Highlights
- Myanmar and China control over 90% of the global heavy rare earth supply, creating a strategic vulnerability for Western defense and technology sectors.
- Dysprosium and terbium are essential for high-performance magnets in military hardware, electric vehicles, and renewable energy systems.
- Western nations are racing to diversify heavy rare earth sources and develop independent processing and manufacturing capabilities to reduce dependence on China.
Heavy rare earth elements (HREEs) like dysprosium (Dy) and terbium (Tb) have quietly become irreplaceable ingredients in the strongest permanent magnets. These magnets power critical technologies from F-35 fighter jet engines and hypersonic missiles to electric vehicle motors and wind turbines. Dysprosium and terbium are used to “dope” neodymium-iron-boron magnets so they retain strength at high temperatures – a must for jet engines and high-performance motors. In short, heavy rare earths are the heat-resistant backbone of modern defense and clean energy tech, enabling systems where failure is not an option.
What Are Heavy Rare Earths and Why Are They Important?
“Rare earth” refers to a set of 17 metallic elements, usually split into light and heavy rare earths. Heavy rare earth elements – generally the latter part of the lanthanide series (such as terbium, dysprosium, holmium, erbium, ytterbium, lutetium) plus yttrium – are distinguished not just by atomic weight but by unique properties and uses. They enhance magnet strength, thermal stability, and other critical material traits. For example, adding a few percent of dysprosium or terbium to a magnet allows it to operate in the scorching heat of a jet turbine or an electric vehicle’s motor without losing magnetism. Without these heavy rare earth dopants, high-tech magnets in military hardware, EVs, satellites, and renewable energy systems would falter under thermal stress. In the U.S., defense officials note nearly every major weapons system relies on some rare earths – and dysprosium and terbium are among the most critical.
Hard to Mine, Harder to Refine: The Challenges of Heavy REEs
Mining and refining heavy rare earths is notoriously difficult and dirty. Unlike light rare earths, which often occur in concentrated hard-rock deposits (e.g. Mountain Pass’s bastnäsite), heavy rare earths tend to be found in low-grade ionic clay deposits – essentially dirt that contains trace amounts of these metals. Major HREE sources are weathered clay belts in southern China and northern Myanmar, where miners extract the metals by pumping ammonium sulfate solution into the ground to leach out rare earth ions. This in-situ leaching method is technically simpler than hard-rock mining, but it yields very low concentrations and creates toxic runoff. Even when heavy rare earths occur in conventional ore (like xenotime or monazite), they’re often entwined with radioactive thorium and uranium, driving up environmental and regulatory costs. In short, HREEs are hard to find, hard to finance, and hard to cleanly separate.
A rare earth mining site in Myanmar’s Kachin State, where ionic clay hillsides are leached with chemicals. Heavy rare earth extraction in such sites uses ammonium-sulfate solution to wash Dy, Tb, and other metals from the clay. This crude technique has devastated Kachin’s ecosystems, turning rivers rust-red and poisoning farms. The lack of regulation in Myanmar’s conflict zones means profits take priority over cleanup, illustrating why few Western countries have been willing to develop heavy rare earth mines domestically despite the strategic need.
From a processing standpoint, separating individual heavy rare earths is also a complex process. These elements are chemically very similar to each other, so refining them requires multiple rounds of solvent extraction or ion exchange—a costly and hazardous chemical process. China has spent decades building up separation facilities; elsewhere, such infrastructure is scarce. All these factors make heavy REEs more expensive and environmentally fraught to produce than their light rare-earth cousins.
A Near-Monopoly: Myanmar, China (and Laos) at the Center
The world’s dependence on Myanmar’s dysprosium-rich clay deposits has grown to precarious levels. Together, China and its shadow suppliers, Myanmar (and to a lesser extent, Laos), control roughly 90+% of global heavy rare earth supply. In fact, analysts estimate nearly half of the world’s heavy rare earth oxide feedstock now originates from Myanmar’s northern Kachin State. Reuters has done a good job covering this.
This remote, strife-torn region – bordering China’s Yunnan province – has rapidly become the planet’s largest source of dysprosium and terbium. Myanmar’s HREE boom took off after 2017 as Chinese firms outsourced dirty mining across the border. By 2023, Chinese imports of heavy rare earth oxides from Myanmar surged to ~41,700 tonnes – more than double China’s own annual mining quota for those elements.
Critically, these Myanmar mines are unofficial and largely illegal. Many are controlled by militias and warlords amid the country’s ongoing civil conflict. Notably, the Kachin Independence Army (opens in a new tab) (KIA) – an ethnic rebel force – seized key rare earth mining zones and now plays gatekeeper. Rare Earth Exchanges’ (REEx) industry rankings underscore Myanmar’s importance: the “Myanmar Rebels – Kachin Clays” deposit ranks as the world’s #1 heavy rare earth project by scale, outscoring every legitimate mine. See the rankings.
