Malaysia's first raw rare earth export sets investment framework

New Policy for Unprocessed Rare Earths

Malaysia has authorised its initial export of unprocessed rare earth materials, marking the first such approval under a revised policy framework.

The Department of Mineral and Geoscience Malaysia, under the Ministry of Natural Resources and Environmental Sustainability, granted permission for a single shipment specifically for research and development purposes, as stated by the Ministry in October 2026. This decision eases a moratorium on raw rare earth exports that had been in effect since 2024.

The updated guidelines, released earlier in October 2026, allow for conditional shipments of unprocessed materials for either research and development or processing, provided they meet specific regulatory requirements. The Ministry emphasised that these guidelines are accessible to all eligible applicants, including foreign entities.

Focus on Value Creation and Technology Transfer

The Malaysian government's primary objective with this new framework is not to increase the volume of export applications but to attract high-quality investments, facilitate technology transfer, and foster long-term value creation within the country.

Rare earths are vital components in numerous modern technologies, including defence applications, and their processing has historically been dominated by China. Malaysia aims to develop its own processing capabilities to reduce reliance on Beijing. The nation already hosts Australia's Lynas Rare Earths Ltd, a significant producer outside China.

Local conglomerates, such as Berjaya Corp Bhd, are also exploring new rare earth projects, indicating growing domestic interest in the sector.

Attracting International Investment

Beyond existing operations, Malaysia is actively drawing further international investment into its rare earth sector. France's Carester SAS, for instance, plans to establish a rare earth separation facility in Perak state in collaboration with Malaysia's Malaco Mining Group.

Additionally, more than a dozen United States-based firms are currently investigating investment prospects within the country. The conditional export guidelines are designed to support these initiatives by providing a clear regulatory path for companies seeking to engage in rare earth research, development, and processing in Malaysia.

This structured approach aims to integrate Malaysia more deeply into the global rare earth supply chain, moving beyond raw material extraction towards higher value-added activities.

Implications for Regional Supply Chains

This policy shift by Malaysia has direct implications for companies operating or considering investment in the Asian rare earth processing sector.

For firms like Lynas and potential new entrants such as Carester and the US companies, the new framework provides regulatory clarity and a pathway for exporting samples, which can de-risk initial research and development phases for local processing facilities.

The emphasis on technology transfer and value creation suggests that future investment approvals will favour projects that commit to advanced processing capabilities rather than merely raw material extraction.

Investors and industry players should monitor the types of projects that receive subsequent export and investment approvals, as these will further define Malaysia's role in diversifying the global rare earth supply chain beyond its current state.