Malaysian Prime Minister Anwar Ibrahim said on Monday that Malaysia will develop a policy to ban exports of rare earth raw materials to avoid mining and resource losses, becoming the latest country to restrict exports of key minerals.
According to 2019 data from the United States Geological Survey, Malaysia has only a fraction of the world's rare earth reserves, estimated at 30,000 tonnes. China is the largest source of rare earths, with reserves estimated at 44 million tonnes.
However, the decision comes at a time when the world is looking to diversify away from China. China is the world's largest producer of critical rare earth minerals, which are widely used in semiconductor chips, electric cars and military equipment.
Mr Anwar said the government would support the development of Malaysia's rare earth industry and the ban would "guarantee maximum returns for the country".
He did not say when the proposed ban would take effect.
Anwar said in Parliament that the rare earth industry is expected to contribute 9.5 billion ringgit ($2 billion) to Malaysia's gross domestic product (gdp) and create nearly 7,000 jobs by 2025.
"A detailed source map of rare earth elements and an integrated business model combining upstream, midstream and downstream industries will be developed to maintain the country's rare earth value chain," he said.
Malaysia's ban could affect rare earth exports to China. Between January and July this year, Malaysia imported about 8% of China's total rare earths, according to Chinese customs data.
Important mineral
Earlier this year, China itself announced restrictions on exports of some metals widely used in the semiconductor industry, a move seen as a retaliatory measure against U.S. restrictions on technology sales to China.
The restrictions have raised concerns that China may also restrict exports of other key minerals, including rare earths.
Project Blue analyst David Merriman said the impact of the Malaysian ban was unclear due to a lack of details, but the ban on rare earth minerals could affect Chinese companies operating in Malaysia.
"The legislation could have some negative impact on potential investment in Malaysia by Chinese companies, which have been looking to other Asian countries to source unprocessed or blended rare earth compounds as feedstock for (rare earth) processing facilities in southern China," Merriman said.
Australia's Lynas Rare Earths Ltd, the largest producer outside China, has a plant in Malaysia dedicated to processing the Australian concentrate.
It was not immediately clear whether Malaysia's planned export ban would affect Lynas, which did not immediately respond to a request for comment.
Malaysia has imposed restrictions on some of Lynas' processing operations, citing concerns about radiation levels from cracking and leaching.
Lynas disputed the allegations and said the company complied with regulations.
