Stories

Malaysia is a resource-rich economy. Mining of tin, iron ore and gold was historically an important activity on the Malay Peninsula, starting from the late 19th century until industrial development took off in the late 1960s. As manufacturing expanded, mining became less important – not to mention sustainable mining in Malaysia.  

Recent global developments, particularly the transition to electric vehicles, have rapidly changed the world demand and supply of critical minerals. The Malaysian government has called for a return to mining, focusing especially on the development of a sustainable non-radioactive rare earth element (NR-REE) industry. NR-REEs found in Malaysia, such as Neodymium (Nd), Dysprosium (Dy), and Praseodymium (Pr), are essential for manufacturing powerful magnets used in wind turbines and electric vehicle motors.  

Malaysia’s National Minerals Strategy 

To support the development of the critical minerals sector, Malaysia developed a National Mineral Industry Transformation Plan 2021-2030 (NMITP). NMITP is a comprehensive strategy that identifies key priority areas to develop a modern mining sector that aligns with the principles of environmental sustainability, good governance and industry accountability. NMITP puts the value of the country’s mineral resources at 4.1 trillion Malaysian Ringitt (USD $982 billion), with metallic minerals accounting for RM1.0 trillion (US $245 billion) and non-metallic minerals worth RM3.0 trillion (US $735 billion). Strategic minerals such as NR-REEs, bauxite, tin, silica, kaolin, that play a crucial role in advanced technologies, electronic devices, pharmaceutical products, aerospace components, automotive materials and chemical compounds, offer enormous potential to drive Malaysia’s sustainable economic growth in the coming decades.  

Building on NMITP, the Government of Malaysia has formulated a National Advanced Materials Technology Roadmap 2021-2030 (NAMTR). NAMTR is intended to catalyze the development of Malaysia’s advanced materials industry ecosystem. The geopolitics of accessing and utilizing critical minerals in industrial production has encouraged Malaysia to increasingly prioritize a shift from upstream development (export-focused mining) to downstream development (value-added secondary manufacturing). This has led to greater domestic focus on the impact of mining on people and the environment. 

A Key Player in the Global Critical Minerals Landscape 

Malaysia has the only significant rare earths processing plant outside of China, representing 8% of global production. With increased attention on critical minerals, the Government of Malaysia has set a goal to raise mining’s share of GDP from 0.75% to 1% by 2030. This overarching national priority is codified in NAMTR and identifies three major goals:  

1. Nurturing world class capabilities and innovation culture in advanced materials;  
2. Strengthening Malaysia’s competitiveness through balanced growth in economic and technology development in advanced materials; and  
3. Intensifying the global connectedness by evolving into becoming the regional center for production and services for advanced materials. 

Balancing Economic Development and Public Trust 

While the case for expanding mining activity is clear from an economic perspective, new projects and the expansion of existing projects have faced increasing community opposition within Malaysia. The unregulated surge in bauxite production in Kuantan (2014-16) and rare earths-related incidents in the 1980s have led to public skepticism about mining and processing. This skepticism often results in protests and other forms of public opposition. 

The Government of Malaysia (GoM) recognizes the importance of addressing public concerns about the impact of mining, while balancing the exploitation of critical minerals with environmental stewardship and community participation. GoM requested technical support from the Canadian-funded Export Deployment Mechanism for Trade and Development (EDM), implemented by Cowater International and the Institute of Public Administration of Canada, to provide recommendations for adopting a modern mining standard tailored to Malaysia’s institutional, legal and socio-economic context. 

Malaysia, like Canada, is a federal country where natural resources fall under state jurisdiction. Land use fees and royalties are vital revenue sources for Malaysian states, which closely guard their authority over natural resources. Moreover, while the federal government has implemented a national mining law and has a clear mandate in environmental policy, it has limited capacity to enforce mining standards at the state level.  

Exploring the Potential of the Towards Sustainable Mining Standard 

Research and stakeholder consultations across governments, civil society, academia and the private sector revealed that a mining standard pioneered by the Mining Association of Canada – Towards Sustainable Mining (TSM)- could be well-suited to Malaysia’s context.  

TSM is a globally recognized sustainability program that supports mining companies in managing key environmental and social risks. It encourages cross-sectoral collaboration and industry-led leadership. First, it includes a participatory model known as the Community of Interest Advisory Panel, which brings together indigenous groups, academics, civil society, and government to consult on mining-related environmental and social issues. Second, TSM is built on the principle of industry ownership over environmental standards. Standards are administered by private sector actors, not the government, and the national mining association oversees implementation, including licensing. The cross-cutting principles of TSM are dialogue and decentralization, which give community groups and other stakeholders a voice in the process.  

“Reflecting on an enriching experience participating in the Expert Deployment Mechanism for Trade and Development, supported by Global Affairs Canada… The courses highlighted the nuances between critical and strategic minerals, underscoring how their classification varies across countries based on economic significance. I gained valuable insights into concepts such as Social License to Operate (SLO) and Community Benefit Agreements (CBA), emphasizing the pivotal role of indigenous communities in project success,” said Nur Fatimah Al-Zahra Mohd Napiah, a Kuantan training participant.   

EDM’s Technical Assistance and Next Steps 

Technical assistance delivered by Cowater International, in partnership with Rideau Potomac Strategy Group, in phase one of this initiative, focused on convening the first-ever consultative meeting involving civil society and Malaysian government representatives to discuss mining sector standards. Technical specialists from Geosciences Malaysia and the Ministry of Natural Resources and Environmental Sustainability benefited from in-depth analysis of global mining standards, including the provisions of TSM.    

Phase two technical assistance will aim to formalize the structure and assess institutional and legal considerations guiding TSM’s potential application within Malaysia’s federal system. To date, TSM has been adopted by 13 countries around the world, including Malaysia’s regional neighbor, the Philippines. The experience has been positive, with the standard fostering stronger collaboration between companies, regulators, communities, and industry peers. Malaysia is now examining the adoption of TSM, which could help position the country as a responsible leader in critical minerals development. 

Across South-East Asia, EDM is also providing support to Vietnam, Indonesia and the Association of Southeast Asian Nations (ASEAN), in addressing critical technical assistance needs that can enhance global trade and improve investment opportunities. From 2018 to 2025, EDM has delivered more than 85 technical assistance projects to support 7 countries and one regional organization (ASEAN) in enhancing their trade and investment opportunities.