Malaysia’s ban on exports of unprocessed rare earth metals this week signals that the Southeast Asian country has a realistic shot – on its own terms – at feeding the mineral-hungry United States amid its strained trade ties with the world’s dominant supplier, China, according to analysts.
Kuala Lumpur will bar exports of unprocessed rare earth minerals, which are globally prized raw materials used in a range of electronic hardware, to keep supplies onshore for investment in downstream industries, a Malaysian official said this week.
The country’s minister of investment, trade and industry, Tengku Zafrul Abdul Aziz, told the Malay Mail news outlet that foreign investors could jump into the downstream Malaysian rare earths sector if their projects involve local mineral processing, job creation and technology transfers. The processed rare earth metals could be exported.
While many countries sit on rare earth reserves, analysts say Malaysia’s industry is likely to take off because it already has processing capacity, and because US buyers of rare earth metals are scrambling for non-Chinese sources.
“Malaysia’s existing capabilities give it a head start in integrating into global supply chains,” said Qarrem Kassim, an analyst at the Institute of Strategic & International Studies Kuala Lumpur.
“Applying this export ban equally to all sides is a signal that Malaysia is willing to exercise its geoeconomic agency to prioritise its own development needs,” he said. “This may result in potential foreign investment down the road.”
