Johari: Lynas-US cooperation to facilitate rare earth supply agreement

KUALA LUMPUR: Cooperation between Lynas Rare Earths Ltd (Australia) and the United States government aims to facilitate a material supply agreement for the advanced manufacturing industry.

Investment, Trade and Industry Minister Datuk Seri Johari Abdul Ghani said this would support US efforts to achieve its national supply chain resilience objectives.

He said Lynas Malaysia had informed him that the agreement was a commercial arrangement handled directly by its subsidiary, Lynas LLC USA, with the US.

He said the supply of the rare earth oxides was intended for research and development (R&D) in the permanent magnet manufacturing sector, which the US is currently exploring.

"Within the complex value chain of the rare earth elements (REE) industry, Lynas Malaysia's operations are at the initial processing stage, involving the separation of raw REE mined in Australia into rare earth oxide (REO) supplies.

"After processing, the REO is supplied to metal manufacturers overseas, who then channel it to magnet producers. The magnets produced are subsequently used as inputs by electric motor manufacturers and original equipment manufacturers (OEMs)," he said in a written reply published on the Parliament website.

He was responding to a question from Shaharizukirnain Abd Kadir (PN-Setiu) regarding the government's stance on the US$96 million (RM388 million) REO supply agreement between Lynas and the Pentagon.

Johari said Lynas Malaysia's processing operations comply with the government's current policies, including operational and manufacturing licence requirements, as well as Environmental Impact Assessment (EIA) approval.

"This also includes a commitment to developing the midstream and downstream segments of the ecosystem, with priority given to the development of local companies," he said.

He said his ministry is committed to developing the midstream and downstream segments of the REE industry to establish a holistic and integrated ecosystem, while maximising the economic value of the country's mineral resources.

"The strategy focuses on attracting domestic and international investments to develop and subsequently strengthen the midstream and downstream segments of the REE industry.

"This is particularly in high-technology manufacturing, such as permanent magnets, advanced materials, electronic components and batteries," he said.

Johari said potential REE investors are currently reluctant to invest due to the lack of guarantees of a stable domestic supply of REE raw materials.

He said the government had agreed to allow flexibility in the existing moratorium policy on the export of raw REE materials through the Guidelines for Consideration of Applications to Export Raw Rare Earth Elements.

"This flexibility in exports is limited solely to R&D activities. Companies must demonstrate a clear commitment to collaborating on the development of processing facilities in Malaysia within three years from the date of approval to export raw REE materials," he said.

Johari said Malaysia needed to leverage strategic partnerships and technology transfers, both domestically and internationally, including from partner countries with experience in REE processing, to realise its ambition of developing the industry.

"This move will strengthen local capabilities across the entire value chain, from mining activities to the manufacturing of finished products.

"Furthermore, it will position Malaysia as a key player in the global critical minerals supply chain," he said.