Highlights
- Advanced U.S. weapons rely heavily on rare earth elements sourced almost exclusively from Myanmar and processed in China, creating a strategic vulnerability.
- The current supply chain is environmentally destructive and geopolitically unstable, with nearly 50% of heavy rare earths originating from Myanmar’s conflict-prone Kachin State.
- U.S. Department of Defense is investing hundreds of millions to develop domestic rare earth production, but a secure supply chain remains years away from realization.
In a nutshell: Advanced U.S. weapons from F-35 jets to precision-guided missiles rely on heavy rare earth elements (HREEs) to function under extreme conditions. Yet nearly all of these strategic minerals are sourced and refined abroad – with roughly half, or more, originating in conflict-torn Myanmar and almost 100% processed in China. This investigative report breaks down why heavy rare earths are so critical, how China and Myanmar built a near-monopoly, and what is (and isn’t) being done to diversify this supply chain.
Why Heavy Rare Earths Matter in Defense
Heavy rare earth elements – generally the latter part of the lanthanide series plus yttrium – possess unique magnetic, optical, and nuclear properties vital to modern military technology (opens in a new tab). They enable weapons and systems to be lighter, more heat-resistant, and more powerful. The table below provides a snapshot of key HREEs and examples of their defense applications:
| Heavy Rare Earth | Defense Applications |
| Dysprosium (Dy) | Added to neodymium-iron-boron magnets for missiles, fighter jet engines, and drones – improving high-temperature performance (opens in a new tab). Also used in nuclear reactor control rods (opens in a new tab) (absorbs neutrons in naval reactors). |
| Terbium (Tb) | Critical in magnet alloys (with Dy) to maintain strength at high heat, e.g. in guided munitions and aircraft actuators. Terbium is also used in Terfenol-D (Tb-Dy-Fe alloy) for high-power sonar transducers on submarines (opens in a new tab). |
| Yttrium (Y) | Yttrium is used in defense applications for producing phosphors in radar systems and night-vision goggles. It is also used in laser targeting and weapons in combat vehicles. Yttrium-based lasers are used commercially in various applications, including defense system. |
| Erbium (Er) & Ytterbium (Yb) | Erbium (Er) and Ytterbium (Yb) are used in several defense applications, primarily in laser systems for ranging, targeting, and countermeasures. They are also used in satellite communications and space-based applications. |
| Gadolinium (Gd) | Used in specialized alloys and sensors; Gd’s high neutron-absorption makes it useful in reactor shielding and control systems. Also employed in magnetostrictive alloys and possibly future radar/sonar components. (Often obtained as byproduct of heavy REE extraction.). |
As shown, HREEs go beyond just magnets. They permeate guidance systems, electric motors, stealth coatings, lasers, and even nuclear subs. In fact, the U.S. Department of Defense (DOD) notes it needs “nearly all” rare earths in some capacity for military platforms.
A single F-35 fighter, for example, contains around 920 pounds of REEs, including heavies like Dy and Tb in key components. Without these “spice of industry” elements, many defense technologies simply cannot be produced.
A Supply Chain Dominated by Myanmar and China
Despite their strategic importance, the U.S. has virtually no domestic supply of separated heavy rare earths. A NATO study bluntly noted that “none of [the heavy REEs] are produced in North America” and the U.S. must import 100% of them from China. China’s dominance is both direct and indirect: it mines about 70% of all rare earths and processes ~98% of the world’s medium and heavy REEs. Crucially, a large share of the raw heavy rare earth feedstock comes from Myanmar’s remote Kachin State, just over the Chinese border.
REEx notes that, in fact, there are a series of pilots for heavies in North America, but none of them are prime time, and we are years away from any such moment.
As Rare Earth Exchanges (REEx) has reported in the heavy rare earth element rankings project/database, Myanmar Rebels secured the number one slot, at least for now. See the link. In recent years, Myanmar’s HREE mines (mainly ion-adsorption clay pits in Kachin) have exploded in scale to meet Chinese demand. By 2023, Chinese imports of heavy rare-earth oxides from Myanmar hit 41,700 tons, “more than double China’s own quota for domestic HREE mining,” according to Global Witness.
Analysts estimate nearly 50% or more of global heavy rare earth supply now originates from Myanmar, according to Rare Earth Exchanges’ research. These materials are trucked into China’s Yunnan province, processed in Chinese refineries, and then shipped worldwide as magnet alloys, oxides, components, assemblies, or magnets. In effect, Myanmar has become China’s “secret weapon” for heavies, providing the raw material that China itself is running short on.
