Backed by Chinese technical partners and regional research, Perak’s rare earth pilot has sparked a nationwide race to unlock Malaysia’s RM800 billion REE potential — despite 70% of mapped deposits lying beneath protected forest reserves.
By Dr Mohd Safar Hasim
Perak, once synonymous with tin, has quietly become the visible front line of Malaysia’s rare earth ambitions.
The Kenering pilot in Hulu Perak has moved beyond laboratory proof of concept into sustained, regulated operations that demonstrate ionic adsorption clays can be recovered with in situ leaching (ISL) and hydrometallurgical processing.
That technical success has made Perak the most advanced and politically salient node in a complex, multistate scramble to convert geological riches into value-added industry.
Perak’s strategy deliberately runs on two complementary tracks. One track fast-tracked plant commissioning with Chinese technical partners, delivering operational know-how and early offtake pathways that helped Kenering transition quickly from test runs to ongoing production.
The other is an intentionally slower capability-building path led by Universiti Teknologi PETRONAS (UTP) in partnership with Indonesia’s BRIN and domestic firms to develop midstream separation and refining.
In effect, Perak secured early momentum while the UTP-led research track aims to convert lanthanide carbonate into nonradioactive oxides fit for magnet grade applications — keeping more of the value chain inside Malaysia and ASEAN.
Beyond Perak, a patchwork of states is positioning for different roles. Perlis and Negeri Sembilan have recently entered the fray: Perlis moved from memoranda of intent into planned exploration activity, while Negeri Sembilan announced pilot extraction projects in Jelebu scheduled to start once Environmental Impact Assessments are complete, with revenue expected by 2027.
Kedah has taken a staged, cautious approach: authorities have targeted industrial corridors such as Kulim Hi-Tech Park and Gurun for potential processing plants and are progressing geological mapping and baseline environmental studies, but public statements stress that no commercial extraction will proceed without robust EIAs and binding safeguards.
Kelantan has been more bullish, courting strategic partners and signalling ambitions that could materially shift its fiscal prospects. Those declarations have pushed federal conversations on infrastructure coordination and revenue sharing because much of Kelantan’s mapped resource overlaps forest reserves and conservation zones.
Sarawak has staked a clear political position: its premier has said the state will not export raw REE, implying a preference for developing domestic processing capacity rather than being a mere feedstock supplier. That stance aligns with federal policy momentum to retain value-added processing inside Malaysia and has intensified interstate competition to host the downstream industry and related jobs.
Terengganu is the quiet giant. Public mapping and industry assessments consistently show the state contains one of the largest shares of Malaysia’s mapped REE resources, yet it has been comparatively silent on rapid commercial programmes. That quietness is not indifference but prudence: a substantial portion of Terengganu’s deposits lies within permanent forest reserves, coastal zones and areas with tourism and indigenous land sensitivities.
Unlocking these resources requires clear temporary excision rules, enforceable rehabilitation plans and independent environmental monitoring — policy questions that Terengganu’s leadership has treated with deliberate caution rather than headline-driven development.
Why that caution matters can be distilled to one critical fact: roughly 70 per cent of Malaysia’s mapped REE-bearing zones overlap permanent forest reserves or otherwise protected lands. That reality is both a legal and political hinge for the country’s REE ambitions.
On one hand, the concentration of resources under reserve land means Malaysia’s in-ground wealth is enormous, and with careful policy and high-standard operations, the country could unlock vast value while setting a global benchmark for responsible extraction.
On the other hand, the reserve land overlap is a major hindrance to rapid commercial rollout. Forest reserve status imposes strict limits on land use; temporary excision for mining requires state approvals, public consultations, detailed Environmental Impact Assessments and robust rehabilitation guarantees. Communities and conservation groups rightly demand transparency and assurances that biodiversity, water quality and indigenous rights will be protected.
Until those governance and social licence conditions are met, large tracts of resource will remain effectively off limits.
The environmental and regulatory tensions are amplifying public scrutiny. Isolated river discolouration cases around pilot sites have prompted intensified monitoring by DOE, AELB and JMG, raising the compliance bar for developers.
That scrutiny increases the upfront costs and timelines for projects, but it also creates an opportunity: Malaysia can use this moment to design a responsible, certifiable REE sector — one that conditions development on zero discharge practices, independent water and biodiversity monitoring, transparent royalty flows and community benefit sharing.
Such standards would make Malaysian REE attractive to buyers demanding sustainability and traceability, and to international partners offering technology and capital.
The geopolitical backdrop has sharpened the domestic dynamic. Recent critical minerals partnerships and frameworks with major economies have widened access to financing and technology while increasing international interest in Malaysian feedstock and processed products.
Federal policy to restrict raw REE exports and incentivise domestic processing has turned Perak’s pilot into a strategic asset in negotiations with potential backers.
Yet international engagement also brings pressure: states and civil society are asking how benefits will be shared, what safeguards will be enforced, and whether foreign technical cooperation will translate into genuine local capability rather than short-term offtake deals.
For smaller states such as Perlis, Negeri Sembilan and Kedah, the opportunity is tangible: pilots and exploration could catalyse jobs, infrastructure and supplier ecosystems.
For Kelantan and Terengganu, unlocking their large underground endowments will demand the hardest trade-offs between conservation, local livelihoods and state development priorities.
Sarawak’s insistence on not exporting raw REE raises the prospect of a competing industrial centre on Borneo, further complicating federal coordination but potentially raising overall national capacity.
The next 12–24 months will be decisive. Perak’s technical demonstration has shown that ISL and domestic processing can work in Malaysian terrain. But translating that into a multistate, value-added industry depends less on geology than on governance: clear temporary excision rules, enforceable environmental standards, independent monitoring regimes, and transparent, equitable benefit sharing.
Get those elements right, and Malaysia — led visibly by Perak — can convert geological potential into industrial sovereignty and sustainable jobs. Failure to secure social licence and policy clarity, and vast in-ground value may remain untapped while environmental risks and illicit activity fill the vacuum.
The views expressed here are entirely those of Dr Mohd Hasim, a Council Member of the Malaysian Press Institute (MPI)
WE