Malaysia will prohibit the export of unprocessed rare earth minerals as part of a strategy to retain greater value domestically by drawing investment into downstream industries, Investment, Trade and Industry Minister Tengku Zafrul Abdul Aziz said as reported by MalayMail.

In an interview with CNBC’s Squawk Box Asia, Tengku Zafrul explained that Kuala Lumpur had discussed its rare earths policy with both Washington and Beijing, emphasising the need to remain neutral between the two powers.

“Both sides have reminded us that Malaysia cannot apply different standards. Consistency is key if we are to defend our position as a neutral player,” he said.

He noted that a moratorium on raw rare earth exports is already in place, citing Australia’s Lynas Rare Earths as an example of firms permitted to operate under rules requiring local processing before export.

“What we are saying is: we welcome companies to invest in Malaysia, participate in the supply chain, and develop downstream rare earth activities here. Only then can the processed output be exported,” Tengku Zafrul said, arguing that the approach maximises economic spillovers and creates local opportunities.

The minister stressed that the policy aims to anchor higher-value activities within Malaysia while ensuring that buyers worldwide are treated under a single, non-discriminatory framework.

Earlier this month, he confirmed that the ban on raw exports was intended to boost domestic processing, create jobs, and encourage technology transfer, while still keeping the country open to foreign investment.