Malaysia plans to be a key player in rare earth supply chain
Malaysia’s vast rare earth deposits are estimated to be worth over US$200 billion, but it lacks the technology to process them.
Rare earths dug up and processed into concentrate at Mount Weld in Western Australia, are pictured after being shipped to the Lynas plant in Gebeng, Malaysia, Jul 3, 2014. (File photo: REUTERS/Sonali Paul)
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KUALA LUMPUR: Malaysia is home to the largest heavy rare earth processing plant outside China.
The Lynas Advanced Materials Plant, located on a 100ha site in the industrial town of Gebeng in Pahang, is fully owned by Australian mining firm Lynas Rare Earths.
The facility processes 1,500 tonnes of heavy rare earths annually, separating minerals such as dysprosium and terbium. They are used for making heat-resistant magnets that power high-tech devices, ranging from defence and medical equipment to wind turbines and electric cars.
Lynas said that since it began operations in Malaysia 12 years ago, it has invested over US$700 million and contributed over US$1 billion to the country’s economy.
Currently, all its feedstocks come from Mount Weld in Western Australia. But in May, the company’s CEO Amanda Lacaze signed a Memorandum of Understanding (MOU) with Kelantan’s state investment arm for the supply of mixed rare earth carbonate as a potential feedstock.
Lynas has also pledged to work with South Korean magnet manufacturer JS Link to produce up to 3,000 tonnes of super magnets per year in Pahang state capital Kuantan.
These projects are expected to spearhead the development of Malaysia’s rare earth ecosystem.
RAMPING UP RARE EARTH PROCESSING
The Southeast Asian nation currently supplies 13 per cent of worldwide critical mineral demand.
The government is pushing for greater cooperation between state and federal authorities to tap the country's vast rare earth deposits, estimated to be worth over US$200 billion.
The nation plans to build an integrated rare earth ecosystem – from mining and processing to producing its own magnets.
The government’s strategic task force projects that super magnet production will generate US$3 billion in revenue by 2030.
Malaysian Prime Minister Anwar Ibrahim presented a five-year plan in parliament last month to prioritise and expedite the development of rare earth elements.
“Focus will be given to developing domestic capacity in mining technology, refining, separation, through overseas strategic collaboration,” he said.
“Rare earth element resources will be prioritised for domestic use to build the midstream and downstream industries.”
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."
