Rare earths need Petronas-like oversight, scholar says

New Straits Times

25-05-2025

KUALA LUMPUR: Malaysia should consider replicating the Petronas model to develop its rare earth elements (REE) industry, ensuring strategic oversight, sustainable practices and long-term economic gains, a policy scholar said.
Professor Datuk Dr Ahmad Ibrahim proposed the formation of a government-linked entity, tentatively named the National Rare Earths Corporation (NREC), to oversee the entire REE value chain.
This would include upstream exploration, downstream manufacturing and international trade.
"This mirrors the role Petronas played in Malaysia's oil and gas sector, but adapted to today's critical mineral needs and geopolitical landscape," said Ahmad, an associate fellow at Universiti Malaya's Ungku Aziz Centre for Development Studies.
He said rare earths are becoming increasingly vital for clean energy and defence technologies.
"Rare earths have become a critical feature of a sustainable world. China currently controls over 85 per cent of global supply, and this dominance gives it significant geopolitical leverage," he said in a statement.
"Malaysia must not sit back while holding untapped resources."
Malaysia's known REE deposits include ion-adsorption clay (IAC), found in the granite-rich spine of Peninsular Malaysia.
Ahmad noted that the country holds an estimated 16.2 million tonnes of REE. No thorium has been detected in the IAC, making it safer to develop.
"Venturing into rare earths presents a strategic opportunity for Malaysia, but the approach must be structured, transparent and forward-looking," he said.
He called for decentralised operations under central oversight. Under this model, NREC would manage national strategy and global partnerships, while state-level Rare Earth Boards ensure local benefit-sharing and environmental compliance.
"Malaysia should position itself as a global model for ethical rare earth production. The goal is to avoid the 'resource curse' and focus on value-added production like rare earth alloys," Ahmad said.
He also highlighted the potential value of thorium, a radioactive by-product of rare earth processing, in next-generation nuclear reactors.
"New reactor designs like Molten Salt Reactors and Liquid Fluoride Thorium Reactors are gaining traction globally due to their safety and sustainability," he said.
Malaysia, he added, could re-evaluate thorium currently stored as waste in facilities such as Lynas in Gebeng.
However, Ahmad cautioned that the rare earths market is smaller and technically more complex than oil, with higher environmental and geopolitical risks.
"Transparency, sustainability and geopolitical neutrality will be more important than in oil and gas. But the rewards, if managed well, could be just as significant."
He urged the government to adopt international best practices in governance, publish regular ESG reports and include civil society in oversight processes.
"The Petronas model succeeded due to strong legal backing, technical capability-building and global partnerships. These principles remain relevant but must be adapted for today's environmental and geopolitical realities.
"We must not squander this opportunity. A hybrid Petronas model — state-led but innovation-driven, transparent and green — can position Malaysia as a respected player in the global critical minerals economy."