Highlights
- KIO rebels control significant rare earth production in Myanmar’s northern border region, challenging traditional mineral supply chains.
- Myanmar previously supplied 40-50% of China’s heavy rare earth elements before Beijing’s 2023 crackdown.
- Potential geopolitical volatility could dramatically impact global dysprosium and terbium supply for high-tech and defense industries.
Timothy McLaughlin’s Bloomberg Businessweek article, “A Rebel Army Is Building a Rare-Earth Empire on China’s Border (opens in a new tab)”, is part adventure dispatch, part geopolitical exposé. Set in Pangwa, Myanmar—near China’s Yunnan province—the piece details how the Kachin Independence Organization (KIO), an ethnic armed group and the number one position on the Rare Earth Exchanges (REEx) Heavy Rare Earth Element Project/Deposit Ranking Database has allegedly taken control of a significant swath of illegal rare earth production once aligned with Myanmar’s junta.
McLaughlin vividly paints the scene: chemical-soaked mountainsides, Chinese middlemen, gambling dens, and a new kind of warlord capitalism—built not on heroin, but on dysprosium.
The Situation
- China’s dominance in rare earths—and its sourcing from Myanmar—is well-documented. Myanmar supplied roughly 40–50% of China’s heavy rare earth feedstock (e.g., dysprosium and terbium) before Beijing’s 2023 crackdown.
- Illegal ion-adsorption clay mining in northern Myanmar has long operated in lawless zones, with environmental degradation, corruption, and smuggling rampant. This is consistent with field research from Global Witness, CRU, and Chinese customs data, as well as REEx’s growing network, which provides direct knowledge.
- KIO’s growing economic autonomy in border regions is supported by historical reporting. The group has long operated as a de facto state, taxing trade, levying checkpoints, and now, reportedly, regulating rare earth mining.
More Speculative
- The framing of a “rebel empire” building a global rare earth supply chain is compelling—but possibly overblown. There’s no firm production volume, export figure, or traceability data presented. Without sourcing metrics, it’s unclear if the KIO is controlling a proper supply chain or merely charging tolls on it. REEx is actively working on research that will hopefully lead to more data.
- No mention of Chinese complicity or downstream buyers. Chinese refiners often process these materials through opaque middlemen. Omitting this sidesteps systemic responsibility, subtly framing the KIO as the sole bad actor.
Investor Relevance
Investors should read this as a warning about the geopolitical fragility of HREE supply chains. If Myanmar’s insurgent-run rare earth fields collapse or are militarily contested, global dysprosium availability could shrink overnight. Beijing’s tightening import regime also risks cutting off access. Watch for volatility in magnet feedstock prices.
So If conflict, political reform, or enforcement shuts down Kachin operations, China’s HREE supply chain—especially for dysprosium and terbium used in permanent magnets for EVs, drones, and missiles—could face a supply shock. Additionally, Beijing may restrict imports from illegal sources for environmental, political, or strategic reasons. This would tighten global supply, particularly in the defense and green technology sectors.
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