Malaysia Upholds Raw Rare Earth Export Ban to Boost Domestic Processing

Malaysia has implemented a comprehensive policy banning the export of raw rare earth materials to shift from being a mere exporter of cheap raw commodities to a hub for value-added processing and manufacturing. The country possesses about 16.1 million metric tons of rare earth deposits but lacks the full technology to mine and process them domestically, prompting requirements for foreign companies to engage in technology transfer and joint ventures. Despite an agreement with the United States to avoid export bans or quotas on critical minerals to the US, Malaysia maintains its ban on raw rare earth exports, allowing only processed products to be traded freely. Malaysia's heavy rare earths separation facility, located in the Gebeng Industrial Estate, Kuantan, has become Southeast Asia's premier rare earth processing hub, with a processing capacity addressing approximately 20% of global demand. The strategic location near deep-water ports facilitates efficient feedstock imports, notably from Australia, strengthening Malaysia's role in global supply chain diversification for critical minerals. This dual-tier export policy balances domestic economic development with international trade, ensuring Malaysia captures more economic value through downstream processing while upholding open trade for processed rare earth products.