Malaysia Critical Minerals Cooperation

For U.S. companies, Malaysia’s rapidly evolving rare earth and advanced materials ecosystem—now backed by new bilateral agreements—creates a uniquely favorable window for commercial entry, joint ventures, and technology partnerships.

The United States and Malaysia have expanded their partnership in critical minerals through two complementary instruments signed during President Trump’s historic visit to Malaysia on October 26: the Agreement on Reciprocal Trade (ART) and a Memorandum of Understanding (MOU) on Critical Minerals Cooperation. The latter strengthens cooperation on critical minerals supply chains; promotes trade and investment in critical mineral resource exploration, extraction, processing and refining, manufacturing, and recycling and recovery; and supports the transition to efficient and secure critical mineral and rare earths markets, enhancing the security and prosperity of critical minerals and rare earths supply chains in the United States and Malaysia.   Together, these instruments strengthen conditions for U.S. commercial participation in Malaysia’s rapidly developing rare earth and advanced materials ecosystem.

Malaysia’s rare earth sector is undergoing major structural change. Government policy and international partnerships are accelerating the development of domestic processing capabilities and reducing reliance on China-dominated supply chains—priorities highlighted in the National Advanced Materials Technology Roadmap 2021–2030.

Since January 2024, the federal government has banned the export of unprocessed rare earth ores and concentrates, mandating that all rare earths mined in Malaysia must be processed domestically before export. This policy supports the growth of a downstream industry, including separation, refining, magnet manufacturing, and recycling, and aligns with Malaysia’s broader ambition to establish higher value-adding industries.

In May 2025, the Australian firm Lynas’ facility in Malaysia became the first commercial refinery to process heavy rare earths (HRE) outside China. Later that year, Lynas announced a partnership with South Korean magnet manufacturer JS Link to develop a $145 million rare earth magnet production facility in Malaysia, along with a $117 million expansion of Lynas’ HRE separation facility. Although Lynas’ feedstock primarily comes from its Mount Weld mine in Australia, the company recently signed an agreement to procure ionic clays from within Malaysia.

The U.S.-Malaysia MOU on Critical Minerals Cooperation encourages collaboration on good regulatory practices, streamlined permitting, environmental sustainability, recycling and recovery, and the deployment of technology. It also creates quarterly working-level meetings to coordinate on trade, investment opportunities, and marketplace development, including the creation of “high-standard marketplaces” supported by transparent pricing. The ART, meanwhile, highlights potential support from U.S. development finance tools, including the Export-Import Bank and the U.S. International Development Finance Corporation, to facilitate qualified U.S.-Malaysia supply chain projects.

Malaysian government stakeholders have expressed interest in working with U.S. firms in the form of joint ventures, technology transfer, and capacity-building initiatives. If you represent a U.S. company with relevant capabilities and want to learn more, please contact Commercial Specialist Mohan Gurusamy at office.kualalumpur@trade.gov.