China and Malaysia said to be in talks on rare earths refinery project

China and Malaysia are in early talks on a project to process rare earths, with sovereign wealth fund Khazanah Nasional likely to partner with a Chinese state-owned firm to build a refinery in the Southeast Asian nation, people familiar with the matter said.

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If the joint venture takes shape, it would represent a significant policy departure for China, the world's top supplier and refiner of rare earths, which has banned export of its processing technology to protect its dominance of the industry.

Beijing is ready to swop its technology for access to Malaysia's untapped rare earths reserves, seeking to limit competition from Australian rival Lynas Rare Earths, which has a processing plant in the central state of Pahang, said two sources in Malaysia with knowledge of the talks.

Khazanah's chief investment officer Hisham Hamdan declined to confirm the talks or plans for the proposed refinery, saying it was "way too early", but acknowledged that rare earths were among the industries being explored.

"We do many studies on industries... It's something we're happy to explore and help the government, but it's at government level, right? So I think that's as much as we can say," he told Reuters in an interview in Singapore on Oct 2.