BEIJING (Realist English). As Beijing tightens export controls on rare earth elements — causing global supply shocks and reinforcing its dominance in critical mineral markets — it faces an uncomfortable reality: China’s own rare earth supply chain has become heavily dependent on a politically unstable neighbor, Myanmar.
Despite being the world’s top producer and refiner of rare earths, China has increasingly relied on imports of rare earth oxides from Myanmar. According to Chinese customs data, these imports surged after 2018 and peaked at nearly 42,000 metric tons in 2023. Last year, Myanmar accounted for 57% of China’s rare earth imports, according to Gracelin Baskaran, director of the Critical Minerals Security Program at the Center for Strategic and International Studies (CSIS).
What makes Myanmar’s role particularly significant is its abundance of heavy rare earth elements — including dysprosium and terbium — which are less common globally and critical for advanced technologies ranging from fighter jets and drones to wind turbines and EVs.
“This dynamic has given China a de facto monopoly over the global heavy rare earths supply chain,” said Baskaran, “but it’s a monopoly built on a fragile foundation.”
Why Myanmar matters
Myanmar’s geology, particularly in the country’s northern Kachin State, mirrors that of southern China, where ionic adsorption clay (IAC) deposits were once intensively mined. These deposits are especially rich in heavy rare earths, but the leaching process used to extract them comes at steep environmental cost.
As China imposed tighter environmental regulations in the 2010s, domestic IAC mines were shuttered, pushing Chinese firms to invest heavily in Myanmar, where environmental enforcement is weaker and oversight often informal. According to David Merriman, research director at Project Blue, Chinese businesses played a key role in rapidly building out Myanmar’s IAC operations.
The raw materials — mostly in the form of rare earth oxides — are then shipped to China for refining and incorporation into high-tech supply chains, Yue Wang of Wood Mackenzie told CNBC.
Supply chain under siege
However, China’s reliance on Myanmar is now facing severe disruption. Since Myanmar’s 2021 military coup, the junta has struggled to control the Kachin region, where most heavy rare earth extraction takes place. In early 2024, the Kachin Independence Army (KIA) seized control of key mining sites responsible for half of global heavy rare earth output, according to Global Witness and CSIS.
The fallout has been immediate. Chinese imports of rare earth oxides from Myanmar dropped over 30% in the first five months of 2024 compared to the same period last year. Prices for some rare earth elements have surged amid uncertainty, and there are reports that KIA may be using access to resources as leverage against Beijing.
“If Myanmar were to cease all exports of rare earth feedstocks to China, China would struggle to meet its demand for heavy rare earths in the short term,” Merriman warned.
Searching for alternatives
Beijing is now urgently trying to diversify supply, with Chinese-backed rare earth projects emerging in Malaysia, Laos, and potentially parts of Africa. However, stricter environmental standards in these countries pose challenges that mirror those Beijing once sought to avoid.
A 2022 report by Caixin chronicled the long-term damage from China’s own IAC mining boom: polluted water tables, toxic soils, and devastated farming communities in southern provinces. Those costs may now be exported elsewhere.
