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Malaysian Minister of Trade Tengku Zafrul Aziz announced on October 29 that the country will maintain its ban on the export of raw rare earth elements to safeguard domestic resources, despite signing a significant mineral agreement with the United States.
Addressing Parliament, Zafrul refuted claims that Malaysia is prioritizing short-term profits or strategic goals by opening rare earth exports to the U.S. “We no longer wish to be a nation that merely extracts and ships low-cost raw materials as we have in the past,” he emphasized.
According to Zafrul, the current policy is not intended to permanently halt trade but to prevent the export of unprocessed raw materials, encouraging value-added activities within the country. Malaysia aims to attract foreign investment and technology transfer to develop its domestic rare earth extraction and processing industry.
The government estimates that Malaysia holds approximately 16.1 million tons of rare earth elements, yet lacks advanced extraction and refining technology. These elements are critical in manufacturing electric vehicles, semiconductors, defense equipment, and clean energy technologies.
Earlier this month, Reuters reported that Malaysia is negotiating with China on rare earth processing cooperation. Plans include a joint venture between the national investment fund Khazanah Nasional and a Chinese company to establish a refining plant in Malaysia.
Meanwhile, the U.S. has signed bilateral agreements with Malaysia and Thailand during President Donald Trump’s visit, aiming to diversify critical mineral supply chains amid competition from China. A joint statement revealed Malaysia’s commitment to refrain from imposing quotas or export bans on critical minerals to the U.S.
However, Malaysia’s ban on raw rare earth exports, implemented last year, remains in effect. The government aims to promote deep processing and downstream development rather than exporting resources in their raw form.
Currently, Lynas Rare Earths (Australia) is the largest rare earth company operating in Malaysia, with a processing complex in Kuantan that extracts rare earth elements for global markets. Lynas sources its raw materials from Australian mines but is also exploring clay deposits within Malaysia.
President Trump’s recent tour of Indo-Pacific nations has secured over $10 billion in supply chain agreements with Australia, Japan, Malaysia, and Thailand. Washington anticipates these deals will reduce 90% of its reliance on China and establish a regional partnership network for strategic material extraction, processing, and storage, supporting defense and clean energy industries.
Source: Reuters
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