The Strait of Hormuz crisis has once again reminded the world that strategic dependence carries economic consequences.
While oil and gas dominate immediate headlines, geopolitical tensions are increasingly exposing vulnerabilities in another category of resources: industrial materials essential to food security, manufacturing, and electrification.
One of them is phosphate.
Traditionally associated with fertilisers, phosphate is becoming increasingly important in industries ranging from semiconductors and specialty chemicals to lithium iron phosphate (LFP) batteries used in electric vehicles.
As electrification accelerates alongside rising global food demand, phosphates are becoming increasingly tied to industrial supply chains, manufacturing resilience, and resource security.
Global phosphate supply is also highly concentrated. Like energy, semiconductors, and rare earths, phosphate is increasingly part of a wider conversation about strategic chokepoints and concentrated industrial dependencies. Morocco alone controls roughly 70 per cent of global phosphate rock reserves, alongside other major producers such as China and Russia.
Recent commentary from firms including StoneX and CRU Group has pointed to tightening supply conditions amid rising demand, export restrictions, and logistics disruptions linked to geopolitical tensions.
The tighter supply environment has also increased the sector’s commercial appeal, as higher phosphate and fertiliser prices in recent years boosted profitability across parts of the industry, particularly among producers with integrated mining and processing operations.
Against this backdrop of tightening supply and rising strategic interest, one Malaysian company pursuing domestic phosphate processing is Cahya Mata Sarawak Berhad (CMSB), a company historically viewed as one of Sarawak’s most politically connected conglomerates. Despite initial difficulties since its inception in 2013, the project has since gained momentum with testing and commissioning activities currently underway.
More broadly, projects of this nature often face delays, regulatory hurdles, and changing market conditions, particularly in capital-intensive industries tied to infrastructure and commodities.
For projects of this scale, scrutiny over funding requirements and financial resilience is also expected. Based on its latest publicly available filings, Cahya Mata posted revenue of RM1.11 billion and cash and bank balances of RM750.8 million. The Group remained profitable, posting a profit before tax of RM108.8 million, though this reflects a period in which the phosphate plant has yet to reach commercial production.
That could change if the facility achieves stable operations and production scales successfully.
Global demand for phosphate-derived products is projected to grow alongside rising food production requirements and the accelerating transition toward electrification. This reflects the unusual position phosphate occupies at the intersection of food security, industrial production, and the global energy transition.
Supply, however, remains geographically concentrated. Disruptions, whether logistical, political or environmental, have historically triggered sharp price movements and supply shortfalls across downstream industries.
For a domestic producer entering this environment, the commercial opportunity is real but not guaranteed. Downstream customers in sectors such as agriculture, chemicals, and battery manufacturing are increasingly seeking to diversify away from concentrated supply sources. A facility capable of delivering consistent and reliable output could benefit from structurally rising demand and relatively limited regional competition.
The challenge, however, is that such opportunities only materialise if operational stability can be sustained over time.
For Malaysia, the tightening phosphate market presents both strategic and commercial considerations. While the country is unlikely to rival major producers such as Morocco or China in scale, industrial policy discussions are increasingly shifting toward securing baseline domestic capability, supply resilience, and higher downstream value-added activities.
This matters because global supply chains are no longer governed purely by cost efficiency. They are increasingly shaped by geopolitics, export controls, logistics vulnerabilities and concentrated resource ownership. Countries that possess at least some domestic processing capability may find themselves better positioned in a world where strategic materials are becoming intertwined with industrial security. Malaysia’s broader industrial strategy may therefore need to look beyond traditional commodity exports and focus more seriously on critical industrial inputs tied to future manufacturing ecosystems.
This includes not only supply chain resilience, but also Asean positioning, downstream industrial development, and participation in emerging strategic sectors linked to electrification and advanced manufacturing. Ultimately, long-term industrial investments in critical resources are rarely straightforward. Delays, commercial disputes, and infrastructure bottlenecks are common realities in upstream processing industries globally.
Whether Malaysia can build a viable domestic phosphate industry will depend less on short-term setbacks and more on long-term execution, operational reliability, competitiveness, and policy continuity. In an era where strategic vulnerability increasingly carries economic costs, the real question for resource-dependent economies is not whether building domestic capability is difficult, but whether strategic dependence itself has become too risky to ignore.
(Samirul Ariff Othman is an analyst of global politics, business, and economics. He is an adjunct lecturer at Universiti Teknologi PETRONAS (UTP) and a senior consultant with Global Asia Consulting.)
