Critical minerals and Malaysia’s ‘sacrifice zones’

On 2 March, the Malaysian government renewed the operating licence of Australian rare earths company Lynas at its Gebeng facility in Pahang, allowing it to import and process rare earth raw materials until 2036.

The Ministry of Science, Technology and Innovation has instructed Lynas to cease generating radioactive waste by 2031 and neutralise existing residues through extraction methods such as thorium recovery (which is now under research and development).

But crucially – and not made sufficiently clear to the general public – Lynas will not be required to construct a new permanent waste disposal facility after the current one is completed.

The extension of the operating licence to Lynas Malaysia Sdn Bhd until 2036 marks a decisive moment in the country’s industrial and ecological path. The Gebeng rare earth processing plant, operated by its Australian parent Lynas Rare Earths Ltd, remains the only significant rare earth refinery outside China.

Framed as a strategic move aligned with global ‘critical minerals’ security and Malaysia’s downstream industrial ambitions, the permit extension allows continued processing of imported rare earth concentrates containing naturally occurring radioactive materials.

While the government has imposed phased conditions, the continuation of Lynas operations raises many ecological questions.

At stake is not merely regulatory compliance, but whether Malaysia is entrenching itself – already embedded in the US-Malaysia Critical Minerals Framework of 2025 – as a peripheral processing node within a geopolitically charged supply chain.

This piece explores some of the more pressing concerns.

The green growth narrative

Rare earth elements are indispensable to wind turbines, electric vehicles, semiconductors and defence technologies. Under various Western policy architectures – including US-led critical minerals partnerships – diversification away from China has become a strategic imperative.

Malaysia’s participation reflects ambitions to capture higher value-added industrial segments. The extension of Lynas’s licence is defended nationally as a pragmatic economic decision: retaining foreign direct investment, creating skilled employment and strengthening supply chain positioning.

But we need to ask whether this framing risks obscuring a deeper contradiction.

‘Green transition’ policies often relocate environmental burdens – primarily to countries in the Global South – rather than eliminate them. While rare earth elements enable low-carbon technologies, their extraction and separation generate toxic and radioactive residues.

The circular economy rhetoric – emphasising recycling, recovery and neutralisation – does not erase the material realities of cracking, leaching and water purification processes that produce complex waste streams.

In this sense, the critical minerals agenda may reproduce older patterns of ecological externalisation under a greener vocabulary (Mejame, 2025; Smerigan & Shi, 2025).

Circular economy or managed contamination?

Malaysia has increasingly invoked the circular economy paradigm in industrial planning. In theory, circularity reduces material throughput and recycles waste into productive inputs.

Rare earth processing, however, presents unique challenges: low-level radioactive residues containing thorium, heavy metal contamination risks, long-term storage and containment uncertainties, and high water and chemical intensity.

Although the governing regulators require waste neutralisation and potential thorium extraction, long-term stewardship responsibilities remain rather ambiguous. Ecological risk unfolds across decades – well beyond electoral cycles and corporate planning horizons.

The question is therefore structural: can a genuinely circular economy exist within a growth-oriented, export-dependent mineral regime?

Circularity does not necessarily or automatically equal ecological justice (Ali, 2014; Himpunan Hijau, 2011).

Ecosocialism and extraction

An ecosocialist framework shifts the debate from technical mitigation to systemic critique. We need to ask: who controls mineral resources? Who bears ecological risk? Who captures economic value?

Malaysia’s rare earth processing industry is integrated into global production networks where high-value technological rents are largely realised abroad. Meanwhile, environmental risk is always localised within host communities.

Malaysia’s history offers cautionary precedents. From radioactive waste contamination in Bukit Merah in the 1980s, to acid mine drainage from a mine in Sabah, to disputed health complaints linked to cyanide use at a mining plant, a pattern emerges: environmental risk consistently falls on local communities while economic gains flow elsewhere.

These are what political ecologists term ‘sacrifice zones’ – territories that absorb ecological harm or risks in exchange for limited developmental gains.

Without democratic control of strategic resources, Malaysia’s national minerals policy risks reinforcing economic dependency rather than political sovereignty.

From an ecosocialist standpoint, radioactive waste management cannot be treated as a narrow compliance issue. It reflects broader contradictions in capitalism’s relationship with nature – what is often described as capital accumulation depending on the externalisation of costs.

In short, capital does not consider the long-term impacts on the environment or the biosphere. Owners of capital seek returns on investment within the shortest possible period.

The licence extension thus represents not just an industrial decision, but a choice about Malaysia’s political economy and ecological future.

Developmental dilemma

The country faces a genuine policy tension: withdrawing from rare earth processing risks geopolitical marginalisation. Yet there is mounting pressure for community oversight of waste management obligations.

It may be time for policymakers to consider that development models cannot rely solely on export-oriented mineral growth. This could mean retaining public or hybrid ownership models to ensure that technological rents are captured and reinvested – say, into ecological restoration funds – going well beyond a narrow ‘green growth’ path.

Foster (1999) emphasised that the dynamics between humans and the natural world are distinct but united within one metabolic system. Within this system, energy is transferred – and capitalism, as a rift in that system, inefficiently converts that energy into monetary and capitalist expansion.

Reclaiming ecological justice

Malaysia’s rare earth dilemma holds up a mirror to the global contradictions within green capitalism, where critical minerals are positioned as the backbone of decarbonisation.

Yet without systemic transformation, the transition risks replicating – and entrenching – extractive hierarchies. An ecosocialist position does not reject technological progress but insists that ecological sustainability must be grounded in democratic control, social justice and material limits.

The Lynas licence extension therefore forces a reckoning: will Malaysia be a sovereign architect of a just ecological transition – or a managed processing enclave within global mineral geopolitics?

The answer depends not on regulatory processes alone, but on whether the ecological commons are treated as public trusts rather than negotiable assets.

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