Highlights
- Malaysia invites foreign investment in 16.1 million metric tons of rare earth deposits, but mandates joint ventures with local partners and bans raw exports, creating a gatekeeping mechanism rather than open access.
- U.S. Trade Representative Jamieson Greer and Treasury Secretary Scott Bessent are visiting Malaysia to discuss rare earths, highlighting the country's strategic importance in global supply chain geopolitics.
- Despite positioning as a counterweight to China, Malaysia's sovereign wealth fund Khazanah is in talks with Chinese firms on refinery construction, suggesting deeper integration with Beijing's supply chain rather than independence from it.
When Reuters reports that Malaysia is “open to foreign companies” to develop its 16.1 million metric tons of rare earth deposits, it sounds like an industrial awakening. But investors should look beneath the diplomatic phrasing: this is not an invitation to a gold rush—it’s a carefully hedged move inside China’s tightening orbit.
As covered by Yahoo Finance, (opens in a new tab) Jamieson Greer (opens in a new tab) confirmed in a CNBC Squawk Box (opens in a new tab) interview that he and Scott Bessent would be going to Malaysia to discuss rare earths, first checking in with China. Rare Earth Exchanges (REEx) has also gone on the record regarding the POTUS visit, given Malaysia's strategic position in the rare earth element geopolitical hierarchy.
The Invitation That Isn’t Entirely Open
Malaysia’s Trade Minister Tengku Zafrul Aziz (opens in a new tab) pitched “joint ventures” that give locals equity stakes—a political necessity, not just an economic one. The government’s continued ban on raw rare earth exports effectively forces all investors to process within Malaysia’s borders, ensuring value retention and regulatory control. That sounds pragmatic, but it’s also a gatekeeping mechanism: no foreign player can operate without Malaysian partnership, approval, and probable state oversight via Khazanah Nasional, the sovereign wealth fund now in talks with Chinese firms on refinery construction.
China’s Shadow on the Peninsula
Reuters frames Malaysia’s aim to develop “midstream processing capabilities” as a counterweight to China’s dominance. Yet the details point in the opposite direction: Khazanah’s potential partnership with a Chinese entity suggests deeper integration with—not independence from—Beijing’s supply chain. Coming just weeks after China tightened export restrictions on rare earth technology, this arrangement could extend China’s refining reach through a friendly intermediary. In effect, Malaysia may become China’s offshore refining proxy in Southeast Asia.
Money on the Table—or Just Mapping Funds?
Prime Minister Anwar Ibrahim’s 10 million ringgit (~$2.4 million) allocation for rare earth “resource mapping” sounds substantial, but it’s more symbolic than catalytic. That sum barely covers geological surveys. Without serious investment in hydrometallurgical or solvent extraction capacity, Malaysia’s dreams of midstream autonomy will remain aspirational.
Reading Between Reuters’ Lines
Reuters, as usual, sticks to the facts—but the omission is telling. There’s little mention of environmental concerns, indigenous land rights, or the steep technical gradient from mining to magnet-grade oxides. Nor does the report contextualize Malaysia’s balancing act between Lynas Rare Earths’ Australian-led plant in Pahang and the political optics of Chinese partnership.
Investor Takeaway
This is not a supply shock headline, but a positioning signal. Malaysia is staking its claim as a value-added host in the next phase of rare earth geopolitics. For investors, the real question isn’t whether Malaysia can process rare earths—it’s whether it can do so without becoming another spoke in China’s strategic wheel.
Source: Reuters (Oct 22 2025)
©!-- /wp:paragraph -->
What might come out of the visit by Trump? Is Lynas a counter to any Chinese push into the Malaysian RE sector? Would this see US strategic money (on top of the nearly $300 mill for the present dormant Lynas L/HRE processing in TX) put into this potential hub which is apparently seeing JS link (magnets) arriving here (as well as in the US)? The US has so many moving parts down the RE value chain presently and no doubt, IOHO, more are to come. GLTA – REI
(PS we hold Lynas).