This supply chain is perilously concentrated. Beijing controls almost all refining of heavies and has not hesitated to wield that power. “China…has a near-monopoly over processing of heavy rare earths,” Reuters (opens in a new tab) noted, and in mid-2025 Beijing even threatened to cut off HREE purchases from Myanmar amid the Kachin conflict. Fighting between Myanmar’s junta and the Kachin Independence Army has already disrupted mining, causing Chinese HREE imports from Myanmar to plunge ~50% in early 2025 per REEx. Prices of dysprosium and terbium spiked as a result. Representatives from the Kachin state joined the REEx Forum (opens in a new tab).
Western defense planners are alarmed that a local war in Myanmar – or a political move by China – could choke off the HREE spigot, crippling production of critical missiles, jets, and electronics. The U.S. Defense Department openly warns that continued reliance on foreign (read: Chinese) sources for rare earth products “poses a risk to national security,” as cited (opens in a new tab) by the U.S. DoD. Environmental and human costs underscore this brittle monopoly. The heavy rare earths from Myanmar are extracted via in-situ leaching: miners inject ammonium sulfate or acid into hillsides to wash out REEs, as pointed out by the global German news agency DW (opens in a new tab).
This crude technique has devastated Kachin’s ecosystems, turning rivers rust-red with pollution, poisoning farmland, and causing illness among villagers and mine workers, as cited in DW and other sources. As cited in the DW report aforementioned, “The mountains used to be green…now those mountains are very ugly, the river turned red,” reports one researcher in the area. Yet the mining frenzy continues under weak or nonexistent regulation, often controlled by militias that can be mafia-like. Again, the Global Witness account points out it’s a “poisoning the present” to “fuel the future” of global clean energy and defense tech, as one Global Witness investigation put it. These “dirty secrets” cast a shadow over the heavy rare earths powering U.S. weapons, nearly all of which trace back to Chinese refineries fed by Myanmar’s troubled mines.
Geology is Destiny: Why China and Myanmar Dominate HREEs
How did we end up in a situation where Myanmar – a country that wasn’t even on the rare earth map a decade ago – now supplies half the world’s heavies, and China does virtually all the processing? The answer lies in a mix of geology and policy.
Heavy rare earths tend to occur in different ore deposits than light rare earths. The heavies (Dy, Tb, etc.) are often enriched in what are called ion-adsorption clay deposits – a specialty of southern China’s geology. Decades ago, Chinese prospectors discovered weathered clay ores in Jiangxi, Guangdong, and other southern provinces that held rare earth elements loosely bound to clay particles. These clays are “especially rich in heavy rare earths, such as dysprosium and terbium,” and crucially, they are easy to mine, as cited in Raw Materials.net (opens in a new tab). In addition to China, Myanmar and Laos are key locations.
Rather than blasting rock, producers can use simple leaching techniques (pouring ammonium solutions through the clay) to extract REEs. By the 1980s–90s, China had scaled up production from these ionic clays, flooding the world market with inexpensive heavy rare earth oxides.
Myanmar happens to have similar geology across the border. Kachin State’s rare earth boom is essentially an extension of the South China Clay Belt. When China began curbing some domestic rare earth mining due to environmental concerns and resource depletion, Chinese firms turned to Myanmar’s clays as an alternate source. The deposits were plentiful, the local oversight minimal, and Myanmar’s military junta (and rebel groups) were eager for revenue. By outsourcing extraction to Myanmar, “China…in effect outsourced much of its [heavy REE] extraction to Myanmar, at terrible cost to the environment and local communities,” notes Global Witness. This geological luck–ionic clay richness – and China’s willingness to exploit it gave them a stranglehold on heavy REEs.
Meanwhile, other types of deposits elsewhere contain heavy REEs but are tougher to develop. For example, monazite – a mineral found in Australia, India, Brazil, and elsewhere as a byproduct of heavy mineral sands – contains a mix of rare earths, including some heavies. However, monazite is rich in thorium, a radioactive element, making its processing both hazardous and expensive (as seen in Malaysia, where processing monazite-rich ore led to radioactive waste controversies) cites Thomasnet.com (opens in a new tab).
