Recent agreements between the United States and Thailand and Malaysia to access rare earth supplies have been criticized in both countries as a threat to their environmental and economic futures.
“What do we have in Thailand?” Pattarapong Leelapat of Thailand’s main opposition People’s Party asked in a social media post last month, accusing Prime Minister Anutin Charnvirakul of “putting the country at risk.”
He was reacting to a memorandum of understanding signed by the United States and Thailand on October 26, on the sidelines of the Association of Southeast Asian Nations (ASEAN) summit held in Kuala Lumpur in October.
The agreement is aimed at increasing cooperation in the rare earth supply chain and offsetting China’s export restrictions on these important industrial resources, and includes provisions that could be interpreted to give the United States preferential mining rights in Thailand.
The agreement was also criticized for its lack of environmental protection.
Public opinion in Thailand is sensitive to pollution risks. These concerns are further heightened by the rampant rare earth exploration by Chinese companies in the Myanmar River basin on Thailand’s northern border.
According to the Stimson Center, an American think tank, 16 mines are scheduled to be developed in the region this year. From 2015 to 2021, the number of new mines fluctuated between one and three per year, but the pace accelerated dramatically in 2022.
Toxic substances have been detected in several rivers in northern Thailand in amounts that exceed legal limits and are believed to have come from mines in Myanmar. If mining is allowed in Thailand, it would “lead to water and soil pollution and destroy wildlife habitat,” said environmental scientist Sonthi Kochwat.
China produces about 70% of the world’s rare earth elements, which are essential for high-tech industries ranging from electric cars to weapons systems. The Chinese government has used rare earth export restrictions as a diplomatic bargaining chip in its trade dispute with Washington.
Southeast Asia is attracting attention as an alternative supply destination. According to the US Geological Survey (USGS), Myanmar produced 31,000 tonnes of rare earths last year, making it the third-largest producer after China’s 270,000 tonnes and the United States’ 45,000 tonnes. Thailand produced 13,000 tons.
Rare earth elements are broadly divided into light elements and heavy elements. According to the Japan Metals and Energy Security Agency (JOMES), the world’s leading mines contain only about 1 to 5% of heavy rare earths, and most of them are dependent on countries such as China and Myanmar. In recent years, mines containing large amounts of heavy rare earths have been discovered in Malaysia and other countries.
At last month’s summit between US President Donald Trump and Chinese President Xi Jinping, China agreed to ease restrictions on rare earth exports, but questions remain about the content of the agreement. Analysts say the fight for rare earths in Southeast Asia is likely to continue.
Takashi Koga, an associate professor at Singapore’s Nanyang Technological University, said, “The US-China agreement is temporary, and there is still a possibility that the trade war will resume.”
Koga said that by cooperating with Southeast Asian countries in the rare earth field, both sides “aim to strengthen their negotiating position by securing and expanding their economic zones and supply chains in the region.”
Dissatisfaction is also growing in Malaysia, which signed a similar memorandum of understanding with the United States at the end of October. Under the agreement, Malaysia promises that domestic companies will prioritize sales of critical minerals to the United States and that there will be no restrictions on rare earth exports to the United States. Opposition parties say the deal undermines Malaysia’s economic sovereignty.
The Malaysian government estimates that the country has more than 16 million tonnes of rare earth deposits. The government recognizes rare earths as a resource for economic growth and has decided to ban their exports in September 2023.
Malaysia’s Trade Minister Tengku Zafrul Aziz sought to reassure parliament on October 28, saying the ban on exports of raw rare earths agreed with the United States “does not change.”
Reuters reported last month that the Malaysian government is partnering with Chinese companies to introduce rare earth processing technology. China’s proven refining technology could help Malaysia develop related industries, but the deal with the US could be a stumbling block.
Badrulhisham Abdul Aziz, a Malaysian expert on critical mineral resources, argued against lifting the export ban, saying, “If that happens, we will lose billions of ringgit (one billion ringgit is equivalent to US$242 million).”
“Furthermore, opportunities to turn resources into new sources of economic wealth will be affected, and opportunities to use rare earths as national security bargaining chips will be lost.”
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