Despite being a high-tech powerhouse, South Korea is considered resource-poor, whereas Malaysia boasts vast, largely untapped reserves of rare earths.
On Monday, South Korea and Malaysia established a strategic partnership to strengthen cooperation in key areas such as trade, clean energy, and critical raw materials, according to The Korea Herald and other outlets. The partnership was formalized during a state visit by Malaysian Prime Minister Anwar Ibrahim to South Korea, where he met with President Yoon Suk Yeol.
South Korea is a leading high-tech producer but lacks many of the raw materials essential for its industry. The new agreement with Malaysia is part of a broader strategy involving recent partnerships with resource-rich nations like Peru and several Central Asian states. Malaysia aims to significantly expand its critical minerals sector, including boosting production of rare earth elements, which has been relatively low to date. Concurrently, the country has announced an export ban on these elements to benefit from downstream value-adding. According to the Malaysian Investment Development Authority, the particularly valuable deposits of medium and heavy rare earths found in ion-adsorption clays are vital to global supply chains. These deposits are currently only mined by China and its neighbor Myanmar. Malaysia’s key role in the rare earth industry has thus far been as the host of the world’s largest refinery outside China, operated by Australian company Lynas.
According to Reuters, the two leaders also expressed their commitment to finalizing a free trade agreement by next year. The Korea Herald reported that Malaysia is South Korea’s third-largest trading partner and the fourth-largest destination for investment among the ten ASEAN member states, a group of Southeast Asian countries striving for economic integration.
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