Malaysia is scrutinizing Lynas Rare Earths’ (ASX: LYC) $96-million supply agreement with the U.S. Department of Defense after a parliamentary committee reviewed whether the deal could affect the country’s support for the Palestinian cause and future rare earths policy.
The parliamentary special select committee on international relations and international trade, chaired by MP Wong Chen, met on July 16 to examine the Australian company’s role in the U.S. defence supply chain, according to a statement released Friday.
The committee heard from government officials, non-governmental organizations and Lynas executives. It recommended the government develop a clearer foreign investment policy to protect Malaysia’s national interests and sovereignty and issue an official position on the matter within two weeks.
“The committee convened this proceeding to examine and assess the impact of the supply agreement, which is viewed as potentially affecting Malaysia’s reputation as a steadfast supporter of Palestine,” the committee said.
Domestic pressure
The review follows growing domestic pressure over Lynas’ four-year Pentagon agreement. More than 20 Malaysian civil society organizations, including Greenpeace Malaysia, urged greater oversight of the country’s rare earths supply chain, arguing the agreement supports the U.S. military, which backs Israel in its war against Hamas in Gaza.
Muslim-majority Malaysia has long supported the Palestinian cause and has no diplomatic ties with Israel.
The committee said its findings will help shape Malaysia’s rare earths policy as the country seeks investment to expand its domestic industry.
Lynas, the world’s largest rare earths producer outside China and operator of the world’s largest rare earths processing facilities in Malaysia, did not immediately respond to requests for comment.
Shares in Lynas Rare Earths fell 2.2% on Friday in Sydney to close at A$15.89 apiece, valuing the company at A$16 billion (US$11.2 billion).