K'tan vows not to allow loss of rare earth revenue

The Kelantan government expressed concerns over Malaysia’s latest trade deal with the US, fearing the state’s rare earth elements (REE) being mined without fair compensation, similar to the case of petroleum.

Kelantan Deputy Menteri Besar Fadzil Hassan reminded that the state had been denied oil royalties by the federal government, which has been a long-standing issue between both parties.

“We are still scarred by the loss of revenue from petroleum royalties. It is one of the greatest injustices committed against the people and the government of Kelantan. So, will this painful history be repeated?

“We will not allow REE to become the 'second petroleum'. This state cannot once again be a mere spectator to its own wealth taken away by others.

“This natural resource must remain for the people of Kelantan,” Fadzil said in a statement today.

On Oct 26, Prime Minister Anwar Ibrahim and US President Donald Trump signed an agreement on reciprocal trade.

Among others, it also outlined that Malaysia would not impose any quotas on the export of critical minerals and rare earth to the US.

Article 6.2 of the agreement also highlights that Malaysia would commit to collaborating with US companies in critical mineral extraction, and encourage the supply of REE to the US.

Purely under state powers

On that note, Fadzil noted how Kelantan possesses Malaysia’s second-largest deposit of non-radioactive rare earth elements (NREE) after Terengganu, with an estimated value of more than hundreds of billions of ringgit.

Having said that, he reminded Putrajaya that the resources are located on Kelantan soil, meaning it falls under state powers entirely.

“Unlike offshore petroleum, the ‘three-nautical-mile rule’ cannot be used as an excuse to deny Kelantan’s rights.

“In the case of petroleum, this rule was used to deny the Kelantan state government of its royalty rights, despite the entitlement being clearly stated in our initial agreements,” he added.

The three nautical mile rule refers to the Territorial Seas Act 2012, which states that a state’s sea territorial jurisdiction is only up to three nautical miles from the low tide line, with the rest falling under federal purview.

With the law, Putrajaya can extract natural resources beyond the distance mentioned without having to pay royalty to the state.

Stressing Kelantan is not against foreign investments, he questioned why the agreement was signed without consulting the states, calling it “a deviation from the spirit of federalism”.

“We welcome technology, expertise, and cooperation. But state resources cannot be used as a political bargaining chip or as diplomatic collateral.

“We are not looking for those who merely want to extract our resources and leave behind nothing but the crust and waste,” Fadzil added.

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