KUALA LUMPUR (May 30): Lynas Rare Earths Ltd said on Friday it has signed an initial pact with Kelantan for the supply of mixed rare earths carbonate as future feedstock for its advanced materials plant in Pahang.

The memorandum of understanding (MOU) with Menteri Besar Inc, the investment arm of the Kelantan government, is non-binding and subject to the negotiation of definitive agreements, Lynas said in a statement.

“This is a significant step for Lynas and the Malaysian rare earths industry, bringing together Lynas Malaysia’s over a decade of rare earths industry expertise, and the Kelantan state’s rare earth resources,” said Lynas chief executive officer Amanda Lacaze.

Lynas has commenced its first production of separated heavy rare earths at its facility in Kuantan, making the facility the only non-Chinese commercial producer of the materials widely used in electric vehicles and advanced electronic applications, including micro-capacitors.

The plant owned by the Australia-listed firm has been exporting to East Asia, the US, and Europe, but faced local opposition due to concerns over toxic waste. Malaysian authorities deemed the plant safe and the company has also built a permanent disposal facility to store radioactive waste.

Under the MOU, the parties will cooperate for the growth of the rare earths industry in Kelantan and work towards developing Malaysia’s locally sourced and separated rare earth products.

“Malaysia’s ionic clay deposits have excellent potential as future feedstock for Lynas Malaysia, particularly given their high proportion of heavy rare earths which are in demand for future facing technologies including electric vehicles and electronics,” said Lacaze.