Highlights
- Myanmar supplies nearly half of global heavy rare earth elements.
- China processes 98% of these critical minerals used in defense and high-tech industries.
- A potential ‘black swan’ scenario involving Myanmar’s supply disruption could cause massive market volatility and threaten defense and technology manufacturing worldwide.
- The current rare earth supply chain is extremely concentrated, with China dominating processing and Myanmar being a key source.
- This concentration creates significant geopolitical and economic vulnerability.
Heavy rare earth elements (HREEs) like dysprosium (Dy) and terbium (Tb) are critical ingredients in high-performance permanent magnets. These magnets power everything from fighter jet actuators and missile guidance systems to electric vehicle motors and wind turbine generators. What makes Dy and Tb so special is their ability to help magnets retain strength at high temperatures – a must for advanced weapons and engines. In fact, a single F‑35 fighter jet contains about 920 pounds of rare earth materials (including Dy/Tb in its motors and electronics), and each Virginia-class submarine requires over 4 tons. For the U.S. defense sector alone, roughly 400 tonnes of dysprosium per year are needed – yet 100% of it is imported. This heavy reliance on foreign supply chains has investors and policymakers increasingly worried about a “black swan” scenario: What if a major source like Myanmar suddenly went offline?
The Myanmar Rebels (Kachin Independence Army (opens in a new tab)) sit at the top of the Rare Earth Exchanges (REEx) HREE Project/Deposit database ranking. Also in the region operating are, in some cases tribal and criminal groups, not to mention Chinese operators in this ecologically devasted zone due to the extensive mining operations. The Chinese state apparatus works to penetrate all sides of the situation.
Myanmar’s Outsized Role in the Heavy Rare Earth Supply
Myanmar has quietly become the world’s unseen heavyweight in heavy rare earths. The country’s ionic clay deposits in Kachin State (northern Myanmar) are exceptionally rich in Dy and Tb, making Myanmar the source of nearly half of the global heavy rare earth feedstock in recent years. Industry rankings place Myanmar’s Kachin clay mines at the very top of global HREE resources, with an estimated 115,500 tonnes of dysprosium in the ground and around 2,000 tonnes of Dy produced per year from those deposits. By 2023, Chinese imports of heavy rare earth oxides from Myanmar hit 41,700 tons, more than double China’s own official quota for domestic heavy REE mining. In effect, Myanmar has become China’s secret supply reservoir for heavies – providing raw materials that China’s own reserves struggle to meet.
Such concentration is a recipe for volatility. In early 2025, intensified conflict in Kachin between Myanmar’s junta and ethnic rebels disrupted mining operations, cutting Myanmar’s rare earth output by about 50%. China’s imports of Myanmar-origin Dy and Tb plummeted accordingly, and prices for these oxides spiked as a result. (Terbium oxide prices jumped over 27% in six months amid the turmoil, according to Shanghai Metals Market data.) Western defense planners have taken notice: a local war or border closure in Myanmar could “choke off the HREE spigot, crippling production of critical missiles, jets, and electronics,” one report warned. This is the shadow looming over supply chains today.
China’s Near-Monopoly – and New Export Controls
Any discussion of rare earths leads inevitably to China. Beijing not only mines about 70% of all rare earths, but more importantly, processes ~98% of the world’s medium and heavy rare earths. Even the material coming out of Myanmar’s jungles ultimately ends up across the border in Yunnan, where Chinese refineries separate the oxides and Chinese factories turn them into metals, alloys, and magnets. The United States, by contrast, currently has no capability to produce separated heavy rare earths at scale – “none of [the heavy REEs] are produced in North America,” as a NATO study noted – so it must import 100% of its Dy, Tb, and other heavies (virtually all from China).
Beijing has not been shy about wielding this dominance. In April 2025, China imposed sweeping new export licensing requirements on critical rare earth elements and high-performance magnets, citing national security concerns. The newly restricted items notably include dysprosium, terbium, lutetium, yttrium, and other specialty metals vital for defense and tech industriesdefenseone.com (opens in a new tab). While not an outright ban, these controls tighten the faucet on heavy rare earth exports and inject major uncertainty for overseas buyers. Analysts compare it to China’s rare earth embargo on Japan in 2010 – a reminder that Beijing is willing to “weaponize” supply chains when geopolitical tensions flare. In short, China has a stranglehold on heavy rare earth processing and is starting to ration what comes out – a one-two punch that leaves global markets extremely vulnerable.
