Study Identifies Myanmar as the Hidden Bottleneck Behind China's Rare Earth Power

Highlights

• Myanmar supplied 66.8% of China's analyzed rare earth compound imports in 2023, up from under 5% in 2016, creating a hidden feedstock dependency for global supply chains.
• A complete Myanmar supply disruption could propagate through China's processing hub to 40 importing economies, with U.S. indirect Myanmar exposure estimated at 45.4%.
• Kachin Independence Army forces control key northern Myanmar mining districts, making armed rebel groups de facto gatekeepers of the world's most critical heavy rare earth deposits.
• Joining the Minerals Security Partnership showed no statistically significant reduction in China dependence—only physical supplier diversification, with each new MSP-aligned supplier cutting dependence by 5.6 percentage points.
• Western diversification strategies that count mines while ignoring midstream processors and their upstream suppliers risk preparing for the wrong crisis entirely.

A new study (opens in a new tab) by Sana Younas, a PhD candidate researcher at the University of Portsmouth (opens in a new tab), puts numbers behind a supply-chain danger Rare Earth Exchanges® has tracked since our launch in early 2025: the world's rare earth vulnerability does not begin and end in China. Using global trade data from 2012–2024, Younas finds that midstream processing—not simply mine production—is the strongest source of structural leverage, while conflict-torn Myanmar functions as a hidden feedstock artery into China's processing machine. Myanmar supplied 66.8% of China's analyzed rare earth compound imports in 2023; the model estimates that a complete Myanmar disruption could propagate through China to 40 importing economies.

REEx Insight | The World's HREE Chokepoint Sits Inside a Civil War

This is where statistics collide with geopolitics. REEx ranks Myanmar's rebel-held ionic-clay deposits as the world's #1 heavy rare earth asset, principally because of their strategic Dy/Tb importance—not because Myanmar possesses China's downstream industrial capabilities. See REEx: World's Most Important HREE Battlefield

The key northern mining districts around Chipwi and Pangwa fell under the control of the Kachin Independence Army (KIA) during its 2024 offensive. REEx: Myanmar's Rare Earth Power Shift The KIA subsequently became a de facto gatekeeper for material moving toward China.

Meanwhile, Myanmar's military has fought to regain strategic territory and border routes. REEx reported in May that military offensives were targeting the Kachin rare earth region; the junta has benefited more broadly from outside support, particularly from China and Russia, although Beijing also maintains relationships and leverage across Myanmar's fragmented political landscape. This is not a conventional mine-to-market chain. Armed groups control extraction territory; Chinese commercial networks connect it to processing; China converts the material into higher-value products; the world buys downstream output.

Study Methods | Following the Supply Chain Behind the Supplier

Younas analyzed 184,555 country-pair-year observations using CEPII BACI trade data, constructing three interconnected layers: ores, rare earth compounds, and permanent magnets. She then used network analysis, fixed-effects regressions, and simulated supply shocks to expose what conventional bilateral trade statistics miss.

Her central concept is brilliantly simple: your supplier has a supplier.

A U.S. manufacturer may appear dependent on China. But if China's feedstock originates in Myanmar, America carries an indirect Myanmar exposure without importing a kilogram directly from Myanmar.

The Numbers Are Uncomfortable

Myanmar's share of China's analyzed compound feedstock rose from below 5% in 2016 to 72.4% in 2020, rebounded to 66.8% in 2023, and remained at 60% in 2024. The model calculates U.S. direct dependence on China at 68% and resulting indirect Myanmar exposure at 45.4% for this particular trade layer in 2023. South Korea reaches 47.1%; Japan 33.4%.

REEx has independently been mapping this vulnerability from multiple angles: the rise of armed groups as mineral gatekeepers, the emergence of “conflict magnets,” and the environmental and geopolitical consequences of China's dependence on northern Myanmar. See REEx: Hidden Heavy Rare Earth War

The MSP Finding May Be the Most Important

Younas also finds that simply joining the Minerals Security Partnership showed no statistically significant reduction in China dependence. Physical supply relationships did. Each additional MSP-aligned supplier providing a meaningful share was associated with a 5.6-percentage-point reduction in China import dependence.

That is an extraordinary policy lesson for Washington: alliances don't move atoms. Mines, separation plants, contracts, and logistics do.

Limitations | Powerful Model, Not a Crystal Ball

The simulation deliberately assumes no Chinese inventories or immediate substitution following a Myanmar cutoff, making the disruption scenario an upper-bound stress test. HS codes also aggregate chemically different products, and the attempted causal analysis around Myanmar's 2021 coup failed the required parallel-trends test.

The paper also transparently discloses use of Anthropic's Claude for literature work, coding, visualization, and drafting assistance; Younas states she independently verified the empirical results and assumes responsibility for the manuscript.

Conclusion

The study changes the map. China may control the processing hub, but part of the feedstock beneath that power runs through mountains controlled by armed organizations fighting one of the world's most complicated civil wars. Western diversification strategies that count mines while ignoring processors—and processors' suppliers—risk preparing for the wrong crisis.

Citation: Younas, S. Hidden Bottlenecks in the Rare Earth Supply Chain: Myanmar, China’s Processing Hub, and Multilayer Network Vulnerability. University of Portsmouth, 2026.