Highlights
- China relies heavily on Myanmar for rare earth element imports.
- Myanmar supplies about 75% of China’s rare earth oxide needs.
- The ongoing civil war and recent military coup have disrupted rare earth mining operations, causing significant supply chain challenges.
- Ethnic armed groups like the Kachin Independence Army are seizing control of critical mining regions.
- These developments directly challenge China’s economic interests.
China and Myanmar share a complex and deeply intertwined relationship when it comes to rare earth elements (REEs), driven by geopolitical proximity, Myanmar’s resource abundance, and China’s industrial dominance in processing and manufacturing REEs. Rare earths, essential for advanced technologies such as electric vehicles, wind turbines, and electronics, are a strategic priority for China. Over the years, Myanmar has emerged as a critical supplier, especially for heavy rare earth elements like dysprosium and terbium, which are vital for high-performance magnets and other advanced applications.
Introduction to the Sino-Dependence on Myanmar
China is the world’s leading producer of rare earth elements (REEs), accounting for over two-thirds of global production as of 2023, as reported in Statista.
Despite this dominance, China imports significant quantities of REEs to meet its industrial demands, particularly for medium and heavy rare earth elements. Myanmar has emerged as a crucial supplier in this regard.
In the first nine months of 2024, China imported approximately 31,000 metric tons of rare earth oxides from Myanmar, constituting about 75% of its total rare earth oxide imports during that period, as reported by China’s Global Times (opens in a new tab).
This reliance underscores Myanmar’s role in supplementing China’s domestic production, especially for heavy rare earth elements, which are more challenging to extract and process.
However, as we have reported, political instability and conflicts in Myanmar have disrupted mining operations, leading to concerns about supply shortages and increased prices for these critical materials. For instance, the Kachin Independence Army’s seizure of key mining areas in late 2024 has further complicated the supply chain, prompting China to halt imports from Myanmar temporarily, as reported by Reuters (opens in a new tab) and other media.
While China maintains substantial domestic production of rare earth elements, it significantly relies on imports from Myanmar to fulfill its industrial requirements, particularly for medium and heavy rare earths. Disruptions in Myanmar’s mining sector can, therefore, have notable impacts on China’s supply chain and global rare earth markets.
Historical Context and Relationship Dynamics
China has historically been the dominant player in the global rare earth industry, controlling over 85% of the world’s processing capacity. However, its own reserves of heavy rare earths are concentrated in southern provinces like Jiangxi and Guangdong, where strict environmental regulations and resource depletion have increased costs.
By contrast, Myanmar, rich in ionic clays containing heavy rare earths, has less stringent regulations and lower production costs, making it an attractive partner for China. Since the early 2010s, Myanmar has become a significant supplier of heavy rare earths to China. Informal mining operations expanded rapidly along Myanmar’s northern border, especially in the Kachin and Shan states. Many of these activities were either directly or indirectly tied to Chinese companies, which supply the raw materials to Chinese processing facilities across the border.
Production Levels and Chinese Companies in Myanmar
By 2020, Myanmar accounted for over 50% of China’s heavy rare earth imports, solidifying its role as a cornerstone of China’s supply chain. Annual export volumes from Myanmar to China are estimated to range between 20,000 and 30,000 metric tons of rare earth oxides, with dysprosium and terbium being particularly important. Several Chinese companies are active in Myanmar’s rare earth sector, often working through joint ventures or informal partnerships with local operators.
These companies include state-owned enterprises and private firms with strong ties to the Chinese government, which helps maintain a steady supply chain.
The involvement of Chinese entities in Myanmar’s rare earth industry is often opaque, with reports of illegal mining and smuggling complicating efforts to quantify production levels or enforce regulations. Some of the companies operating in Myanmar have faced scrutiny for their environmental and social impact, as well as their relationships with non-state armed groups that control parts of the mining regions.
Environmental Track Record of Rare Earth Mining in Myanmar
Rare earth mining in Myanmar has a poor environmental track record. The ionic clay deposits found in Myanmar are extracted using in-situ leaching, a process that involves injecting chemicals like ammonium sulfate into the ground to dissolve the rare earths, which are then pumped to the surface. This method is cost-effective but highly destructive, leading to soil contamination, deforestation, and the pollution of local water sources.
In Myanmar, where regulations are lax or poorly enforced, the environmental impact has been severe (opens in a new tab). Entire ecosystems in mining areas have been degraded, and local communities often bear the brunt of pollution, facing health risks and loss of agricultural productivity. Activists and NGOs have raised concerns about the lack of oversight and the long-term damage being inflicted on Myanmar’s environment. See “Myanmar’s Poisoned Mountains (opens in a new tab).”
Outsourcing of Mining by China
China has effectively outsourced much of its heavy rare earth mining to Myanmar to mitigate the environmental and social costs of mining within its borders. This strategic move allows China to maintain its dominance in rare earth processing and manufacturing without bearing the full ecological burden. By importing raw materials from Myanmar, China can continue to meet global demand while adhering to stricter domestic environmental standards.
