china and Malaysia Strengthen Rare Earths Collaboration,Raising geopolitical Concerns
Date: January 20,2024
Recent developments indicate a deepening collaboration between China and Malaysia in the rare earths sector,sparking concerns about China’s continued dominance in the supply chain and potential geopolitical implications. while Malaysia seeks too leverage its substantial rare earth deposits, analysts caution that realizing these ambitions will require navigating notable logistical, environmental, and political challenges.
Malaysia’s Rare Earth Potential
Malaysia possesses significant rare earth resources, particularly non-rare earth carbonate (NR-REE), found in deposits linked to historical tin and gold mining activities. The country is estimated to hold the world’s largest NR-REE reserves outside of China https://www.reuters.com/markets/commodities/malaysia-eyes-rare-earth-boom-but-challenges-loom-large-2023-12-22/. In December 2023, the Malaysian government approved operating licenses for two companies to begin processing NR-REE, marking a pivotal step towards commercializing these resources https://www.channelnewsasia.com/asia/malaysia-rare-earths-processing-licences-approved-3924416.
Chinese Investment and Collaboration
Chinese companies are playing a key role in developing Malaysia’s rare earth processing capabilities. One of the companies granted a license, Rare Earth Global, has a strategic partnership with China’s Shenghe Resources Holding Co.,Ltd., a major Chinese rare earth producer https://www.reuters.com/markets/commodities/malaysia-rare-earth-venture-linked-chinese-firm-shenghe-resources-2023-12-28/. This collaboration allows Malaysia to tap into Chinese expertise and technology for processing NR-REE, while simultaneously providing Shenghe with access to crucial raw materials. Another company, Australian Lynas Rare Earths, also holds a license, but the chinese involvement is drawing significant attention.
Geopolitical Implications and Concerns
The increased Chinese presence in Malaysia’s rare earth industry is raising concerns among other nations, particularly the United States and Japan, who are seeking to diversify their rare earth supply chains and reduce reliance on China https://asia.nikkei.com/Politics/International-relations/China-eyes-rare-earth-foothold-in-Malaysia-to-maintain-dominance. China currently dominates the rare earth processing market, controlling an estimated 70% of global production https://www.cfr.org/backgrounder/rare-earth-elements-critical-materials-china.
The US Department of Defense has been actively funding projects to bolster domestic rare earth production and processing capabilities, and views the Malaysia situation with scrutiny.