00:09Hi, welcome back to Consider This. I'm Melissa Idris. Let's continue our discussion about the
00:15moratorium on raw rare earth exports, which the government is considering easing following
00:22pressure from both state governments and foreign investors. Now, what would be the implications
00:28of lifting the export ban on rare earth materials? Well, joining me now is Karim Kasim, who is an
00:35analyst at the think tank ISIS Malaysia, where his primary research areas include the geo-economics
00:42of critical minerals, as well as the international political economy. Karim, thank you so much for
00:47joining me on the show today. So why do you think the government is considering reversing this
00:52decision to impose a moratorium on rare earth exports? At this point, what are the factors
00:59that could be driving this shift? Sure, thanks for having me, Melissa. So just to begin, let's
01:09start with the sort of backdrop. This moratorium was in fact introduced back in 2024 with the aim
01:18of forcing immediate domestic processing. However, building out the midstream requires a lot of
01:27capital investment, a lot of technical expertise, and most importantly, a lot of time. Now, without a
01:33short-term outlet for upstream miners, without really any pathway for processing, it created a cash flow
01:43gridlock. So what this means is that midstream investors require consistent upstream feedstock of
01:54mixed rare earth carbonates. So they face operating constraints because the domestic upstream hasn't yet
02:02been fully built out. So when we look at what factors appear to be driving this, so number one, there
02:09appears to
02:09be very strong demand, at least internationally, geopolitically, from many parts of the world, looking
02:18to de-risk and diversify their critical mineral supply chains. And now they're actively knocking on
02:26Malaysia's door. From the state government side, they also have pointed out that maintaining this export ban, it does risk
02:38choking the sector of liquidity even before it can take off.
02:43Okay. All right. So we'll talk to us about the global scenario. Where are we, Malaysia? Where do we stand?
02:49Because if we want to be part of the global rare earth industry,
02:54where exactly are we positioned? And I do wonder, because things have changed quite considerably in the past couple of
03:00years, so maybe paint a picture of us in the entire supply chain where Malaysia sits.
03:05Right. So Malaysia generally is considered to be one of the most promising deposits of rare earth materials in the
03:16world. But some distinction needs to be made here.
03:20Because for Malaysia, Malaysian ionic clays tend to be higher in concentration of heavy rare earths, which are generally speaking
03:29more scarce, and much more valuable in the global supply chain, which is required for advanced permanent magnets and advanced
03:37industrial applications.
03:38So Malaysia generally has quite a modest share of these reserves and has major inferred potential.
03:51And some estimate that some of these deposits could be on par with some of the very elite deposits in
03:59southern China and Myanmar.
04:03Another factor is also that Malaysia already plays host to the Linus processing facility, which is one of the very
04:12few ex-China REE processing facilities.
04:17So it is no stranger to these processing activities. In terms of value addition and competitiveness, we still need to
04:28build out these capabilities.
04:30I don't think we're there yet. But in the future, generally all signs are pointing towards building out in that
04:38direction.
04:39Right. So Karim, you talked about the growing demand for this. I mean, given that there is such a race
04:46now for critical minerals, when Malaysia introduced the moratorium, I think it was 2023, 2024 when we introduced it, are
04:54we in a stronger bargaining position today?
04:58When we're considering who we should partner with, who we should export some of these rare raw earth materials to,
05:08do we have more leverage today? And if we do, how should we use that leverage?
05:14Sure. So I think there's a general consensus that yes, Malaysia does have leverage to decide who we want to
05:22work with.
05:23But at the same time, Malaysia's foreign investment policy has always been geopolitically neutral.
05:32So we are a small open economy, but a large trading nation. So we don't really have the, I would
05:40say, geopolitical weight to really decide we will work with these guys, not with you guys.
05:48So generally speaking, Malaysia is fairly agnostic about geopolitics.
05:56That said, now, one way to look at it is that yes, Malaysia has significant inferred potential, especially in heavy
06:05rare rare earth materials.
06:07And this potential could then be used as strategic leverage in order to place certain conditions that, okay, you want
06:16to invest in Malaysia, want to mine our rare earth materials, invest in sustainable technologies, which is very important.
06:27You have to have local partnerships, local joint ventures, local training and local hires.
06:34So I think these all form part of the grander picture and using our position as a very high potential
06:45source of rare earth materials, we can then build it out in a way which benefits us in the long
06:52term.
