๐ ๐๐๐๐ข๐ง๐๐ซ๐ฒ ๐๐จ๐ซ๐ญ๐ก ๐๐๐ญ๐ญ๐ข๐ง๐ ๐๐ข๐ ๐ก๐ญ: ๐๐๐ญ๐ฐ๐๐๐ง ๐ ๐๐ญ๐ซ๐๐ญ๐๐ ๐ข๐ “๐๐๐” ๐๐ง๐ ๐ ๐๐๐ ๐๐ฅ “๐๐๐ ๐๐๐”
Free Malaysia Today reports that Malaysia and China are exploring a rare-earths refinery on our soil. That is good news—if we are disciplined about facts, law and national interest.
Let’s keep the chemistry to a minimum. Broadly, rare-earth ores fall into two families: hard-rock (bastnรคsite, monazite, xenotime) and clay-based laterites (ion-adsorption clays). Malaysia’s policy emphasis and pilots favour the latter, using in-situ leaching, alongside a ban on exporting raw rare-earth materials so value is added at home.
The strategic snag is scale: small number of countries possess know-how, but China dominates separation (refining ore to become elements and commercial rare earth products) at global, commercial scale—especially for the clay-based resources Malaysia prioritises. Hence today’s report: a prospective pathway with Beijing.
I say this with some confidence. I have witnessed, first-hand and without translation, discussions between China's President Xi Jinping and our Prime Minister Dato’ Seri Anwar on critical minerals particularly rare earth—conversations pointing toward a special arrangement aligned with both nations’ strategic interests. A formal carve-out was not expressedly stated, but the direction of travel was clear: find a lawful, and win-win pathway.
๐ง๐ต๐ฒ ๐น๐ฒ๐ด๐ฎ๐น ๐ฟ๐ฒ๐ฎ๐น๐ถ๐๐
China’s 2023 Catalogue of Technologies Prohibited and Restricted from Export (ไธญๅฝ็ฆๆญขๅบๅฃ้ๅถๅบๅฃๆๆฏ็ฎๅฝ, hereafter to referred to as 'catalogue' ) lists under non-ferrous metallurgy entry 083201J: “็จๅ็ๆ็ผ、ๅ ๅทฅ、ๅฉ็จๆๆฏ,” with control points including “็จๅ่ๅๅ็ฆปๅทฅ่บๆๆฏ.” The category is explicitly marked ็ฆๆญขๅบๅฃๆๆฏ (prohibited export technology)—which means transfers “in any form” (licences, cooperation, services, data packages) cannot be approved.
China’s 2024 Rare Earth Regulation (ๅฝๅก้ขไปค็ฌฌ785ๅท) then adds that import/export of related technology, process, and equipment must obey export-control laws. Put together, the default answer to exporting separation know-how is no.
The Export Control Law (2020) defines “controlled items” to include technology and data, and the Dual-Use Items Export Control Regulation (State Council Order 792, in force 1 Dec 2024) makes clear that “export” covers transfers via trade, gifting, exhibition, cooperation, or aid—which in practice can include training, commissioning, remote support and manuals. In short: the law blocks ordinary tech transfer unless Beijing issues a sovereign-level authorisation or amends the catalogue.
In plain terms: the legal reality today is prohibition — but China has already built the legal scaffolding for a sovereign exception. If Beijing wants to green-light a special arrangement with Malaysia, it can do so within its own framework.
๐ช๐ต๐ฎ๐ ๐๐ต๐ฒ ๐๐ ๐ง ๐ฟ๐ฒ๐ฝ๐ผ๐ฟ๐ ๐ด๐ฒ๐๐ ๐ฟ๐ถ๐ด๐ต๐—๐ฎ๐ป๐ฑ ๐๐ต๐ฎ๐ ๐ถ๐ ๐น๐ฒ๐ฎ๐๐ฒ๐ ๐๐ป๐๐ฎ๐ถ๐ฑ
The report rightly captures the moment: early-stage talks, with Khazanah in the frame and Chinese state-linked participation—consistent with public signals that Beijing’s help, if any, would be channelled through state actors. But it underplays the crux: without a policy instrument from Beijing, rare earth separation know-how cannot be exported.
