Highlights

• Malaysia's sovereign wealth fund Khazanah Nasional signals potential collaboration with China on a new rare earth refinery project.
• The country holds an estimated 16.1 million tonnes of non-radioactive rare earth reserves valued at approximately RM810 billion.
• The partnership could either solidify Malaysia's position as an ASEAN processing hub or risk increasing Chinese industrial dependency.

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Malaysia’s sovereign wealth fund, Khazanah Nasional Bhd, has stepped squarely into the rare earth conversation. Speaking at the Khazanah Megatrends Forum 2025, Managing Director Datuk Amirul Feisal Wan Zahir said the fund “stands ready” to support government initiatives in strategic sectors — specifically rare earth elements (REEs) — amid reported early-stage talks with China to establish a new rare earth refinery in Malaysia.

The comment follows Reuters’ report that China and Malaysia are exploring a potential refinery partnership, with Khazanah expected to collaborate with a Chinese state-owned enterprise. Rare Earth Exchanges (REEx), via its own network of contacts, verified these rumblings.  Malaysia’s Ministry of Investment, Trade and Industry (MITI) has since reiterated its intent to strengthen the REE supply chain under its New Industrial Master Plan 2030 and Advanced Materials Technology Roadmap 2021–2030.

What Rings True — and What’s in Question

Khazanah’s statement aligns with Malaysia’s well-documented ambitions to climb up the critical minerals value chain. The country’s estimated 16.1 million tonnes of non-radioactive REE reserves, valued at roughly RM810 billion, make it one of Southeast Asia’s most promising but underdeveloped sources of supply.

However, there is no formal confirmation of a binding deal with China. The Reuters report cites unnamed sources — a red flag in a geopolitical environment where rumors can move markets. The Malaysian government has also been cautious, avoiding explicit endorsement of any joint venture terms. At this stage, Khazanah’s role appears exploratory, not operational.

The recent piece published in MalayMail (opens in a new tab) leans toward optimism — a hallmark of state-linked communications. The article’s tone suggests a carefully managed narrative: a confident, forward-looking Malaysia positioned as a willing partner to China’s industrial machine. What it omits, however, is equally telling — environmental oversight, strategic risk of Chinese dominance, and how Khazanah will ensure local value retention. Also, as REEx has reported, the business desires of a nation to strike it rich dealing with the West, led by America..

Why This Matters for the Rare Earth World

Malaysia has a history here. Lynas Rare Earths Ltd (ASX: LYC) operates the world’s largest rare earth separation plant in Pahang — often under political fire for waste management concerns. A new refinery, this time with Chinese backing, could either cement Malaysia as an ASEAN processing hub or risk reinforcing China’s midstream dominance under a new flag.

The larger question for investors: Will Khazanah’s involvement anchor Malaysia’s independence in the rare earth value chain, or subtly tether it to Beijing’s orbit once more?

As rare earth geopolitics tighten, the difference between “partnership” and “dependency” may soon define the region’s industrial future.

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