US-Israel ties complicate $96 million rare earth deal in

The U.S. government's ties to Israel are causing backlash against a $96 million rare earth deal in Malaysia. This week, Malaysian civil society groups urged the government to reconsider its agreement with Australian mining firm Lynas, which is critical for U.S. supply chains of rare earth elements. The deal, signed by the U.S. Department of Defense in March, aims to secure 17 metals essential for various industries, including technology and defense.

Local Opposition

The deal's connection to U.S.-Israeli relations has sparked protests in Malaysia, a predominantly Muslim country that has historically supported Palestinian statehood. Over 50 non-governmental organizations sent an open letter to Malaysian Prime Minister Anwar Ibrahim, demanding that the government either block the deal or ensure that the rare earths processed at Lynas’ facility in Gebeng do not contribute to weapons systems. The groups argue that the deal could implicate Malaysia in international law violations due to the U.S. being a principal arms supplier to Israel.

Economic Context

Lynas operates the largest rare earth processing plant outside China in Gebeng, which is crucial for U.S. efforts to reduce dependence on Chinese supply. However, the Malaysian protesters argue that the potential uses of rare earths are varied, ranging from military applications to consumer products like washing machines. Thomas Kruemmer, director at Ginger International Trade and Investment, noted the complexity of the situation, stating that the demands for a ban are akin to prohibiting natural rubber exports to the U.S. due to its potential use in Israeli vehicles.