China extends rare earth development aid to Malaysia, a nation believed to harbor approximately 16.2 million metric tons of elements worth an estimated $175 billion

Malaysia has recently discovered a massive rare-earth reserve, estimated to be worth around US$175 billion, and the country is using this newfound resource as a bargaining chip in negotiations with both the United States and China.

Currently, Malaysian firms are required to purchase around US$150 billion worth of technology from American companies, including the purchase of Boeing jets and liquefied natural gas. However, the U.S. is also holding talks with Malaysia regarding rare-earth elements, crucial ingredients for many modern technologies, especially in semiconductor and chip manufacturing.

In an effort to develop its rare-earth processing capabilities, Malaysia has announced that China offered technical assistance during Chinese President Xi Jinping's visit in 2024. However, the cooperation will be limited to state-owned companies only, citing technology protection concerns. This move might potentially alarm U.S. officials, as bringing in Chinese expertise to process Malaysia's rare-earth resources could strengthen China's control over the market, which is one of the biggest exporters of these materials.

China has used its control over the rare-earth market as a bargaining chip in its negotiations with the U.S., and Malaysia may be following suit. Kuala Lumpur may use the threat of Chinese influence as a bargaining chip in current and future talks with Washington, D.C.

Malaysia lacks the expertise and technology needed to process all these minerals, and the country is promising "equal and non-discriminatory application of relevant policies" to both the U.S. and China. The statement does not provide specific details about any offers made by the U.S. to Malaysia regarding rare-earth processing capabilities, nor is there any mention of potential partnerships or collaborations between Malaysian and American state-owned companies in this context.

Tapping into these reserves could create 4,000 jobs in Malaysia, making it an attractive prospect for both the Malaysian government and international companies. The Australian mining and materials company Lynas operates two rare-earth processing facilities in Malaysia, importing rare-earth concentrates from Australia. China's request to partner with state-owned companies only for the deal might be a reference to the existing facilities operated by Lynas.

As the geopolitical landscape continues to evolve, the race for control over rare-earth resources is heating up. Malaysia, with its significant reserves, is at the centre of this race, and the country's decision to use its resources as a bargaining chip could have far-reaching implications for the global tech industry.

China extends rare earth development aid to Malaysia, a nation believed to harbor approximately 16.2 million metric tons of elements worth an estimated $175 billion