By contrast, the top ex-China source, Australia’s Lynas Rare Earths, is a distant #2 on REEx’s list. Lynas’s Mount Weld mine(Australia) and processing plant in Malaysia produce some dysprosium and terbium – roughly 500 tonnes of Dy and 100 tonnes of Tb per year – making Lynas the largest non-Chinese supplier of heavy REEs. But that is a fraction of Myanmar’s output.
Lynas Rare Earths is capable of processing up to 1,500 tonnes of heavy rare earth elements per year at its Malaysia plant. Specifically, they have commissioned new processing capacity to produce up to 1,500 tonnes of dysprosium and terbium, two key heavy rare earths. This capacity expansion is part of their efforts to increase production outside of China.
Other nations’ contributions (including small ionic clay operations in Laos) barely move the needle in a market dominated by Chinese refineries feeding on Myanmar ore.
Geopolitical Risk and Supply Chain Fragility
This extreme concentration of supply presents a strategic vulnerability. China already commands nearly all processing and refinement of heavy rare earths – about 98% of medium and heavy REE separation happens in China. On top of that, China’s grip extends through supply lines: its companies rely on Myanmar’s militias for raw material. This gives Beijing enormous leverage. In mid-2025, as fighting flared between Myanmar’s Kachin rebels and the junta, Chinese officials delivered an ultimatum to the KIA: stop advancing or Beijing would stop buying rare earths from Kachin areas, as cited by Reuters (opens in a new tab).
Nearly half the world’s HREE supply was caught in the crossfire of that local war. Though it’s unclear if China followed through, the threat underscores how easily politics could choke off the heavy REEspigot. In fact, conflict already disrupted mining this year – Chinese customs data show Myanmar-origin rare earth imports fell by about 50% in the first five months of 2025 amid the violence. Prices for dysprosium and terbium spiked as a result.
Western governments and defense industries are alarmed that a “magnet crunch” could be looming. If Myanmar’s exports collapse or China weaponizes its near-monopoly (for instance, by imposing export controls), global stockpiles of Dy/Tb could rapidly run dry. One analysis warned that a prolonged disruption of Kachin’s supply might push the global heavy rare earth market into deficit by year-end. The U.S. Department of Defense has openly stated that reliance on foreign (read: Chinese-controlled) rare earths “poses a risk to national security”. China, for its part, has not hesitated to use its dominance for geopolitical gain – from past embargoes (such as the 2010 rare earth cutoff to Japan) to new export restrictions on magnet tech in 2023. In an era of rising U.S.-China tensions, the prospect of heavy REEs becoming a bargaining chip is very real.
Geopolitics aside, the supply chain is inherently fragile because it lacks redundancy. A single region – Myanmar’s Kachin hills – has become a linchpin for the world’s Dy/Tb needs as reported by Reuters, Rare Earth Exchanges, and others. And virtually all roads still lead to China: even non-Chinese mines must send concentrate to China’s specialized refineries in order to separate the various rare earths. This funneling of almost all heavy REEs through one country (and often one conflict-prone border) is a recipe for supply shocks. As one observer put it, Western high-tech manufacturing now effectively depends on both **Beijing’s policy choices and the whims of militias in Myanmar’s jungle.
Racing to Diversify: New Mines, Separation Plants, and Magnet Production
Breaking this dependency will not be easy, but a global push is underway to develop alternative heavy rare earth sources – as well as the processing facilities and magnet factories needed to support them. A handful of non-Chinese companies are at the forefront. Lynas Rare Earths (opens in a new tab) – the Australian firm – is ramping up output and building a new separation plant in Kalgoorlie, aiming to boost its supply of Dy/Tb from its Mount Weld ore. In the U.S., MP Materials (opens in a new tab) (which runs California’s Mountain Pass mine) has secured Pentagon funding first to build a separation facility and a Texas magnet factory, though today Mountain Pass yields primarily light REEs and produces only token dysprosium – MP will need partnerships or new feed sources to enter the heavy game. Of course, the Department of Defense also just infused hundreds of millions into MP to build out a magnet facility in the next three years---the DoD now can secure up to 15% ownership interest in MP in an unprecedented move.
Several emerging projects are also chasing the heavy rare earth prize. In Brazil, Brazilian Rare Earths (opens in a new tab) is developing the Monte Alto ionic clay deposit – geologically similar to China’s clays – which REEx ranks among the most promising HREE prospects outside Asia. Northern Minerals’ Browns Range (opens in a new tab) project in Australia has actually produced small batches of dysprosium as part of a pilot, but scaling up remains a challenge due to financing and technical issues. Ionic Rare Earths (opens in a new tab) is advancing the Makuutu clay project in Uganda, aiming to be a new supplier from Africa. There’s also Aclara Resources’ (opens in a new tab) pilot clay project in Chile, and hard-rock ventures like USA Rare Earth’s (opens in a new tab) RoundTop (Texas) and Torngat’s Strange Lake (Canada) that hold heavyREE reserves in theory. However, most of these are years from production and face steep economic hurdles.