That’s not politics; it’s black-letter law. But the politics required to amend their laws and regulations toward a Malaysian carve-out is written all over what they’ve done in the year since the Anwar–Xi bilateral I was honoured to be part of on 7 November 2024.
Don’t get me wrong; by no stretch of anyone’s imagination is Malaysia putting all our rare earth eggs in one Chinese basket. Malaysia has been doing everything possible to engage Europeans, Americans, Koreans, and others—albeit with little to show.
It must be mentioned that Australia’s government has engaged sincerely and consistently at a policy level, but its rare-earth ecosystem is predominantly private-sector led, which limits direct governmental control over corporate decisions. There is no fault to ascribe; it is structural.
By contrast, China as a state actor has both the sincerity and the machinery to place substance on the table, because it controls almost the entire rare earth value chain.
๐ง๐๐ผ ๐๐ผ๐ฟ๐ธ๐ฎ๐ฏ๐น๐ฒ ๐น๐ฎ๐ป๐ฒ๐—๐ฎ๐ป๐ฑ ๐ฎ ๐๐ต๐ถ๐ฟ๐ฑ ๐ต๐ฒ๐ฑ๐ด๐ฒ
๐๐ฑ๐ต๐ช๐ฐ๐ฏ ๐: ๐๐ญ๐ข๐ค๐ฌ-๐ฃ๐ฐ๐น + ๐ง๐ฐ๐ณ๐ฆ๐ช๐จ๐ฏ ๐ฐ๐ฑ๐ฆ๐ณ๐ข๐ต๐ช๐ฐ๐ฏ (๐ฏ๐ฐ ๐ฐ๐ณ ๐ฎ๐ช๐ฏ๐ช๐ฎ๐ข๐ญ ๐ฅ๐ช๐ด๐ค๐ญ๐ฐ๐ด๐ถ๐ณ๐ฆ).
Borrow from the ASML model in semiconductors: you may use the machine, but not the know-how. In practice, even servicing and maintenance is licensing-gated. Translated to rare earths, think “equipment + foreign O&M + IP firewalls.”
Caveat: for Chinese rare earth separation, commissioning/training may still constitute a controlled export of technology/services, so this option remains fragile unless China grants an exception.
Russia’s Rosatom nuclear project at Akkuyu, Tรผrkiye is another example: a Build–Own–Operate model where the Russian State Oned Enterprise owns and runs the plant, supplies fuel, and controls sensitive IP, while Tรผrkiye gains the asset and power. A similar BOO-style refinery is structurally feasible—but China’s catalogue still forbids exporting REE separation know-how. Even an Akkuyu analogue would require a legal carve-out.
๐๐ฑ๐ต๐ช๐ฐ๐ฏ ๐: ๐๐ฐ๐ท๐ฆ๐ณ๐ฆ๐ช๐จ๐ฏ-๐ต๐ฐ-๐ด๐ฐ๐ท๐ฆ๐ณ๐ฆ๐ช๐จ๐ฏ ๐ค๐ข๐ณ๐ท๐ฆ-๐ฐ๐ถ๐ต.
When sensitive tech moves, it usually does so under a sovereign umbrella. See the U.S.–India GE F414 engine co-production, the U.S.–India 123 Agreement on civil nuclear cooperation, or AUKUS, which created AUSTRALIA-UK-US trilateral bespoke legal architecture for naval nuclear propulsion.
For Malaysia–China, the analogue would be a named pilot project with:
(i) a case-specific authorisation or catalogue tweak;
(ii) zero onward transfer of equipment/know-how;
(iii) on-premise compliance monitors;
(iv) data-return/disablement clauses; and
(v) workforce localisation only in non-sensitive roles.
