Kuala Lumpur:  Malaysia has announced that it will continue to ban the export of raw rare earth materials even after signing a critical minerals trade deal with the United States. The country’s trade minister, Tengku Zafrul Aziz, told Parliament that Malaysia is determined to move beyond being merely a supplier of cheap raw resources and aims instead to build a domestic industry for processing and refining rare earths.

The minister said the government wants foreign investment to help Malaysia develop its downstream capabilities and create more value within the country. “We do not want to be a nation that only digs and ships out raw materials like in the past,” he said.

Malaysia is believed to have more than 16 million metric tons of rare earth deposits, making it one of the largest holders of these resources in Southeast Asia. Despite its new partnership with the United States, officials have clarified that the existing ban on exporting unprocessed rare earth ore will stay in place.

The trade deal signed during President Donald Trump’s recent Asia visit included an agreement in which Malaysia committed not to impose export quotas or restrictions on critical minerals supplied to the United States. However, this appears to conflict with the country’s domestic policy of restricting the export of raw materials. Malaysian officials have explained that the ban applies only to raw, unprocessed ore, while processed and refined materials can still be traded internationally.

The government hopes the policy will attract global companies to invest in local processing plants. Australia’s Lynas Rare Earths is already expanding its Malaysian operations with a new RM 500 million heavy rare earth separation facility. Malaysia’s sovereign wealth fund, Khazanah Nasional, is also holding talks with Chinese companies to build a large-scale rare earth refinery in the country.

Malaysia’s approach reflects its broader strategy of becoming a regional hub for rare earth processing, rather than just a mining base. Officials say this will generate higher economic returns, create skilled jobs, and reduce reliance on raw material exports.

Experts note that Malaysia still faces challenges, including environmental concerns and limited refining infrastructure. But if the plan succeeds, the country could play a key role in reshaping global rare earth supply chains that are currently dominated by China.

As Malaysia navigates its partnerships with both the United States and China, the government’s focus remains on value creation at home, signaling a new phase in its resource management strategy.