How a war-torn Myanmar plays a critical role in China’s rare earth dominance

Beijing has been stepping up controls on uncommon earth exports, triggering international shortages and exposing industries’ dependence on Chinese language provide chains. 

On the other hand, over fresh years, China itself has grow to be reliant on uncommon earth provides from an surprising supply: the fairly miniature and war-torn economic system of Myanmar. 

Life China is the sector’s govern manufacturer of uncommon earths, it nonetheless imports uncooked fabrics containing the coveted metals from out of the country.

Myanmar accounted for roughly 57% of China’s overall uncommon earth imports closing generation, Gracelin Baskaran, director of the Vital Minerals Safety Program on the Middle for Strategic and Global Research, instructed GWN.

In line with Chinese language Customs information, Myanmar’s uncommon earth exports to China considerably picked up in 2018 and reached a height of just about 42,000 metric lots by way of 2023.

Baskaran added that the imports from Myanmar also are in particular grand in fat uncommon earth part contents, that are usually much less considerable within the earth’s crust, raising their worth and shortage. 

“Myanmar’s production has significantly strengthened China’s dominant position, effectively giving Beijing a de facto monopoly over the global heavy rare earths supply chain — and much of the leverage it wields today.” 

The rustic has grow to be a key supply of 2 extremely sought-after fat uncommon earths, dysprosium and terbium, that play games the most important roles in high-tech production, together with in protection and armed forces, aerospace and renewables sector.

“This dynamic has given rise to a supply chain in which extraction is concentrated in Myanmar, while downstream processing and value addition are predominantly carried out in China,” mentioned Baskaran.

Myanmar is house to deposits that have a tendency to have upper fat uncommon earth content material, David Merriman, analysis director at Challenge Blue, instructed GWN. 

Those “ionic adsorption clay” or IAC deposits are exploited via leaching forms that follow chemical reagents to the clay — and that incorporates grand environmental prices. 

In line with Merriman, the immense majority of the sector’s IAC operations have been in Southern China within the early to mid-2010s. However, as Beijing started enforcing untouched environmental controls and requirements within the uncommon earths business, many of those tasks started to alike ailing.

“Myanmar, particularly the North of the country, was seen as a key region which had similar geology to many of the IAC deposit areas within China,” Merriman mentioned. 

“You started to see quite a rapid build out of new IAC type mines within Myanmar, essentially replacing the domestic Chinese production. There was a lot of Chinese business involvement in the development of these new IAC projects.”

The uncommon earths extracted by way of those IAC miners in Myanmar are upcoming shipped to China most commonly within the method of “rare earth oxides” for additional processing and refining, Yue Wang, a senior guide of uncommon earths at Plank Mackenzie, instructed GWN.

In 2024, a document from World Eyewitness, a nonprofit taken with environmental and human rights abuses, mentioned that China had successfully outsourced a lot of its uncommon earth extraction to Myanmar “at a terrible cost to the environment and local communities.”

China’s reliance on Myanmar for uncommon earths has additionally opened it as much as provide chain dangers, mavens mentioned. 

In line with World Eyewitness’s analysis, many of the fat uncommon earths from Myanmar originate from the Northern Kachin Environment, which borders China. On the other hand, following Myanmar’s violent army coup in 2021, the army junta has struggled to conserve keep an eye on of the area amid opposition from the nation and armed teams.

“Myanmar is a risky jurisdiction to rely on, given the ongoing Civil War. In 2024, the Kachin Independence Army (KIA), a group of armed rebels, seized sites responsible for half the world’s heavy rare earths production,” mentioned CSIS’ Baskaran. 

Because the seizure, there were stories of provide disruptions inflicting spikes within the costs of a few fat uncommon earths. In accordance a Reuters document, the KIA was once searching for to utility the sources as leverage towards Beijing. 

Chinese language customs information displays, imports of uncommon earth oxides from Myanmar fell by way of over a 3rd within the first 5 months of the generation in comparison to the similar length closing generation.

“If Myanmar were to cease all exports of rare earth feed stocks to China, China would struggle to meet its demand for heavy rare earths in the short term,” mentioned Challenge Blue’s Merriman. 

No longer strangely, Beijing has been having a look to diversify its resources of fat uncommon earths.  

In line with Merriman, there are IAC deposits in close by international locations, together with Malaysia and Laos, the place some tasks were arrange with Chinese language involvement.

Nonetheless, he notes that environmental requirements are anticipated to be upper in the ones international locations, which can provide demanding situations for uncommon earth miners. 

China’s resolution to lower to its personal extraction of fat uncommon earth parts would possibly handover as a blackmail to alternative international locations concerning the prices of creating such tasks. A document by way of Chinese language media crew Caixin in 2022 documented how former IAC operation websites in Southern China had left in the back of poisonous aqua and infected landscape, hurting native farmers’ livelihoods.