Notably, Australian Strategic Materials (opens in a new tab) (ASM) announced in its latest quarterly report that it has produced some heavy rare earth oxides – an encouraging sign that new separation capacity is coming online. And across the West, governments are pouring money into the full supply chain: the U.S. Department of Defense alone has committed hundreds of millions of dollars to support domestic rare earth processing and magnet manufacturing. The goal is to establish end-to-end capabilities – from mining and oxide separation to alloy and magnet making – on allied soil. Policymakers recognize that opening one new mine won’t solve the problem if the materials still have to be sent to China for refinement. Funding new separation plants and magnet factories is just as critical as finding new HREE deposits.
Still, progress is slow. Western heavy rare earth output today remains a tiny fraction of global demand. Building a mine-to-magnet supply chain could take the better part of a decade, even with generous funding and fast-tracked permits. In the meantime, companies like Lynas provide a trickle of non-Chinese dysprosium, but the world is far from weaning itself off Myanmar and China.
Outlook: Navigating a Heavy REE Crunch
All three factors – geology, geopolitics, and industrial inertia – make heavy rare earths one of the most precarious links in the tech supply chain. Myanmar’s turmoil and China’s dominance together pose an acute risk of a Dysprosium/Terbium crunch, especially for militaries that depend on advanced magnets. Western nations are increasingly aware of the threat: heavy rare earths are now discussed in the same breath as oil or semiconductors in defense planning circles. Yet awareness alone doesn’t produce oxide or magnets.
Interestingly, even representatives from Myanmar’s Kachin region – where these vital minerals originate – have taken notice of global interest. Some have quietly engaged with industry observers (for instance, participants from Kachin have appeared on the Rare Earth Exchanges forum discussions). However, there is no public evidence that Myanmar’s authorities or rebel leaders are in direct talks with Western governments about rare earths; the political realities (a sanctioned military junta and armed insurgents) make such engagement highly unlikely. Instead, the West is hedging by fostering its own resources rather than striking deals in Myanmar’s war zone.
Although REEx is aware of interest on the part of the USA and West in Myanmar deposits, and chatter in our network suggests some possible discussions—but we cannot verify this.
In conclusion, the world’s extraordinary dependence on Myanmar’s dysprosium underscores the urgency of diversifying heavy rare earth supply. Developing new HREE mines is just one piece of the puzzle – equally important is investing in refining and separation capacity and in domestic magnet production so that raw materials can become finished products outside of China. The stakes are high: without secure supplies of Dy, Tb, and their kin, the military and green-tech ambitions of the West could be constrained. As one analysis warned, until heavy rare earths are treated as a defense-critical priority and not just a market commodity, the balance of power will remain with Beijing – and with the Kachin hills of Myanmar.
Reflections on Industrial Policy or Lack Thereof
Arguably, even with aggressive U.S. industrial policy, the United States is still at least 5–10 years away from any meaningful independence from China’s HREE supply chain—and complete independence may never be fully achievable without coordinated global alliances and significant breakthroughs in processing and recycling.
If the U.S. continues to rely solely on ad hoc or supply-side incentives, deal-by-deal negotiations, and limited industrial support like Trump’s “Big Beautiful Bill” approach—without a centralized, full-spectrum industrial policy—then meaningful independence from China’s HREE supply chain is likely 15 to 20 years away, if it happens at all.
Lacking an integrated strategy, U.S. projects will more than likely develop in fragmented silos—some funded, others stalled—with no coordinated infrastructure to link mining, separation, magnet, and other relevant assembly and component manufacturing. Permitting delays of 7–10 years and volatile rare earth prices could doom critical projects like Round Top and Bear Lodge before they ever reach production, while supply side “incentive-only” models fail to address the technical complexity of solvent extraction or the need for skilled magnet engineers, not to mention the need for consistent offtake.
Yes, the MP Materials and DoD deal is a start—but that’s one deal, and the pricing floor is not necessarily applicable across the still infantile ex-China market.
Meanwhile, China can out-compete or undercut at will, having spent decades building a synchronized, vertically integrated system that dominates every step of the HREE value chain. Even if the U.S. mines more dysprosium or terbium, the absence of domestic separation capacity and magnet alloying means those materials still likely flow through China. True awareness has grown, and it becomes harder now to go back to the pre-Liberation Day reality.
Yet, without coordinated capital deployment, offtake guarantees, and long-term defense procurement for the market (not just a few companies)—tools only national industrial policy can provide—the U.S. risks building pieces of a puzzle that never connect. In short, Trump’s legislative supply-side incentives and deal-by-deal approach may buy time and headlines, but without strategic cohesion, it cannot deliver real supply chain sovereignty.
Sources: Rare Earth Exchanges (REEx) analysis - wordpress-1542803-6000058.cloudwaysapps.com; Reuters - reuters.com (opens in a new tab); Stimson Center - stimson.org (opens in a new tab); Irrawaddy - irrawaddy.com (opens in a new tab); REEx “Defense Sector’s Hidden Vulnerability” report - wordpress-1542803-6000058.cloudwaysapps.com; Global Witness - globalwitness.org (opens in a new tab).
Myanmar has unique HREE deposits with ion-adsorption clay and derived from weathered granitoid. Published data on sample analysis is not available to check the concentration of Dy , TB etc.