Our harassment of rare earth business will scare off investors

nation has gone through a number of economic transformation plans. We have also discussed embracing high technology industries to migrate to a high-income, developed economy.

Unfortunately, most of these plans have been derailed by poor policymaking and implementation. One example is the continued misunderstanding about the rare earth business.

Many are still clueless about the opportunities that rare earths present. Instead, they continue to harp on the baseless claims about threats of radiation from the waste. China has been celebrating its rare earth finds, but we continue to ridicule the business here.

It was former chairman Deng Xiaoping who first declared that rare earths would bring prosperity to the country, and China is now profiting tremendously from its rare earths. When China negotiated the trade war with the United States, rare earths were used as one of its bargaining chips.

This is because the industries in the US depend on rare earth imports from China for many of its products. The US does not produce much rare earths of its own, a material which has also become critical in the manufacture of its military arsenal.

Rare earth minerals are now muchsought after in the automotive industry, as the transport sector migrates from fuel combustion engine to the electric motor. This change is happening very fast. Major car companies have declared that they would shift to electric in the next five years.

Indonesia is moving fast to capitalise on the change. The latest we hear is that Tesla, a global player in electric cars, has made the move to set up operations there. There is no doubt such a move will invigorate the entire supply chain of electric auto parts in Indonesia, including the manufacturing of batteries and electric motor parts.

A critical component of the electric motor is the magnet, a high-powered supermagnet to be precise. In the design of this supermagnet, rare earth metals have emerged as a crucial constituent.

These are the rare earths that Malaysia now produces through Lynas.

We do not have our own rare earth mines. But this may change as we have been hearing reports of big rare earth finds in some states. Lynas has been bringing in rare earth concentrate from Australia to be processed into refined rare earths in Kuantan.

The unfortunate part is that Lynas has been constantly harassed for the residue that the plant produces. Despite a study by soil scientists at Universiti Putra Malaysia, which demonstrated that the residue, which contain high amounts of phosphates, can be used as fertiliser for the oil palm industry, Lynas has not been given permission to supply the residue to the oil palm business.

Yet, every year we lose much foreign exchange importing the stuff. As we continue to say that we champion the circular economy, residue from Lynas feeding the palm oil industry is a good example of something that we should capitalise on.

It is clear that rare earth elements have become a key ingredient of the global high-technology economy. The highest value of the rare earth minerals is in downstream product manufacturing, which includes the supermagnets.

Unfortunately, our continued harassment of the rare earth business has scared off foreign direct investments involved in such downstream manufacturing from coming here.

The latest we hear is that a major Japanese company making supermagnets, which buys rare earths from Lynas, has set up shop in Vietnam instead. We seriously need to rethink the business.