Highlights
- Nearly 50% of global heavy rare earth elements originate from Kachin state, Myanmar.
- Chinese control of refining faces potential disruption.
- KIA rebels have seized key mining areas and threaten to capture Bhamo, a critical logistics hub near the China-Myanmar border.
- China has warned KIA leaders of a potential export blockade.
- Global concerns are rising about rare earth supply security and geopolitical tensions.
In an explosive investigation by Reuters (opens in a new tab), a secret Chinese ultimatum to the Kachin Independence Army (KIA) threatens to destabilize the global supply of heavy rare earth elements (HREEs), just as markets already reel from Myanmar’s civil war.
Nearly 50% of global HREEs—critical for EV motors, wind turbines, and defense tech—originate from Kachin state, Myanmar. Since October 2024, the KIA, a powerful ethnic militia, has seized control of key rare earth mining areas. They now threaten to capture Bhamo, a vital logistics hub near the China-Myanmar border.
The Kachin state rebels found themselves at the top of the Rare Earth Exchanges (REEx) Heavy Rare Earth Element Project Ranking Database. In fact representatives from the Kachin governing group involved with mining joined the REEx Forum (opens in a new tab).
Beijing, which controls nearly all global rare-earth element (REE) refining, reportedly warned KIA leaders to halt their advance or face an export blockade. Sources say Chinese foreign ministry officials issued the threat during spring meetings and offered cross-border trade incentives if the KIA pulled back. No confirmation exists that China has acted on the threat—yet.
This escalation has already disrupted supply. Chinese imports of Myanmar’s rare earths declined by 50% year-over-year in early 2025, although a 20% month-over-month rebound was observed in May. Analysts, including Neha Mukherjee of Benchmark Mineral Intelligence, warn of a looming global HREE deficit if fighting continues.
KIA leaders appear undeterred, betting that Beijing’s hunger for dysprosium and terbium outweighs its political muscle. But China’s recent decision to weaponize rare earth policy—limiting exports in retaliation for U.S. tariffs—raises alarms about growing geopolitical risk.
Unanswered Questions for Investors:
- Will China follow through with a full embargo on HREEs from rebel-controlled areas?
- How resilient are downstream magnet producers to another supply shock in Myanmar?
- Can the West accelerate HREE diversification strategies in Africa, Australia, or Alaska before the next flashpoint?
Rare Earth Exchanges will continue to monitor the Bhamo frontline, as rare earth supply security and Chinese leverage are increasingly intertwined.
Source: Reuters, July 8, 2025 – “Exclusive: Why China’s ultimatum to Myanmar rebels threatens global supply of heavy rare earths” by Naw Betty Han, Devjyot Ghoshal, Shoon Naing, and Poppy McPherson.
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