The prime minister has recently announced that Malaysia will soon develop a new policy to ban the export of rare earth raw materials in order to avoid the exploitation and loss of resources. This makes Malaysia the latest of several countries to restrict the shipment of such key minerals, according to a Reuters report.
According to the report, Malaysia itself is home to just a small fraction of the world’s rare earth reserves, with an estimated 30,000 metric tons, based on data from the 2019 United States Geological Survey. This is compared to China’s 44 million tons of reserves, which also makes it the largest source of the material.
The decision was made after careful consideration of diversification away from China, the largest producer of such rare earth minerals, which are widely used critical components such as semiconductor chips, electric vehicles, and military equipment.
Datuk Seri Anwar Ibrahim said the government would support the development of the rare earths industry in Malaysia and that a ban would “guarantee maximum returns for the country”. However, he did not say when the ban would come into effect.
Ban to encourage development of growth resources
This was highlighted as part of the prime minister mid term review tabled in parliament this week. The rare earth industry is expected to contribute as much as 9.5 billion ringgit (approximately US$2 billion) to Malaysia’ gross domestic product (GDP) in 2025. It is also aimed at creating around 7,000 job opportunities.
“A detailed mapping of rare earth element sources and a comprehensive business model that combines upstream, midstream and downstream industries will be developed to maintain the rare earth value chain in the country,” he said.
Reuters reported that Malaysia’s ban on rare earth minerals could also potentially affect sales to China, which imported about 8 percent of its rare earth ores from the Southeast Asian country between January and July 2023, according to China’s customs data.
China itself had announced restrictions on the export of some critical metals widely used in the semiconductor industry earlier this year. This move was seen by many as a retaliation against US curbs on technology exports to China. As such, many began to worry that China could also limit exports on critical minerals such as rare earths.
