KUALA LUMPUR, Malaysia: This week, Prime Minister Anwar Ibrahim said that to avoid exploiting and losing resources, Malaysia plans to ban exports of rare earth raw materials.

The decision will make Malaysia the latest country to restrict exports of key minerals. It will diversify supplies away from China, the world's largest producer of the critical rare earth minerals used in producing semiconductor chips, electric vehicles, and military equipment.

Anwar told parliament that the Malaysian government will support the development of a local rare earths industry, and a ban would "guarantee maximum returns for the country."

He added that the rare earth industry will likely create nearly 7,000 jobs and contribute US$2 billion to the national gross domestic product in 2025.

"Detailed mapping of rare earth element sources and a comprehensive business model that combines upstream, midstream and downstream industries will be developed to maintain the rare earth value chain in the country," Anwar said.

The ban could affect sales to China, which imported some eight percent of its rare earth ores from Malaysia between January and July 2023.

In retaliation for U.S. restrictions on sales of vital technologies to China, Beijing also announced restrictions on exports of some metals used in the semiconductor industry earlier this year.

The tensions between the two superpowers raised concerns that China could limit exports of other critical minerals, such as rare earths.

Analyst David Merriman at Project Blue said, "The legislation could have some negative impacts on potential investment in Malaysia from Chinese parties, which have looked to other Asian nations to source unprocessed or mixed rare earth compounds as feedstock for rare earth processing facilities in southern China."