This outsourcing dynamic, however, raises ethical and geopolitical questions.
Critics argue that China’s reliance on Myanmar exacerbates environmental degradation and instability in the border regions (opens in a new tab), where illegal mining often fuels conflict and undermines local governance. Moreover, it underscores the broader challenge of balancing global demand for critical minerals with sustainable and equitable resource management. Has China outsourced much of the adverse ecological externalities of the REE mine complex to Myanmar?
China’s relationship with Myanmar in the rare earth sector is marked by mutual dependence and significant challenges. While Myanmar provides a vital supply of heavy rare earths for China’s high-tech industries, the environmental and social costs of mining in Myanmar are significant and often overlooked.
As global scrutiny of rare earth supply chains grows, both countries face increasing pressure to address the environmental and ethical implications of their collaboration. The future of this relationship will likely hinge on Myanmar’s ability to regulate its mining industry and China’s willingness to support more sustainable practices in its supply chain.
Civil War Roots
The civil war in Myanmar, also known as Burma, is one of the world’s longest-running conflicts, rooted in the country’s colonial history, ethnic diversity, and political instability. Since gaining independence from British rule in 1948, Myanmar has experienced continuous internal strife, driven by tensions between the central government and numerous ethnic minority groups seeking greater autonomy. The civil war is marked by a complex interplay of ethnic identity, political power, and control over natural resources.
The Roots of Conflict—the Heavy Hand of Anglo Colonialism
The seeds of Myanmar’s civil war were sown during the colonial era. Under British rule (opens in a new tab) (1824–1948), the territory now known as Myanmar was divided into “Ministerial Burma,” primarily inhabited by the majority ethnic Burmans (Bamar), and the “Frontier Areas,” home to numerous ethnic minorities, such as the Karen, Kachin, Shan, and Chin. This administrative segregation deepened divisions and fostered mistrust between ethnic groups and the Burman majority.
When Myanmar gained independence in 1948, the Panglong Agreement (opens in a new tab), signed by ethnic minority leaders and the central government, promised autonomy for certain regions.
However, these promises were never fully realized, leading to feelings of betrayal among ethnic groups. Armed rebellions erupted soon after independence, as groups like the Karen National Union (KNU) and others demanded greater autonomy or independence.
The Military Era and Intensification of Conflict
In 1962, General Ne Win staged a military coup (opens in a new tab), establishing a repressive regime under the “Burmese Way to Socialism.” This period saw heightened ethnic tensions, as the central government pursued aggressive policies of Burmanization, attempting to impose Burman culture and Buddhism on a diverse population. Ethnic minorities resisted these efforts, fueling the growth of armed insurgencies.
Throughout the 1970s and 1980s, the Tatmadaw (Myanmar’s military) waged brutal campaigns against ethnic insurgent groups, leading to widespread displacement and humanitarian crises. The civil war became deeply entangled with the control of natural resources, as ethnic groups often operated in resource-rich borderlands, such as jade mines in Kachin State or timber and opium production in Shan State. These resources funded both the insurgents and the military, perpetuating the conflict.
Democratic Reforms and Continued Conflict
In 2011, Myanmar transitioned to a quasi-civilian government under President Thein Sein, (opens in a new tab) initiating political and economic reforms that raised hopes for peace. Ceasefire agreements were signed with several ethnic armed organizations (EAOs), and efforts were made to negotiate a nationwide peace process. However, the reforms were uneven, and trust between the government and ethnic groups remained fragile.
The signing of the Nationwide Ceasefire Agreement ( (opens in a new tab)NCA) in 2015 was a milestone, but key groups like the Kachin Independence Army (KIA) and the United Wa State Army (opens in a new tab) (UWSA) refused to join. Clashes continued in various parts of the country, particularly in Kachin, Shan, and Rakhine States.
Rohingya Crisis and Escalation
In 2017, the conflict in Rakhine (opens in a new tab) State drew international attention due to the military’s violent crackdown on the Rohingya Muslim population, described by the United Nations as a possible genocide. Over 700,000 Rohingya fled to Bangladesh (opens in a new tab), further isolating Myanmar internationally and exposing deep divisions within the country.
At the same time, other ethnic conflicts intensified, with the Arakan Army (AA) emerging as a powerful force in Rakhine State, and clashes escalating in Kachin and Shan States. The Tatmadaw continued its scorched-earth tactics, targeting civilian populations and exacerbating the humanitarian crisis.
The 2021 Military Coup and Widespread Resistance
On February 1, 2021, the military staged another coup (opens in a new tab), overthrowing the democratically elected government of Aung San Suu Kyi’s National League for Democracy (NLD). This triggered mass protests across the country and gave rise to a new phase of conflict. The coup reinvigorated ethnic armed groups and led to the formation of new resistance forces, including the People’s Defense Force (opens in a new tab) (PDF), composed largely of young, urban protesters.
