Illegal Mining in Malaysia, 2020–Feb 2026: Rare Earths and Critical Minerals

Highlights

• Malaysia's illegal mining crisis from 2020–Feb 2026 spans gold, tin, sand, bauxite, iron ore, and critically, non-radioactive rare earth elements (NR-REE), with Perak's 31-person arrest (21 foreign nationals) and Negeri Sembilan's chemical in-situ leaching case demonstrating organized foreign involvement and sophisticated evasion tactics.
• Enforcement reveals governance gaps: the split in state-federal oversight under the Mineral Development Act 1994 has prompted parliamentary calls for reform, while Nov 2025 suspensions of REE and tin sites in Perak after blue river-water complaints highlight acute environmental and market-disruption risks.
• For Western stakeholders, due diligence must verify state permits, DoE Malaysia EIA approvals, proximity to forest reserves via satellite, and a chain of custody for tin/sand/mixed flows, as illegal operations carry ESG, provenance, and reputational exposure tied to foreign labor and permit abuse.

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From 2020 through Feb. 12, 2026, public reporting shows illegal mining in Malaysia is most consistently tied to gold, tin, sand dredging, bauxite, and iron ore, while NR‑REE (non‑radioactive rare earth elements) becomes the most strategically sensitive thread. Verified accounts include a Negeri Sembilan case describing chemical in‑situ leaching using ammonium sulphate and a Perak case in which 31 people were arrested (many of them Chinese nationals) over alleged NR‑REE ore mining in a forest reserve, with most detainees reported as foreigners. 

A high-profile estimate that “16,000 tonnes” of rare earth oxide were illegally mined and exported to China was raised in Parliament but remains unverified in open sources; the minister later said production at a named site was still under investigation, and Pahang’s chief minister denied illegal REO production in Lipis. 

Background and Context

Mining oversight is split: states control land access and many mining permissions, while federal law provides inspection and standards under the Mineral Development Act 1994. The Public Accounts Committee urged amending that act to better enable enforcement against illegal mining, and environmental approvals/compliance fall under Malaysia’s EIA framework under the Environmental Quality Act. 

Trends and Geography 2020–Feb 2026

Open reporting clusters incidents in Perak, Pahang, Negeri Sembilan, and Sarawak, with an added maritime vector via illegal sand dredging. Methods described include forest‑reserve excavation/quarrying, chemical in‑situ leaching (REE), and vessel dredging (sand), with repeated foreign‑labor and immigration/document violations. 

Table 1: Selected incidents and enforcement

Date	State	Mineral(s)	Outcome
April 20	Phang	Gold	6 arrested (forest reserve)
May 23	Negeri Sembilan	REE	Illegal site detected; in‑situ leaching described
Dec 23	Perak	NR-REE	31 arrested; forestry and immigration actions*
Oct 2025	Perak	Tin	27 arrested; RM28.73m seized
Nov 2025	Perak	REE + tin	Mining operations suspended after blue river-water complaints

*The group included 21 foreign nationals (16 Chinese nationals, 4 Myanmar citizens, and one Vietnamese woman) and local individuals.

Table 2: Hotspots by state and indicative scale

State	Key Illegal Minerals/Types	Scale Signals (open sources)
Perak	NR‑REE; tin	31 NR‑REE arrests; RM28.73m tin seizure
Pahang	Gold; iron ore; bauxite; alleged REE	Multiple raids/seizures; iron ore arrests with machinery seizure value reported
Negeri Sembilan	REE (chemical leaching)	In‑situ leaching described; foreign involvement suspected
Sarawak	Gold	Fatal collapses and foreign involvement reported
Coastal waters	Sand (dredging)	Detentions for unlicensed dredging with foreign crews

Case Studies

Perak’s NR‑REE case illustrates organized evasion: police described multi-location raids, most detainees foreign without valid documents, and separate forestry action; state-assembly reporting described operations under canopy camouflage, sophisticated communications, and locals paid to warn miners before raids. 

Negeri Sembilan’s REE case is the clearest method disclosure: officials described ammonium sulphate in‑situ leaching (drilled holes → solution → catchment ponds) and said foreign involvement could not be ruled out—an approach that can reduce visible disturbance while concentrating risk in chemical control and water monitoring. 

Environmental and Social Impacts

The most market-relevant signal is an abrupt disruption: in Nov. 2025, Malaysia suspended a rare-earth site and two tin mines in Perak after public complaints about blue-colored river water, citing non‑compliance findings pending remediation. Separately, illegal gold mining in Sarawak has been linked to deadly collapses, reinforcing safety and reputational risk. 

Legal and Enforcement Response

Malaysia’s enforcement mix includes state mineral/land rules, forest-reserve law, immigration offences, and corruption prosecutions; the PAC’s call to amend the Mineral Development Act is the clearest governance-reform signal during the period. 

Supply-Chain Implications and Recommendations

Open-source links Malaysian illicit activity mainly to rare earths, tin, gold, bauxite, iron ore, and sand. Evidence of domestic illegal nickel/cobalt/tungsten extraction is limited in Malaysian incident reporting, even though regional critical‑minerals crime assessments flag those minerals as targets with weak traceability. 

Exposures

For Western/US stakeholders, the exposure is provenance and ESG-driven stoppage (effluent/tailings controls, illegal labor, and permit abuse). Minimum due diligence: verify state permissions and Department of Environment Malaysia EIA approvals; run satellite screening for forest-reserve proximity; apply enhanced KYC and labor checks; and require chain‑of‑custody controls for tin, sand, and mixed mineral flows. 

Priority primary sources to close data gaps: Ministry of Natural Resources and Environmental Sustainability, state land and mines offices, Royal Malaysia Police and General Operations Force operation summaries, Department of Minerals and Geoscience Malaysia mineral confirmation records, and customs/trade data for export validation. 

Disclaimer: This report draws on state-affiliated reporting (notably Bernama) and other media and research sources (including Reuters). State media can emphasize enforcement narratives; NGO sources can emphasize environmental harm. All claims should be independently verified against primary Malaysian government records and court documents.