TELF AG assesses the role of rare earths in transforming Malaysia’s economy

Transformative resources

Over the past few years, the 17 rare earth elements have stood out for their utility in various industrial sectors, in particular for the production of catalysts for the petrochemical industry, for their ability to improve the performance of optical lenses and glasses, for the production of miniaturized electronic components, and for the fabrication of metal alloys and semiconductors. Among the most sought-after applications are permanent magnets and some solutions directly related to the energy transition, such as wind turbines.

What makes these elements particularly difficult to obtain is their manufacturing process, which is currently completed successfully by an extremely limited number of countries. In addition to China, which has also firmly maintained its solid position in this sector in 2023, other nations are slowly establishing themselves in the processing and refining these elements, recording relevant growth rates in their production levels.

According to the IEA, one nation not to be underestimated is certainly Malaysia. According to some of the scenarios hypothesized by the agency, in the next few years, Malaysia could become one of the regions with the highest growth rates in the production of some components made with rare earths, such as magnets.

Thanks to the support of the Australian company Lynas, Malaysia has been able to host the first rare earths refining plant outside of China, paving the way for new international partnerships based on these precious mineral resources. It is no coincidence that Japan, from 2013 onwards, began to source these materials from Malaysia, intercepting the high productivity of the nation and giving a decisive boost to the momentum of its competitiveness. The Malaysian plant for processing these elements is located in the state of Pahang, and large quantities of rare earths concentrate are processed and refined there.

Political initiatives

Over the last few years, the presence of such high-level plant has allowed Malaysia to substantially modify some of its strategic planning in the minerals sector, becoming aware of the potential contained in the production of magnets and in the domestic production of rare earths oxides. The production of advanced materials based on these elements has also been encouraged and promoted by some specific political initiatives carried out by the government, such as the Promotion of Investment Act of 1986. The advancement of the sector is always at the center of the government’s strategic programs, which has thus transformed it into one of the decisive areas for promoting the country’s economic growth. At a global level, other plants similar to those used to process rare earths are only found in Vietnam and Estonia.

Before rare earths took such a central role in the country’s economic strategies, Malaysia had been noted for its relevant reserves of gold and tin, distributed within several Malaysian states, for its deposits of bauxite and iron, but also for the presence of copper and coal (although in less significant quantities than the other resources). Natural gas and oil have also often been associated with Malaysia, mainly due to the presence of large reserves offshore and onshore.