The post-coup period has been marked by widespread violence, with the Tatmadaw (opens in a new tab) targeting civilians in airstrikes and ground assaults. The civil war has expanded geographically, affecting areas that were previously relatively peaceful, such as the central Bamar heartland. The conflict has become a multi-front war, with the Tatmadaw fighting ethnic armed groups, the PDF, and other resistance organizations simultaneously.
Current Situation and Challenges
As of now, Myanmar remains deeply fragmented. The Tatmadaw retains control over key cities and infrastructure but struggles to maintain authority in many rural areas. Ethnic armed groups and resistance forces continue to gain ground in some regions, creating a patchwork of contested territories. The humanitarian situation is dire, with millions displaced and lacking access to basic necessities.
Seizing Rare Earths
Just in October, an armed group fighting Myanmar’s ruling military seized control of the rare earth element mining hub that is a major supplier to China, likely disrupting shipments of elements used in clean energy and other technologies.
Again, the REE mining complex in Myanmar centers in Kachin state around the towns of Panwa and Chipwe, adjacent to southwestern China’s Yunnan province.
The Kachin Independence Army (opens in a new tab) (KIA) took control of Panwa on Oct. 19, spokesperson Colonel Naw Bu told Reuters in October (opens in a new tab). It had previously captured Chipwe, according to local Myanmar media.
The conflict in northern Myanmar has entered a pivotal phase, with resistance forces achieving unprecedented victories against the Myanmar military. In early August, after a brief 35-day campaign, the resistance successfully dismantled the military’s northeastern command, taking control of significant territory in northern Shan State. This historic achievement bolstered resistance morale but also provoked a strong and strategic reaction from China, revealing the broader geopolitical stakes.
China’s response has been multifaceted and assertive. It imposed punitive measures on the resistance, closed border crossings, disrupted critical supplies like electricity and internet, and pressured ethnic armed organizations (EAOs) in the region to follow suit.
Additionally, China signaled its support for the Myanmar military by greenlighting airstrikes and hosting junta leader Min Aung Hlaing, marking a stark shift in its diplomatic posture. See VOA News (opens in a new tab).
Despite this, resistance groups have remained steadfast, capturing more territory, including rare earth deposits vital to global markets, which further challenges China’s dominance in the sector.
The origins of this conflict trace back to a Chinese-brokered cease-fire, the Haigeng Agreement, which collapsed (opens in a new tab) in mid-2024. Resistance groups such as the Three Brotherhood Alliance (3BHA) (opens in a new tab) swiftly capitalized on the failed cease-fire, achieving remarkable territorial gains, including the strategic town of Lashio. These victories alarmed Beijing, as they disrupted China’s interests and investments in the region. Notably, the capture of Lashio drew rumors of potential political cooperation between resistance leaders and Myanmar’s National Unity Government, further intensifying Chinese intervention.
China’s Backing of Military
China’s involvement highlights its broader geopolitical ambitions and fears. By backing the Myanmar military, Beijing seeks to protect its Belt and Road Initiative projects (opens in a new tab) and secure rare earth resources essential for its economy. However, its actions risk escalating instability. China’s demands, including creating joint security ventures to directly manage its investments, could inflame tensions further, especially as resistance forces now control many areas critical to Chinese projects.
As reported (opens in a new tab) by Jason Tower, who is writing for the United States Institute of Peace (opens in a new tab), despite Beijing’s efforts, resistance groups continue to defy its pressures. In Kachin State, for instance, as we reported in Rare Earth Exchanges and above, the Kachin Independence Army (KIA) recently seized control of lucrative rare earth mines and shut down a key border crossing, directly challenging China’s economic interests. These moves not only reflect the resistance’s resilience but also underline growing popular demands for environmental and social accountability in resource extraction.
The implications extend beyond Myanmar. China’s actions may set a precedent for more aggressive overseas security operations, testing its strategies in geopolitically sensitive areas. Simultaneously, resistance forces are shaping Myanmar’s future, positioning themselves as key players with growing leverage over the country’s economy and political landscape.
For the international community, particularly the United States, Western allies, and India, this moment represents a critical opportunity. Supporting Myanmar’s resistance could counterbalance China’s influence, especially regarding rare earth minerals, a market where Beijing’s dominance has long been a concern, argues Tower.
However, any intervention must consider the complexities on the ground, ensuring support aligns with the resistance’s broader goals of federalism, democracy, and stability.
In sum, Myanmar’s resistance movement is not only reshaping the nation’s internal dynamics but also challenging China’s strategic ambitions in Southeast Asia (opens in a new tab). The unfolding situation demands careful attention, as its outcomes could reverberate across global political and economic landscapes.
Daniel
You Might Also Like…