Malaysia is home to just a fraction of the world's rare earth reserves, with an estimated 30,000 metric tons, data from the United States Geological Survey in 2019 showed. China is the biggest source with an estimated 44 million tons of reserves.
The decision, however, comes as the world looks to diversify away from China, the world's largest producer of the critical rare earth minerals that are used widely in semiconductor chips, electric vehicles and military equipment. Anwar said the government would support the development of the rare earths industry in Malaysia and that a ban would "guarantee maximum returns for the country".The rare earth industry is expected to contribute as much as 9.5 billion ringgit to the country's gross domestic product in 2025 and create nearly 7,000 job opportunities, Anwar said in parliament.
"Detailed mapping of rare earth element sources and a comprehensive business model that combines upstream, midstream and downstream industries will be developed to maintain the rare earth value chain in the country," he said. Malaysia's ban could affect sales to China, which imported about 8% of its rare earth ores from the Southeast Asian country between January and July this year, according to China customs data.