Extracting a small percentage of Dy/Tb from monazite also isn’t economically enticing when Chinese/Myanmar clays offer a cheaper source. Xenotime, (opens in a new tab) another heavy-rich mineral, is found in some hard-rock deposits (like Northern Australia’s Browns Range). But these require significant mining and refining effort for relatively modest output – barely a blip compared to the tens of thousands of tons coming out of Asia.
In short, China and Myanmar’s monopoly exists because they have the right resources and have borne the environmental costs to exploit them cheaply. An Australian rare earth executive summed it up via Proactive (opens in a new tab): “More than 95% of the world’s supply of heavy REOs is from declining [ionic clay] reserves in southern China and Myanmar”.
The “declining” part is key – those clay reserves won’t last forever at the current rate. China’s own heavy REE clay mines are depleting, which is why it leaned so heavily on Myanmar (even 98% of medium and heavy REEs now come from Chinese or Myanmar sources). Other potential sources are emerging but face long timelines and questions of viability.
Let’s survey a few notable non-Chinese/Myanmar sources of heavy rare earths:
| Country | Deposit Type & Composition | Current Production | Key Projects & Companies | Foreign Involvement | Challenges Notes |
| Laos | Ionic clays, rich in heavy REEs (HREEs) | Dormant until recently; small scale | Canadian company refinery (~3,000 t/yr LREE + HREE); Xiamen Tungsten JV | Heavy Chinese involvement (mining & refining) | Likely to feed Chinese supply chain; geopolitically aligned with China |
| Vietnam | Significant reserves, mostly light REEs (LREEs) from bastnaesite; some HREEs in coastal sands | Minimal—hundreds of tons/year | Dong Pao mine; new foreign partnerships (U.S., Japan, Australia, Korea) | Aggressively courting foreign investment | Goal: 60,000 t/yr REO by 2030; infrastructure and processing still underdeveloped |
| Australia | LREE-dominant (Mount Weld); some HREEs (xenotime, monazite) | Browns Range (pilot-scale HREE); Lynas mostly LREE | Lynas (Mount Weld, Texas separation plant); Northern Minerals (Browns Range); Iluka (Eneabba) | U.S. DoD support for HREE processing (Lynas Texas) | HREE production remains small; processing ramping up; Eneabba project still maturing |
| Brazil | Ionic clays and mineral sands; large reserves incl. HREEs | Just launched Serra Verde (~5,000 t/yr planned); ~80 tons REO in 2022 | Serra Verde (Goiás state); various undeveloped deposits. Mineas Gerais complex; BRE on northeast coast—need to develop | Some exports go to Asia for processing | Nascent industry; lacks domestic separation/refining; thorium, financing, and complexity hurdles remain. But some movement. |
Elsewhere, promising heavy rare earth projects are in development – for instance, Makuutu in Uganda (ionic clay, being advanced by Ionic Rare Earths Ltd (opens in a new tab).) boasts one of the highest heavy REE concentrations outside China.
The U.S. itself has a heavy-rich deposit in Texas (Round Top) under study. But for now, none of these are producing significant quantities. As Benchmark Mineral (opens in a new tab) Intelligence warned, there are “limited alternative sources” of heavies coming online soon, so the world’s dependence on that “remote corner of Myanmar” has only deepened.
Breaking China’s Grip: Slow Progress and New Initiatives
Facing this strategic chokehold, the U.S. and allies are scrambling to rebuild a secure supply chain for heavy rare earths – essentially trying to replicate, in a cleaner way, what China did over decades. Progress has been halting but not without wins.
The U.S.Department of Defense has taken an unusually hands-on role, directly investing in companies to jumpstart domestic capabilities. Since 2020, the DOD has pumped over $430 million into rare earth supply chain projects, from mining to magnet manufacturing. A major focus is “mine-to-magnet” integration by 2027, ensuring every step (extraction, separation of both light and heavy REEs, metal alloying, and magnet fabrication) can be done domestically.
And of course, there was the just recently announced bombshell MP Materials dela with the DOD.
MP Materials surged nearly 50% after announcing a landmark $400 million investment from the U.S. Department of Defense, giving the Pentagona 15% ownership stake and long-term strategic partnership. The deal cements MP as the cornerstone of America’s domestic rare earth strategy, with vertically integrated operations at its Mountain Pass mine and a second U.S. magnet plant backed by $1 billion in private capital (Goldman Sachs and JP Morgan). This marks a major escalation in Washington’s industrial policy, aimed at countering China’s dominance in rare earth supply chains.
