US Ties to Israel Ratlle Rare Earth Deal in Malaysia
Washington is seeking to establish an alternative supply chain for critical minerals that doesn't rely on Beijing, yet its foreign policy stance toward Israel
Malaysia’s Rare Earth Agreement Faces Scrutiny Amid US-Israel Connections
Tempatdonasi.com – Washington is seeking to establish an alternative supply chain for critical minerals that doesn’t rely on Beijing, yet its foreign policy stance toward Israel is generating resistance in Malaysia, a predominantly Muslim nation. A $96 million (€84 million) agreement involving rare earth elements has become the focal point of this diplomatic tension.
Earlier this year, the American Department of Defense finalized a four-year arrangement with Lynas, an Australian mining enterprise, to secure seventeen distinct rare earth metals. These specialized materials serve as foundational components in contemporary manufacturing, powering technologies ranging from mobile devices and electric vehicles to advanced military equipment.
Geopolitical Complications in Southeast Asia
The agreement’s viability depends heavily on Lynas’s primary processing facility located in Gebeng, an industrial settlement situated along Malaysia’s eastern coastline. This installation represents the most significant rare earth processing operation globally outside of Chinese territory.
Malaysian officials are experiencing mounting pressure regarding the country’s relationship with Israel. The Southeast Asian nation has consistently advocated for Palestinian self-determination and has publicly criticized Israeli military operations in Gaza and the West Bank. Consequently, domestic sentiment has turned against the rare earth transaction.
“What the Malaysian protesters demand is the equivalent of banning natural rubber exports to the US because the tires might end up on Israeli vehicles in Gaza,” Thomas Kruemmer, director of Ginger International Trade and Investment, a Singapore-based firm focused on the rare earths market, told DW.
Residents are calling upon Kuala Lumpur’s leadership to either halt the Lynas arrangement or establish assurances that minerals processed in Gebeng will not contribute to military applications. More than fifty civil society organizations submitted an open correspondence to Prime Minister Anwar Ibrahim, warning that the agreement could entangle Malaysia in “credible allegations of violations of international law across multiple theaters,” with particular reference to the situation in Gaza. They emphasized that the United States remains one of Israel’s primary arms providers.
Complex Supply Chain Dynamics
The relationship between Malaysian-sourced rare earths and Israeli weaponry is not as direct as critics suggest. Although these metals serve in fighter aircraft and missile systems, they equally find applications in household appliances and renewable energy infrastructure.
A parliamentary inquiry recently convened to assess whether the Lynas initiative might damage “Malaysia’s reputation as a staunch supporter of Palestine.” The Anwar administration must deliver its formal response by month’s end.
“For the Malaysians, this isn’t really a case about rare earths. It’s a case about Palestine,” Kruemmer said.
Activists intend to leverage the Gebeng refinery to influence American strategic calculations. China currently dominates global rare earth mining and processing, and has increasingly restricted these materials’ flow to Western markets.
Strategic Importance for American Defense
Lynas holds a distinctive position as one of the limited number of enterprises capable of supplying commercial volumes of dysprosium and terbium. Kruemmer highlighted that the United States’ principal domestic rare earth venture, MP Materials’ Mountain Pass operation in California, contains minimal quantities of these specific elements.
“And since China stops rare earth exports destined for military applications, Lynas will be the only source available to the Pentagon for the time being,” said Kruemmer.
With limited alternatives to Chinese supplies, Washington is pursuing multiple domestic and international projects. Meredith Schwartz, an associate fellow at the Center for Strategic and International Studies, noted that these initiatives require considerable time before becoming operational.
“The Pentagon needs secure supply in the event China continues to deny access — it is a national security imperative. This makes projects that are actively operating, like Lynas’ rare earth refinery in Malaysia, especially strategic to the United States,” she said.
Schwartz emphasized that Australia’s substantial mineral reserves and extraction capabilities place it at the center of efforts to diminish China’s near-monopoly on rare earths. She characterized the Malaysian refinery, which receives raw materials from Australia, as a “key node” within the comprehensive “mine to magnet supply chain.”
Although Lynas’s March announcement did not specify whether materials sold to the DoD would enter defense applications, Kruemmer suggested the Pentagon’s direct involvement indicates military utilization. He observed that if the materials served civilian purposes exclusively, the Department of Defense would not have entered into the agreement, given its limited interest in commercial electric vehicle production.
