KUALA LUMPUR, Aug. 18 -- Malaysia is banning exports of unprocessed rare earths while at the same time attempting to court downstream investment to retain their value added at home, Investment, Trade and Industry Minister Datuk Seri Tengku Zafrul Aziz said.

Speaking in an interview with US-based CNBC's "Squawk Box Asia", Tengku Zafrul said Malaysia has discussed its rare-earth strategy with both Washington and Beijing during broader negotiations.

"Today, we engage both sides. And to be fair, both China and US have never said that you can't supply to the other, right? You can't not do business with the other," he said.

He also said that both countries have reminded Malaysia that it cannot have two different standards on rare earth expor...