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New Straits Times

RM800bil buried potential: Malaysia held back by rare earth tech gap

PETALING JAYA: Malaysia is currently sitting on an estimated 16 million tonnes of low-radioactive ion adsorption clay (IAC) rare earth elements (REE), valued at RM800 billion — yet is unable to fully capitalise on this potential due to a lack of advanced processing technology. According to Utusan Malaysia, the absence of cutting-edge separation technology — proprietary to countries such as China, Japan, and the United States — has significantly hampered Malaysia's ability to move up the value chain. This technology is essential for producing high-value downstream products like supermagnets and batteries. Without it, the nation remains unable to realise the hundreds of billions in potential revenue. Universiti Sains Malaysia's (USM) School of Materials and Mineral Resources Engineering senior lecturer Associate Professor Dr Syed Fuad Saiyid Hashim, this limitation currently prevented Malaysia from producing REE-based products. He identified two key challenges that Malaysia must overcome in order to develop a viable downstream rare earths industry. The first is the need to secure a reliable domestic supply of rare earth elements to sustain production independently of foreign imports — many of which are now restricted. "A consistent and secure supply is critical. Without it, the industry will not be commercially viable, and investors will be reluctant to enter the market," he said. The second challenge, he said, was Malaysia's lack of the advanced separation technology required to process raw REE materials into components for high-tech applications. "While we do have local expertise in mining rare earth oxides (REO), we currently lack the specialised technology for separation. This remains closely guarded by countries like China, Japan, and the US," he added. Syed Fuad was responding to reports that Malaysia could potentially generate up to RM800 billion in revenue by developing its IAC deposits across five states. He said that separation technology for REEs remained "exclusive" and is not shared by the few countries that possess it. "That's the core issue in this industry — this technology is still treated as a state secret, which restricts its spread to other countries. It's also heavily influenced by global geopolitical interests," he said. Syed Fuad, who also researches REE mining through in-situ leaching (ISL), said that Malaysia's 16 million tonnes of IAC were sufficient to justify investment in downstream manufacturing facilities. However, he said that any development must involve careful, long-term planning to ensure a stable supply and avoid production disruptions. "Sixteen million tonnes is a significant quantity and does justify investment in such facilities. But we must proceed strategically," he added. Syed Fuad also highlighted Malaysia's geographical and economic constraints. "Malaysia is not a large country. It's not practical to build a factory in every state," he said. He added that any REE processing plant would need a guaranteed supply source to remain viable. "Each plant would require a stable and continuous supply to ensure long-term sustainability. Strategic government planning is vital if we are to fully harness this mineral potential," he said. Meanwhile, Putra Business School's MBA programme director Associate Professor Dr Ahmed Razman Abdul Latiff said Malaysia's rare earth industry held significant promise for attracting foreign direct investment (FDI), especially as global demand rises and countries seek to diversify supply chains away from China. "This industry could become a major magnet for FDI, given the high global demand for rare earths and the strategic shift among many nations to reduce dependence on China," he said. However, he stressed that any investment must include provisions for technology transfer, warning against the risk of Malaysia remaining merely a raw material exporter. "Malaysia should not be limited to supplying raw REE. We must build value by developing a robust downstream industry," he said. Ahmed Razman believes that a fully developed IAC-based rare earth sector could make a significant contribution to the national economy. "If we manage to develop the IAC-based REE sector holistically, it could have a notable impact on annual GDP growth," he said.