Khazanah Nasional Maintains Silence on Reported Rare Earths Partnership
Khazanah Nasional Bhd has chosen to remain officially non-committal concerning recent news reports suggesting that Malaysia and China are engaged in high-level discussions regarding a significant new rare earths refinery project.
Reuters had previously reported on Thursday that the two nations were in the preliminary stages of discussion for a large-scale project to process rare earths, with Khazanah widely expected to form a strategic partnership with a Chinese state-owned firm to construct and operate a refinery in Malaysia.
However, when approached for comment, the Malaysian sovereign wealth fund provided a standard, guarded response, telling Bernama: “It is Khazanah’s policy not to comment on rumours and market speculation, and therefore we will not be able to answer your specific questions at this time.”
The current rare earth processing landscape in the country features only one major player: Lynas Malaysia Sdn Bhd, a subsidiary of the Australia-based Lynas Rare Earths Ltd.
This facility, located in the Gebeng Industrial Estate in Kuantan, is notably the world’s largest single rare earths processing plant.
It is responsible for producing high-quality separated rare earth materials that are exported to crucial manufacturing markets across Asia, Europe, and the United States, underscoring Malaysia’s existing role in the global supply chain, even before any potential project involving Khazanah.
Government Aims to Strengthen Rare Earth Supply Chain
The potential development, even if unconfirmed by Khazanah, aligns with the Malaysian government’s pronounced commitment to developing a robust and resilient rare earth elements (REE) supply chain.
On August 27, 2025, Deputy Minister of Investment, Trade and Industry Liew Chin Tong publicly stated that the government is fully committed to both developing and actively attracting potential investors to strengthen production activities along the entire length of Malaysia’s REE supply chain.
This strategic focus demonstrates a national ambition to move beyond raw material extraction into higher value-added processing, which would inherently require facilities like the proposed refinery.
To support these substantial efforts, the government plans to leverage key national policy documents.
The New Industrial Master Plan 2030 and the National Advanced Materials Technology Roadmap 2021-2030 are intended to provide the foundational support for government efforts in developing advanced materials, including the exploitation of high-value REE mineral ore resources.
A project involving Khazanah, a primary sovereign wealth fund, would instantly provide the necessary capital and state backing to expedite these national goals.
The country’s interest in expanding its processing capabilities is underpinned by the significant national reserves: Malaysia is estimated to hold an impressive 16.1 million tonnes of non-radioactive rare earth elements, which are valued at a market-estimated figure of RM809.6 billion.
Strategic Importance of Rare Earths to Malaysia
The pursuit of a new rare earth refinery, whether led by Khazanah or another major entity, highlights the strategic and economic importance of these resources for Malaysia’s future industrial landscape.
Rare earth elements are indispensable components in modern high-technology manufacturing, essential for producing everything from electric vehicles and wind turbines to advanced defense systems.
Securing a robust domestic processing capability is crucial for Malaysia to move up the economic value chain and capture a larger share of global high-tech manufacturing.
The current global trade landscape, which features geopolitical tensions and supply chain risks, makes self-sufficiency or diversified sourcing in rare earths a major priority for many nations.
By potentially partnering with a Chinese state-owned firm, Khazanah would be strategically aligning Malaysia with one of the world’s leading experts and largest producers in the field, gaining access to critical technology and operational expertise.
This move would not only create jobs and attract foreign direct investment but also significantly enhance the country’s stature as a reliable and capable player in the global rare earths market, a goal that the New Industrial Master Plan is designed to achieve.
The decision by Khazanah to remain silent, while adhering to policy, signals that the negotiations, if ongoing, are sensitive and of high national significance.