This deal, under the Defense Production Act, effectively subsidizes U.S. production of NdPr magnets and heavy REE products by ensuring a floor price of $110/kg, roughly double the current Chinese market price for NdPr. The infusion will fund MP’s expansion into magnet manufacturing (with a new 10,000-ton/yr magnet factory planned by 2028) and scale up heavy REE separation when feasible. In fact, MP announced it will add additional heavy separation capacity at Mountain Pass with a $150 million DOD loan. The CEO of Adamas Intelligence called it via Reuters (opens in a new tab) “a game changer for the ex-China industry and a much-needed surge in magnet production capacity.”
But the reality is that the supply of heavies is not sufficient to scale, and the DOD can take an active role in the partnership, helping to source deals elsewhere.
This supply chain is perilously concentrated. Beijing controls almost all refining of heavies and has not hesitated to wield that power. “China…has a near-monopoly over processing of heavy rare earths,” Reuters (opens in a new tab) noted, and in mid-2025, Beijing even threatened to cut off HREE purchases from Myanmar amid the Kachin conflict. Fighting between Myanmar’s junta and the Kachin Independence Army has already disrupted mining, causing Chinese HREE imports from Myanmar to plunge ~50% in early 2025 per REEx. Prices of dysprosium and terbium spiked as a result. Representatives from the Kachin state joined the REEx Forum (opens in a new tab).
There are also smaller initiatives: e.g., U.S.-based Energy Fuels is extracting mixed REEs (including some heavies) from monazite sand in Utah, and could supply feedstock to separation plants. The Pentagon has even funded R&D into unconventional sources like coal ash and phosphate byproducts for rare earth extraction, hinting at the urgency to find any viable heavy REE source outside China.
Despite these moves, the current reality remains unchanged: if a U.S. missile or jet is built today, the odds are 95% plus that its rare earth magnets or components came through China. The supply chain fix is racing the clock. U.S. officials acknowledge it will take years to fully establish domestic heavy REE production. As the 2015 GAO study warned, it could take 15 years to rebuild supply chains (opens in a new tab) and materials expertise after decades of offshoring. REEx has suggested that without an integrated, comprehensive industrial policy, the USA may never totally become resilient, not in the next two decades.
We are now a decade into that window. If Myanmar’s civil war or a geopolitical standoff cuts off supply tomorrow, the West would face a severe HREE shortage before alternate supply chains are ready.
Conclusion: A Critical Juncture
Heavy rare earth elements are a small-volume but indispensable ingredient in America’s defense arsenal – truly “small gears that power big machines.” The current monopoly by China (and its proxy Myanmar) has turned into a glaring strategic vulnerability. In an era of great-power competition, it’s not a comfortable position to rely on your rival for the “secret sauce” of your advanced weapons. Beijing has already shown it is willing to weaponize rare earth exports for leverage, as we have reported via REEx.
And Myanmar’s instability adds another layer of risk outside anyone’s control.
The good news is that this vulnerability is now widely recognized, and efforts are underway to address it. The bad news: there’s no quick fix. And Washington DC with its ongoing penchant for marketing, likes quick wins, in time for midterm elections.
Opening new mines, building separation plants, and scaling production to meaningful levels is a slow, capital-intensive process – “time-consuming, expensive, and geographically limited,” as one analysis noted in a Canadian defense report (opens in a new tab). The U.S. Department of Defense’s heavy investments in MP Materials and others show a welcome sense of urgency and willingness to break the economic paradigm that favored cheaper Chinese material. These moves, alongside allied projects in Australia, Europe, and elsewhere, aim to foster a more diversified, resilient supply of heavy rare earths in the coming years.
For now, however, the supply lines still run through Myanmar’s jungles and China’s refineries and factories. Each Terbium-infused magnet and Dysprosium alloy in an American fighter jet links back to a muddy leach pond in Kachin or a refinery in Jiangxi. It’s a dependency fraught with environmental, ethical, and strategic perils. Bridging that gap – from the current state to a secure supply – is imperative. The U.S. defense-industrial base is moving from awareness to action, but the clock is ticking. In the interim, a single diplomatic crisis or a rebel offensive in Myanmar could bring this issue from quietly urgent to painfully acute. Regrettably, China continues to wield significant leverage given the current state of global supply chains. Note the result of years of neglect on behalf of political and corporate elites in the West.
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