Be cautious over foreign control rare earth industry in Malaysia
Collins Chong17 Jan 2023 04:49pm
Malaysia has been blessed with a significant amount of non-radioactive rare earth deposits. The US Geological Survey (USGS) estimates that some 30,000 metric tonnes of rare earth ores can be found in Peninsular Malaysia alone.
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SHAH ALAM: The recent report on the Kedah state government inking a memorandum of understanding (MoU) with Menteri Besar Incorporated (MBI) with Jangka Bakat Mineral Sdn Bhd and Chinese technical partner Xiamen Tungsten Co Ltd to tap into RM60 billion worth of rare earth elements (REE) may lack comprehensive strategic planning on Malaysia’s part.
We are blessed with vital strategic resources but this potential geopolitical card is at risk of being squandered the wrong way with long term strategic mistakes by our inability to break free from the addictive lure of fast and easy gains.
In 2019, the Parliament was informed that the country has RM732 billion worth of metal mineral reserves in the form of coal, tin ore, iron ore, gold, manganese, silica sand and kaolin to be explored.
Malaysia has been blessed with a significant amount of non-radioactive rare earth deposits. The US Geological Survey (USGS) estimates that some 30,000 metric tonnes of rare earth ores can be found in Peninsular Malaysia alone.
Globally,most of the rare earth elements are found in China, Australia, India and Vietnam.
These rare earth elements (REEs) have been increasingly important in consumer electronics, electric vehicles (EV), clean energy, and most strategically, in military equipment and usage.
In military applications, REEs are used in vital military assets, particularly precision-guided weapons, communication equipment, Global Positioning System (GPS) equipment, and other defence electronics.
It should be noted that China has the largest reserves of REEs at 44 million tonnes in addition to having the largest refinery capacity allowing it to control the market.
Meanwhile, Lynas Malaysia’s operation in Malaysia since 2012 has been able to break the monopoly by being the first refining plant outside China. It is also one of the world’s biggest rare earth refining plants.
Rare earth is increasingly being used as another vital and critical resource factor in a greater global geopolitical competition especially in enhancing military technology and capacity and in technological supremacy, which includes technology and space race.
This alone compels us to be wise, and have the foresight and boldness to play our cards well to ensure our long term returns in the broader picture of security and geopolitical gains, not out of pure monetary returns alone.
Beijing is cognisant of the fact of its grip on Malaysia and knowing our future potential in this critical resource. It created the need for Beijing to break the Western momentum and precedence in our local rare earth ecosystem with the presence of Lynas.
Beijing’s pursuit in Malaysia in the rare earth spectrum is not entirely based on the want for our rare earth resources alone, as it is already a dominant producer. It is more on halting Malaysia’s intent and option to have greater Western presence in this area, and to disrupt and put a stop to the momentum and capacity that has already been gained by the West through Malaysia in this regard.
Beijing’s long game sees Malaysia as a convenient factor, and wants to maintain its technological and critical resources advantage against the intense competition with the US and the West, and will want to slow and halt the West’s presence in this field in this part of the world.
Increased pressure and negative impact from the Chips Act, and the growing impasse of its slowing economy and the losing of the edge in its hosting of critical top technological companies, now that a growing number of top companies including Apple are eyeing an exit due to the growing internal setbacks and dwindling appeal.
Other major producers such as India, Australia and Vietnam, all remain outside of the orbit of Beijing’s influence and grip and thus, crippled Beijing’s strategic pursuit. Malaysia hence remains a suited opening for Beijing, which it can use as an effective coercion and blackmailing tool.
China’s presence in Malaysia’s rare earth ecosystem might make us even more vulnerable to Beijing’s dictate and exposing our already open risks to its vast array of tools to possibly put us at a greater disadvantage, with our unique and prized assets in our resources being possibly beholden to Beijing’s geopolitical play.
It hastens the potential to create a ripple and domino impact on other critical industries that will eventually benefit Beijing more, as can be seen already in the case of the ECRL, the Kuantan Industrial Park, Forest City project and many others that have fuelled our long term debt and being beholden to Beijing’s terms and dictate that will compromise our assets and resources that can be used to its gain, as a bargaining tool in our debt obligation.
For years, we have been trapped under this China pandering and trap, and have been addicted to easy capital, seeing the relatively little to zero barriers of Chinese investments and readiness to offer their expertise and capacity that tempted us to happily accept the services.
We will be vulnerable to these being used to hold us to ransom, especially in our critical and unique resources that will be vital to Beijing’s interests including rare earth, palm oil, oil and gas, semiconductor, rubber and others.
We must have long term strategic calculations and planning on how this will benefit us not only in pure and direct form of investment returns but in greater chain implications, by setting up productive industry and refinery mechanisms and processing structure and downstream capacity.
This in turn will benefit our local economy, but more importantly, our strategic card in our greater long term survival and security interests.
We need to be future driven and have long term strategic foresight, being smart and wise in better capitalising on our assets and not let internal divides weaken our overall strength and strategy.
Collins Chong is with Universiti Malaya, focuses on internationalisation and strategic management. The views expressed in this article are the author's own and do not necessarily reflect those of Sinar Daily.
