The prospects of Malaysia growing its rare earths exports are looking better as the minerals used for military equipment and consumer electronics are expected to be in demand and used as a bargaining chip in the United States and China trade dispute. (File pic: For illustration purposes only)

KUALA LUMPUR : The prospects of Malaysia growing its rare earths exports are looking better as the minerals used for military equipment and consumer electronics are expected to be in demand and used as a bargaining chip in the United States and China trade dispute.

Bank Islam chief economist Mohd Afzanizam Abdul Rashid said from an economic point of view, this could mean a new business venture that would facilitate the diversification of Malaysian economic activities.

“This will boost or solidify our hold on the electronic industry’s supply chain,” he told the New Straits Times (NST).

However, he said, the elephant in the room, which was international politics, could not be ignored.

“Nonetheless, these forces are fluid as politicians come and go, especially in the context of the US presidential election next year.

“What matters is the value proposition of the industry (rare earths) and how it can benefit Malaysian companies and employees, while at the same time, be mindful of environmental issues.”

Last week, it was reported that the US was looking to source rare earths after China threatened to curb exports to the country, as part of a plan to find diversified reserves outside China.

Quoting sources, a report said, the US Department of Defence had held talks with Malawi’s Mkango Resources and other rare earth miners about their supplies of the minerals.

Putra Business School’s Associate Professor Dr Ahmed Razman Abdul Latiff said China’s boycotting the supply of rare earths to the US would have no significant impact as there were plenty of other sources of the minerals and there were ways to circumvent China’s control of its global supply.

Bank Islam chief economist Mohd Afzanizam Abdul Rashid said from an economic point of view, this could mean a new business venture that would facilitate the diversification of Malaysian economic activities. Pic by NSTP/ AZIAH AZMEE

For Malaysia, he said the plant near Kuantan was owned by
Lynas Corporation, an Australian company, which had its own customers and market
for its refined rare earth materials.

“So there will be a minimum impact on Malaysia if China decides to boycott the US.

“US has its own mine in Mountain Pass that it can open again and start producing its own refined rare earths, or its technological companies can alter their products to use less of the substance.”

On Malaysia’s position in the trade war between China and the US, Budget Select Committee chairman Datuk Seri Mustapa Mohamed said the country would not be in a better situation if it took sides.

“There has got to be a win-win solution as both are big countries.

“We need these big powers (to help with our economy).

“China remains our biggest trading partner and foreign direct investor and the US continues to play a big role in Malaysia, too, in terms of trade and investment.

“The US’ electrical and electronics companies also play an important role (in Malaysia).

“These are important countries for Malaysia, so we are looking for a win-win (solution).

“We hope we can come up with solutions not only for Malaysia. And this is not unique to Malaysia only, but also to other countries.”