Beyond the Mining Licence: Navigating Land, Operational and Environmental Approvals in Peninsular
For an investor considering a mining project in Peninsular Malaysia, obtaining the relevant mineral right may appear to be the main regulatory hurdle. In practice, however, that right is only one part of the legal framework. A mining project may simultaneously engage State mineral law, Federal operational requirements, land regulation and environmental controls.
This layered approach is especially relevant as Malaysia continues to develop its mineral industry under Dasar Mineral Negara 3 (“DMN3”). The DMN3 framework was agreed by the Cabinet on 17 January 2024 and is intended to guide the strategic, responsible and sustainable development of Malaysia’s mineral industry across the value chain.1
For investors, the practical question is therefore not simply whether a mineral right can be obtained, but what must happen after that right has been secured.
Why the State Matters First
The starting point is the division of responsibility between the Federal and State Governments.
Under Malaysia’s constitutional framework, mineral tenements such as prospecting licences and mining leases are principally matters for the States, while the Federal Government regulates aspects of mineral development and mining operations.2 This means that there is no single nationwide approval which, by itself, authorises the whole lifecycle of a mining project.
The relevant State law must first be considered to determine the type of mineral right required and the conditions attached to it. For example, mineral tenements in Perak are governed by the Mineral (Perak) Enactment 2003,3 as amended, while other States operate under their respective mineral enactments and subsidiary regulations. At the same time, the operator must also consider the Federal requirements governing how exploration or mining will actually be carried out.
Once the appropriate State right has been identified, the next question is therefore whether that right is enough, on its own, to allow operations to begin.
Why the Licence Alone Is Not Enough
In most cases, it is not.
The Mineral Development Act 1994 (“MDA”) regulates the exploration, mining and processing of minerals and mineral ores at the Federal level.4 Importantly, section 10 (1) of the MDA requires the holder of a proprietary mining licence or mining lease to submit an operational mining scheme for approval before commencing development work or mining within the mineral tenement area.5
The scheme must address matters including the expected commencement of production, estimated annual raw ore production and plans of the mine workings.6 The distinction is commercially significant: obtaining the mineral right does not give the holder an unrestricted ability to determine how the mineral deposit will be developed.
The regulatory obligation also continues after approval. Development and mining must be carried out in accordance with the approved operational mining scheme, while exploration, mining and mineral processing must comply with good and safe practices and applicable environmental standards.7
Even after those operational requirements have been addressed, however, another important issue remains: the land on which the mineral is located.
The Land Beneath the Mineral Still Matters
Mineral rights and land rights should not be treated as interchangeable.
Land administration in Peninsular Malaysia is governed principally by the National Land Code, within a framework in which land remains primarily a State matter.8 A mineral tenement should not therefore be assumed to confer unrestricted surface access or to displace existing land conditions, restrictions or third-party interests. An operator should accordingly examine the status and ownership of the relevant land, existing conditions and restrictions, access arrangements and whether any further State approvals may be required.
The nature of the material being extracted is also important. The MDA excludes “rock material” from its definition of “mineral”,9 while the National Land Code defines rock material to include substances such as rock, stone, gravel, common sand, earth and clay.10
As a result, an extraction project involving rock material may fall within a different regulatory regime from conventional mineral mining. Correctly identifying what is being extracted is therefore not merely a technical exercise; it can determine which legal framework applies.
Securing the necessary mineral and land rights, however, still does not answer whether the project can proceed from an environmental perspective.
Environmental Approval: A Separate Hurdle
Environmental approval forms another independent layer of the regulatory process. Section 34A of the Environmental Quality Act 1974, together with the Environmental Quality (Prescribed Activities) (Environmental Impact Assessment) Order 2015, requires an environmental impact assessment (“EIA”) where a proposed mining project falls within one of the prescribed activities under the 2015 Order.11
In relation to mining, the Second Schedule includes, among others, mining of minerals in new areas involving large-scale operations and mining within, adjacent to or near an environmentally sensitive area.12
Crucially, approval of an EIA report is not the same as approval of the project itself. The Department of Environment expressly distinguishes EIA approval from project approval by the relevant approving authority.13
This is an important practical point. Environmental approval does not replace the need for a State mineral right, just as securing a mineral right does not remove the need to comply with environmental requirements.
Taken together, these overlapping requirements show why mining projects should not be viewed as a sequence of isolated approvals.
Looking Beyond the Licence
A mining project in Peninsular Malaysia is therefore better understood as a regulatory matrix, in which State mineral rights, Federal operational requirements, land considerations and environmental approvals may all affect the timing, design and commercial viability of the project. Navigating these different requirements at both Federal and State levels is therefore a central part of bringing a mining project from the licensing stage into lawful operation.
For investors and operators, early regulatory due diligence is critical. Identifying the applicable State regime, land constraints, operational requirements and environmental obligations before substantial capital is committed can help reveal approval risks and project-design issues at an early stage.
As Malaysia continues to develop its mineral industry under DMN3, the opportunity to expand the sector must be balanced against the need for regulatory compliance, environmental sustainability and responsible resource management. Securing the mineral right remains an important first step, but investors must also ensure that the requirements which follow are properly identified and addressed if a project is to proceed successfully.
1. Office of the Deputy Prime Minister, Kenyataan Media: Mesyuarat Majlis Mineral Negara Ke-3 (2 July 2024).
2. Federal Constitution, art 74 and Ninth Schedule, List I, item 8(j) and List II, item 2(c).
3. Mineral (Perak) Enactment 2003 (Perak No 7 of 2003).
4. Mineral Development Act 1994 (Act 525).
5. Mineral Development Act 1994 (Act 525), s 10(1).
6. Mineral Development Act 1994 (Act 525), s 10(2).
7. Mineral Development Act 1994 (Act 525), ss 12–13.
8. National Land Code (Act 828).
9. Mineral Development Act 1994 (Act 525), s 3, definition of ‘mineral’.
10. National Land Code (Act 828), s 5, definition of ‘rock material’.
11. Environmental Quality Act 1974 (Act 127), s 34A; Environmental Quality (Prescribed Activities) (Environmental Impact Assessment) Order 2015, PU(A) 195/2015.
12. Environmental Quality (Prescribed Activities) (Environmental Impact Assessment) Order 2015, Second Schedule, item 8.
13. Department of Environment Malaysia, ‘Frequently Asked Questions (EIA)’ https://www.doe.gov.my/en/frequently-asked-questions-eia/ accessed 21 September 2026.
Written by:
Dato’ Azmi Mohd Ali (Senior Partner) azmi@azmilaw.com
Muhammad Danial Azli (Associate) danial.azli@azmilaw.com
Sophia Mohammad Amin (Trainee Solicitor) sophia.amin@azmilaw.com
Corporate Communications, Azmi & Associates – 14 October 2026
