KUALA LUMPUR (Aug 19): A plan to establish a single national entity to regulate and develop the rare earth industry in Malaysia is facing pushback from several state governments.

The proposal — envisioned as the counterpart to national oil-and-gas firm Petroliam Nasional Bhd, or Petronas — is being perceived by some states as an attempt to nationalise mineral resources, said Natural Resources and Environmental Sustainability Minister Datuk Seri Johari Abdul Ghani.

He did not name the states opposing the creation of the national entity.

“The management of petroleum resources in offshore areas differs from land affairs, which are under state jurisdiction,” Johari said during his winding-up speech on the 13th Malaysia Plan debate in the Dewan Rakyat.

The Federal Constitution’s Ninth Schedule, State List II, grants states authority over land, including licences and permits for mining activities.

For now, Johari said the federal government will focus on strengthening collaboration through the National Mineral Council, the main platform for coordination between federal and state authorities.

Rare earths hold significant economic value, but its development must be managed carefully, Johari stressed.

“The government is committed to ensuring that the industry generates real spillover benefits for the economy and local communities, while also taking into account environmental sensitivities, such as permanent forest reserves and environmentally sensitive areas,” he said.

Johari pointed to lessons from past controversies, including the Bukit Merah rare earth processing plant in the 1980s and the Lynas facility in Pahang, which highlighted the need for stringent safeguards in handling mining waste and mitigating environmental risks.

He also reaffirmed that Malaysia’s current ban on the export of raw rare earths remains in place and reiterated that the government’s negotiations with foreign partners, including the US, have not involved any commitment to supply the raw minerals.

Malaysia has not agreed to allow the export of unprocessed rare earths as part of any trade concession, he said. At present, exports of rare earths are limited to value-added products processed at Lynas’ plant in Kuantan using feedstock imported from Australia.

Several MPs, including Datuk Rosol Wahid (PN-Hulu Terengganu), also called on the government to expedite the tabling of a bill to establish clear policies, regulatory frameworks and safeguards for the industry to provide investors with certainty, maximise economic returns and ensure sustainability.

Johari assured the House that the government is working on a comprehensive framework that will include research and development, technology adoption, and technical vocational training to develop local expertise.

“The reserves are not going anywhere,” he said. “What is important is that we do not rush but develop the industry systematically, with proper research, safeguards and technology to ensure its long-term sustainability.”