INTERVIEW: Malaysia's rare earth export easing may attract investors, says Southern Alliance COO

Malaysia could attract more investments in rare earths exploration by lifting some export restrictions on the critical minerals, according to Lim Wei Hung, COO and executive director of Malaysia-based Southern Alliance Mining Ltd. However, project development takes time, and the measure could not immediately generate new supplies from Malaysia, Lim said.

The Southeast Asian nation has emerged as an alternative source of rare earths, signing agreements with several countries looking to diversify their supply of the strategic material, which is used in electric vehicles, wind turbines and other high-tech applications. The government is considering easing a moratorium on exports of raw rare earths to meet increasing demand, Bloomberg News reported Aug. 2, citing Syed Ibrahim Syed Noh, Malaysia's deputy minister of natural resources and environmental sustainability.

Southern Alliance is seeking to capitalize on the opportunity. The company recently expanded into rare earths and other critical minerals, aiming to broaden its iron ore-focused portfolio. The Singapore-listed miner owns a 40% stake in MCRE Resources Sdn. Bhd., which owns the Pioneer Gerik rare earths operation in Malaysia. In April, Southern Alliance signed an agreement with Brazilian Critical Minerals Ltd. to explore potential synergies between their respective rare earths assets.

Platts, part of S&P Global Energy, recently spoke with Lim in an online call. The following interview has been edited for clarity and length.

Platts: Southern Alliance Mining mainly produces iron ore, but it recently pivoted into rare earths and critical minerals. What is the rationale behind this strategy shift?

Lim Wei Hung: Iron ore remains an important part of Southern Alliance. But what we have actually done is to expand our mining and resource capabilities. Some of our capabilities are transferable, right? We understand the exploration, geology, resource development, project execution, permitting, so on and so forth.

Our involvement in rare earths actually has reinforced a belief that is quite basic: in the rare earths value chain, you start with geology and resource. So that's where we are. But at the same time, if we are to look at the market, it doesn't mean that all the elements are required or there is good demand because, as you know, rare earths is not a single commodity. It is many commodities within a commodity. So the market tells us what they want and the geology gives us what it has.

In other words, you can't refine something that we don't first discover and develop. So that is the reason why I think our experience in mining helps us to transfer some of the knowledge into this.

The Malaysian government has discussed the potential easing of export restrictions on rare earths. What are the potential implications of this measure to global rare earth supply chains and to Malaysia's rare earths industry?

I think market access is fundamental in resource development. But that is different from the idea that it will suddenly create a surge in Malaysian exports. I don't see that happening. It doesn't work that quickly.

Before you can export, you need to do the exploration. And then, you need to find an economically viable resource. Exploration takes time and capital. And there's no guarantee of success.

But I believe it could unlock greater confidence to invest in exploration. That matters because that will enable Malaysia to understand better our own rare earth resource.

Malaysia has signed critical minerals partnerships with several countries. Will Malaysia's neutral stance on geopolitics work in terms of presenting itself as an alternative supplier of rare earths?

We welcome everyone to work together. The world needs a more sustainable supply chain for critical minerals. Malaysia can offer resilience and optionality to the supply chain.

Because pursuing complete independence from any particular country is not the meaning of diversification. Diversification does not mean exclusion, right? For Malaysia, we will look at our own interest.

Malaysia has already established a midstream rare earths capacity through Lynas Rare Earths Ltd.'s Gebeng facility. But Malaysia's own production remains limited. What has prevented the country from developing its own rare earths reserves?

I don't think Malaysia has to measure success based on whether we can rival any country in terms of tonnage. What is more important is for us to focus on our competitive advantages compared to others.

For Lynas, they designed the plant and everything is based on feedstock from the Mt Weld mine in Western Australia, which is a monazite-based resource. And they are typically light rare earth elements.

When it comes to Malaysian rare earths mining, MCRE actually started mining in 2022. I think the prospect is there.