Kelantan’s rare earth reserves offer a potential lifeline for the impoverished Malaysian state, promising a path to slashing debt and driving much-needed economic development. But experts warn it will need to secure more federal funding to build the infrastructure needed to unlock billions of dollars in projected revenue.
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The Kelantan state government signed a preliminary deal with Australian mining giant Lynas last week to explore the state’s capacity to supply rare earths to the company’s processing facility in Pahang – the largest rare earths plant outside China.
Lynas’ advanced materials plant in Pahang state currently refines minerals sourced exclusively from its Mount Weld, Western Australia. These include neodymium-praseodymium oxide, as well as heavy rare earths such as dysprosium and terbium – all critical components for high-performance magnets used in electric vehicles, wind turbines and advanced semiconductors.
The new arrangement – described by Lynas as a “significant step” in developing Malaysia’s rare earths industry – could position Kelantan as a major regional supplier. The state government estimates its reserves are worth 125 billion ringgit (US$29.3 billion).
But Kelantan will first need to convince the federal government – led by a rival political coalition under Prime Minister Anwar Ibrahim – to overlook its mountain of outstanding debt and hand out even more financial support or loans to modernise its public infrastructure, critical for large-scale mining and material transport.
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