Malaysia is planning to develop a policy to ban exports of “rare earth raw materials” to avoid exploitation and loss of resources.
Prime Minister Anwar Ibrahim, speaking to parliament on Monday, according to Bloomberg, said the government will develop an export ban policy “to prevent exploitation and loss of resources, thereby guaranteeing maximum returns for the country.”
Anwar further added that the new policy would help drive development of the mineral industry, but didn’t say when a ban would come into effect.
Malaysia joins a growing list of countries looking to diversify away from China, the world’s largest producer of the critical rare earth minerals that are used widely in semiconductor chips, electric vehicles, and military equipment, The Straits Times is reporting.
Data from the U.S. Geological Survey in 2019 showed that China is the biggest source of rare earth minerals, with an estimated 44 million tonnes of reserves, while Malaysia’s reserves are estimated at around 30,000 tonnes.
Reuters is reporting the rare earth industry is expected to contribute as much as 9.5 billion ringgit ($2 billion) to the country’s gross domestic product in 2025 and create nearly 7,000 job opportunities, Anwar said in parliament.
“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.
Surprisingly, Malaysia’s ban could affect sales to China, which imported about 8 percent of its rare earth ores from the Southeast Asian country between January and July this year, according to China customs data.
Analyst David Merriman at Project Blue said the impact of a Malaysian ban was not immediately clear due to a lack of details, but a ban on rare earth ore could affect Chinese companies operating in Malaysia.
“The legislation could have some negative impacts on potential investment in Malaysia from Chinese parties, which have looked to other Asian nations to source unprocessed or mixed rare earth compounds as feedstock for (rare earth) processing facilities in southern China,” Merriman said.
