US Rare Earth Deal in Malaysia Stirs Backlash Over Israel Ties

A significant rare earth elements deal between the US and Australian firm Lynas, processed in Malaysia, is facing strong opposition rooted in geopolitical tensions and the Israeli-Palestinian conflict. The US Department of Defense signed a four-year, $96 million agreement with Lynas to secure a supply of 17 critical rare earth metals, essential for manufacturing everything from smartphones and electric cars to advanced weaponry. This move is part of a broader US strategy to establish a supply chain for these vital materials independent of China.

The crux of the controversy lies in the location of Lynas' primary processing facility in Gebeng, Malaysia. Malaysia, a Muslim-majority nation with a history of supporting Palestinian statehood, is experiencing a strong public backlash against the deal. Numerous non-governmental organizations have penned an open letter to Prime Minister Anwar Ibrahim, urging him to block the agreement. They express concern that the rare earths processed in Malaysia could end up in weapons systems used by Israel, potentially implicating Malaysia in violations of international law, particularly concerning the situation in Gaza.

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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.

While the direct link between Malaysian-processed rare earths and Israeli weapons is not straightforward, as these elements are used in a wide array of civilian and military applications, the symbolic connection is potent. Protesters argue that allowing the deal risks tarnishing Malaysia's reputation as a staunch supporter of Palestine. The situation has escalated to the point where a parliamentary committee held a hearing to assess the potential damage to Malaysia's standing.

Thomas Kruemmer, director of Ginger International Trade and Investment, likens the protesters' demands to banning natural rubber exports to the US because tires might be used on Israeli vehicles. He highlights that the rare earths in question, dysprosium and terbium, are particularly important, and Lynas is one of the few companies capable of supplying them commercially. The US's own domestic rare earth projects, like MP Materials' mine in California, lack significant quantities of these specific elements. The Malaysian government has until the end of the month to announce its official stance on the deal, a decision heavily influenced by domestic public opinion and Malaysia's foreign policy commitments.

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For the Malaysians, this isn't really a case about rare earths. It's a case about Palestine.