China extending footprint to Malaysia, Indonesia in bid to control global rare earths industry
New Delhi, July 19 (IANS) China has become geopolitically more ambitious with its objective no longer merely to dominate rare earth production at home but also control the global industry by deciding which countries receive the technology, technicians and market access required to compete, according to Jack Lifton, Co-Chair, Critical Minerals Institute (CMI).
In an article in Investor News, he points out that China’s strategy for Malaysia and Indonesia are clear indicators of this new policy.
Malaysia has prohibited exports of its unprocessed rare earth material, thereby requiring domestic value addition, while inviting both Chinese and non-Chinese investment.
Since then, Malaysia’s non-Chinese industrial base has become more formidable. Carester and Malaco have announced plans for a Malaysian rare earth separation operation, while Lynas and South Korea’s JS Link are proceeding with a 3,000-tonne-per-year sintered NdFeB magnet facility near the Lynas plant.
The article states that China does not want Malaysia simply to become a Western or Japanese-sponsored competitor. It wants Malaysia to become a multi-aligned processing center in which China remains an indispensable participant.
Beijing recognizes that it may no longer be able to prevent every rare earth industry from being built outside China. Its second-best strategy is therefore to insert Chinese technology, state-owned companies, technicians, and commercial relationships into those industries, the article observes.
Malaysia offers China several benefits which include providing Chinese companies access to additional feedstocks without increasing mining pressure inside China. Malaysia can also serve markets that increasingly require nominally non-Chinese production such as Southeast Asian, Middle Eastern or some European buyers. Besides, Chinese participation could prevent Malaysia from becoming an exclusively American-aligned rare earth platform.
“I therefore regard China’s Malaysian policy as a form of strategic co-option. China is saying, in effect, if a rare earth industry is going to develop in Malaysia, China intends to be inside it rather than standing outside and watching it become a competitor,” Clifton states.
The article also highlights that Indonesia wants to develop rare earth resources, but there is much less public evidence that China has yet to establish a major, dedicated rare earth separation or magnet project there.
Indonesia announced in February 2026 that it had identified eight prospective blocks containing rare earths and other strategic minerals. It assigned a new state-owned organization, Perminas, to oversee development and announced parallel research into processing technology. The locations reportedly include Kalimantan, Sulawesi, and Bangka Belitung.
Indonesian officials have openly stated that the country needs to master rare earth processing and have identified China, Japan and South Korea as countries from which it can learn. President Prabowo’s government has also repeatedly invited foreign investment in rare earth exploration and processing.
The article points out that China already occupies an extraordinarily strong industrial position in Indonesia through nickel, stainless steel, batteries, smelting, industrial parks, and supporting infrastructure. Rare earths could ultimately be attached to that existing Chinese-Indonesian industrial structure, even without a highly visible stand-alone announcement today.
–IANS
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