficult to detect.
Malaysia’s rare earth deposits are located mainly in the east coast states of Terengganu, Kelantan and Pahang.
“These states, where a lot of the physical minerals sit on, don’t really have the standard operating procedures adopted, and that is a concern,” said Zayana Zaikariah, a researcher at the Institute of Strategic and International Studies Malaysia (ISIS).
Qarrem Kassim, another analyst at the Kuala Lumpur-based research institute, added that despite such concerns, Malaysia must seize the opportunity to move into high-value downstream activities.
With an ongoing United States-China trade war and a pressing global demand for rare earths that are critical to high-technology applications, Kassim said Malaysia must “strike while the iron is hot”.
“We already have a midstream ecosystem in Malaysia. Let’s not waste this opportunity,” he said. “Right now, everyone is looking to diversify their supply chains, and Malaysia is in a strong position to leverage on all these.”
https://www.channelnewsasia.com/asia/malaysia-rare-earth-minerals-refining-supply-chain-5306716