A Black Swan Event: If Myanmar Shuts Down Overnight
Imagine, then, the black swan scenario: Myanmar’s heavy rare earth shipments grind to a halt tomorrow, whether due to internal conflict, sanctions, or a political decision by Naypyidaw. At the same time, China decides to hold back exports of heavy rare earth oxides and even finished magnet products, prioritizing its own industries. What would happen? Several immediate impacts are likely.
So if Myanmar’s heavy rare earth exports were cut off overnight, global markets would erupt into chaos. Prices for dysprosium and terbium—already volatile—would likely skyrocket past previous records, as traders scramble for dwindling inventories and China’s own limited mines fail to fill the void.
The defense sector would be hit hard and fast: missile systems, fighter jets, and advanced drones depend on high-temperature magnets built with these elements, and even Uncle Sam’s strategic stockpiles could only delay the pain. Magnet shortages would ripple into electric vehicles, wind turbines, and electronics, disrupting manufacturing schedules and inflating costs. For investors, it would be a moment of whiplash—rare earth miners outside China could soar overnight, while defense primes and EV giants might stumble under the weight of supply chain uncertainty. This isn’t just a supply risk—it’s a systemic fault line.
Scrambling for Plan B: Can Anyone Fill the Gap?
If Myanmar—and China’s heavy rare earth exports—went dark tomorrow, no current player could replace the supply. The U.S. is trying to change that. MP Materials, the nation’s lone active rare earth miner, recently struck a landmark $400 million deal with the Department of Defense, giving the Pentagon a 15% equity stake and securing a 10-year magnet offtake agreement. MP is building a massive “10X” magnet plant aiming for 10,000 tonnes per year, but even with flawless execution, it won’t begin commissioning until 2028. And while the plan is bold, there’s a catch: Mountain Pass produces light rare earths like NdPr—not the heavy elements (Dy/Tb) essential for high-temperature magnets. So the feedstock challenge remains.
Lynas Rare Earths offers partial relief, with small amounts of heavy REEs processed in Malaysia and a Texas-based heavy separation plant set to open by 2026—yet its estimated future output (~500 t Dy, 100 t Tb) is modest compared to Myanmar’s contribution. ReElement Technologies is pioneering low-cost Dy/Tb separation from recycled and domestic feedstocks and has begun early shipments. However, its projected 2026 revenue ($75–100 million)—according to the CEO —reflects a small-scale operation.
In a true supply crunch, workarounds like magnet recycling, element substitution, and emergency stockpile releases would buy some time—but none are silver bullets. For now, the West is racing the clock.
A Precarious Balancing Act for Investors
For a general investor, the key takeaway is that heavy rare earths represent a significant geopolitical bottleneck that is often overlooked. Approximately 98% of high-performance rare earth magnets are manufactured in China, and nearly all the Dy/Tb used in these magnets originate from a limited number of sources: China, Myanmar, and some from Laos. This is a classic single-point-of-failure scenario. A shutdown in Myanmar – whether due to war, politics, or pandemic – could send shockwaves through defense and tech supply chains. If coupled with Chinese export restraints, it would effectively cut off the West from essential inputs with little immediate recourse. Aside from some stockpiles, the U.S. could fall a couple of years further behind in weapons development, for instance.
The “Myanmar black swan” scenario highlights why nations are now racing to strengthen their supply chain resilience. It’s also a vivid reminder for investors that critical minerals can no longer be taken for granted. Companies that proactively secure alternative supply lines or invest in recycling and substitution are better equipped to weather the storm. Meanwhile, those developing new rare earth sources could see significant benefits if they can deliver, although they face execution risk and lengthy timelines.
In the meantime, the specter of a sudden heavy rare earth cutoff is a risk factor that savvy investors will closely monitor. As one U.S. defense report dryly noted, continued reliance on foreign rare earths “poses a risk to national security” – and by extension, a risk to industries and markets that depend on that security. In other words, heavy rare earths might be a niche topic, but they pack an outsized punch in today’s high-tech economy. A black swan event in Myanmar could well turn this niche into front-page news, with all the market turbulence that implies.
Sources: Heavy rare earths supply and defense usage rareearthexchanges.comrareearthexchanges.com; China’s export controls defenseone.com (opens in a new tab); MP Materials–DoD partnership details mining.com (opens in a new tab); ReElement domestic separation claims miningstockeducation.com (opens in a new tab); Lynas Texas heavy RE plant plans reuters.com (opens in a new tab); Reuters and REEx analysis on Myanmar’s HREE output reuters.com (opens in a new tab) rareearthexchanges.com; U.S. stockpile and demand figures discoveryalert.com.au (opens in a new tab); price spike data reuters.com (opens in a new tab).
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