๐๐ฑ๐ต๐ช๐ฐ๐ฏ ๐: ๐๐ฐ๐ฏ๐ท๐ช๐ฏ๐ค๐ฆ ๐๐บ๐ฏ๐ข๐ด ๐ต๐ฐ ๐ฆ๐น๐ฑ๐ข๐ฏ๐ฅ ๐ช๐ฏ๐ต๐ฐ ๐ช๐ฐ๐ฏ-๐ข๐ฅ๐ด๐ฐ๐ณ๐ฑ๐ต๐ช๐ฐ๐ฏ ๐ค๐ญ๐ข๐บ๐ด.
Malaysia already hosts Lynas, the world’s largest non-Chinese producer. Asking it to add IAC processing would diversify capability while talks with China mature—subject to AELB and EIA requirements and updated social licence.
Recent licence-condition revisions and clearer regulatory expectations, and the amendment of a key piece of legislation on atomic energy licensing make discussions for diversification more feasible. If the business case stacks up, Malaysia could increase output without additional upstream radioactive residues (as ISL-IAC produces negligible radioactive waste) provided licensing and technical safeguards are met. It’s not a silver bullet, but it’s a hedge we can activate immediately. That's if Lynas is willing and able to invest.
๐ง๐ต๐ฒ ๐ณ๐ฒ๐ฑ๐ฒ๐ฟ๐ฎ๐น–๐๐๐ฎ๐๐ฒ ๐ธ๐ป๐ผ๐—๐ฎ๐ป๐ฑ ๐ฎ ๐ป๐ฎ๐๐ถ๐ผ๐ป๐ฎ๐น ๐ฎ๐ด๐ด๐ฟ๐ฒ๐ด๐ฎ๐๐ผ๐ฟ
Let’s be candid: federal ambition without state alignment will stall in courtrooms and state executive councils. A national aggregator—pooling feedstock across states into one negotiating counterparty—remains the cleanest way to deliver scale, discipline environmental practice, and secure the best terms.
But the royalties regime must be convincing. States must receive more and better than under the current race-to-the-bottom model. A redesigned regime would allow states to invest in real enforcement and prospectivity mapping, while the federal level focuses on building markets, attracting technology, and promoting full mine-to-magnet and microchip downstream chains.
Our caucus has argued this for months; the bottleneck is political, not technical.
๐ ๐ฝ๐ฟ๐ฎ๐ด๐บ๐ฎ๐๐ถ๐ฐ, ๐ ๐ฎ๐น๐ฎ๐๐๐ถ๐ฎ-๐ณ๐ถ๐ฟ๐๐ ๐ฟ๐ฒ๐ฐ๐ผ๐บ๐บ๐ฒ๐ป๐ฑ๐ฎ๐๐ถ๐ผ๐ป
Mandate a dual-track negotiation. Track 1: a sovereign pilot with China (Option B), narrow, auditable, and time-bounded. Track 2: a non-Chinese lane (Option C + any other IP, though Lynas is realistically the only option). Malaysia must not be hostage to one gatekeeper.
Codify ring-fenced compliance. Any China-linked plant must have no-onward-transfer clauses, on-prem monitors, data escrow, and automatic suspension for breaches—plus stringent environmental compliance.
Use the national aggregator. States gain revenue certainty and guardrails; the federation gains scale and offtake clarity.
Lock in community dividends. A statutory Rare Earths Community Benefit Fund, funded by a levy on gross revenue (as seen in the Lynas precedent), earmarked for watershed protection, skills, SMEs, and research.
If we do this with clear eyes and steady hands, Malaysia can move from “ore owner” to price-setting processor—without surrendering our laws, our environment, or our leverage. The refinery is not the prize; national capability is. That is the difference between being buffeted by the market, and bending it.
๐ป๐๐ค๐๐๐ ๐ฟ๐๐
๐๐ ๐๐๐ ๐ผ๐๐โ ๐๐๐๐๐
๐ถโ๐๐๐ ๐๐ ๐๐๐๐๐ฆ๐ ๐๐๐ ๐๐๐๐๐๐๐๐๐๐ก๐๐๐ฆ ๐ถ๐๐ข๐๐ข๐ ๐๐๐ ๐ถ๐๐๐ก๐๐๐๐ ๐๐๐๐๐๐๐๐
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