06:52Okay, so there should be a kind of long term plan in place before we consider easing the moratorium.
07:01Karim, talk to me a little bit about the implications of lifting or easing the ban.
07:07You talked a little earlier about the factors that could be driving the shift or driving the considerations of easing
07:14it.
07:14But on the flip side, there are implications.
07:17So walk me through some of the implications that Malaysia could face if we choose to lift the export ban
07:24on rare earth materials.
07:25Absolutely.
07:27So I'll start from a commercial perspective.
07:30From a commercial perspective, it does signal that there will be an injection of much needed liquidity into the ecosystem.
07:39So let's say if you are a miner and exploration isn't cheap.
07:46Exploration comes with a heavy price tag.
07:48If you're a miner, only three outcomes are available.
07:53First outcome is you don't find anything.
07:55Second outcome is you found something, but it's not economical to mine.
07:59Third outcome is you found something and it's economical to mine.
08:02Only in the third scenario, you make back your money.
08:07And if you have a ban to stop the export of unprocessed or semi-processed rare earth materials, then how
08:15do you make back those investments?
08:16You need to start investing in quite expensive warehousing and stockpiling in case conditions change in the future.
08:25But when you allow limited conditional exports, it allows these upstream miners to generate the revenue necessary to cover their
08:36initial investment and to invest in exploration as well as in sustainable extraction methods.
08:43Now, of course, on the topic of sustainability, environmentally, we also need to be a little careful here because opening
08:53up the upstream mining sector without ironclad rules poses major risk.
08:59Because, well, it is a known fact that many deposits do sit near sensitive forest reserves.
09:08And so we need to have an anti-leaching risk framework in place that must be strictly prioritized and enforced.
09:18Now, lastly, the strategic or the geostrategic implication here is that it would transform Malaysia really into a collaboration hub
09:29with multiple nations.
09:30And that's really where I think we should move.
09:34So many countries are looking to build out their ex-China supply chain.
09:39But in my view, we need to avoid at all costs to do a kind of blanket lifting.
09:46If we want to achieve national sovereignty in critical mineral development, we need to tie export permissions to inbound investment,
09:57capex requirements, technology sharing, R&D investment into sustainable technologies, and importantly, mandatory local joint ventures, local hires.
10:10And so by prioritizing this kind of approach, Malaysia can actually build on its strategic leverage to encourage a more
10:19sustainable build out of the local R&D sector.
10:23All right. So as we talked about this, there should be a long term plan in place.
10:28So if Malaysia opts to ease the export ban, how do we make sure that it is in our best
10:36interest?
10:36What would tell you, Karim, if that is a good, that five years down the line, we've made a good
10:42decision as opposed to it being a bad bargain on our end?
10:47Absolutely. I was reading a report actually by the EIA, which said that around 40 odd percent of global rare
10:55earth materials would need to be utilized by 2050 in order to ensure the net zero transition.
11:02So it is very clear. All indications point out that it has to be done.
11:09If we want to transition to a zero carbon global economy, we need to do it.
11:15So by providing in terms of whether it is in our best interest, I would say generally, yes, because it
11:25does provide a limited and conditional commitment on sustainable investment rather than a blanket free for all.
11:32But a so I just want to stress that a lifting of the ban or if we totally relax the
11:42ban, it would really be extremely counterintuitive and against our national interest, because what it would then do is incentivize
11:51companies to simply mine and export.
11:53So this has the effect of starving the domestic ecosystem of vital upstream feedstock and this leaves midstream processes, processors
12:04when when it's been built out with no local feedstock to process.
12:10So my sort of but to really be in the best interest, my view is we need to implement a
12:18export to invest quota system whereby you are only permitted to export this much of rare earth, unprocessed rare earth
12:27materials.
12:28If only it is tied to local capex, local commitments to joint ventures and with verifiable and phased milestones.
12:37Right. And in that way, I think if our ambition to become a premier global critical minerals hub and focusing,
12:47most importantly, on heavy rare earth materials by 2030, I think it could be achievable.
12:53Brilliant. That sounds that's very optimistic. And let's end on that optimistic note.
12:57Thank you so much, Karim, for being on the show with me, Karim Kasim there from ISIS Malaysia, wrapping up
13:01this episode of Consider This.
13:03I'm Melissa Idris signing off for the evening. Thank you so much for watching and goodnight.
13:07Thank you so much for watching.
13:22Bye.
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