Kelantan Deputy Menteri Besar Mohamed Fadzli Hassan has questioned how a multi-billion ringgit agreement with the United States involving the state’s rare earth elements (REE/NREE) was concluded without consulting the state government.
He said the situation departs from the spirit of federalism and denies rights guaranteed to states under the Constitution.
He noted that Kelantan holds Malaysia’s second-largest non-radioactive rare earth (NREE) deposits after Terengganu, valued in the hundreds of billions of ringgit. Unlike offshore petroleum, NREE is on land and “fully under state jurisdiction”.
Fadzli said many foreign investors have sought to mine and buy NREE for processing abroad, but the state has rejected such an approach. “Our policy is clear: REE must be processed—if not fully, then to the maximum extent—in Kelantan, not exported as raw material. Local processing multiplies value, grows upstream and downstream industries, and opens high-skill jobs for youth.”
He said the Malaysia–US agreement reportedly sets “no restrictions or quotas” on REE exports to the US, raising key questions. What if Kelantan screens investors or limits raw exports to secure local value-addition—would this be deemed a breach of international commitments made by the federation?
“Do states still have policy autonomy, or are we bound by the federal government’s promises to the US? This is not about politics; it is about the state’s economic sovereignty,” he said.
Fadzli stressed that Kelantan does not reject foreign investment, but it must come with respect for state sovereignty—“not surrendering rights in the name of diplomacy”. While treaty-making is federal, he said, the resource and subject matter belong to the state. “Producing states have the right to know and to be heard.”
