Myanmar's Key Role in China's Rare Earth Supremacy Amidst Conflict

China's decision to intensify its grip on rare earth exports has led to global shortages and underscored the world's dependency on their supply networks.

In a surprising twist, in recent years China has come to depend on Myanmar, a nation embroiled in conflict, for its rare earth resources.

Although China leads in producing these essential minerals, it still sources raw material inputs from outside its borders.

A significant portion of China’s rare earth imports, approximately 57% last year, originated from Myanmar, according to Gracelin Baskaran from the Center for Strategic and International Studies.

Data from Chinese Customs reveals a substantial increase in Myanmar’s exports to China starting in 2018, peaking at close to 42,000 metric tons by 2023.

Baskaran emphasized that Myanmar’s exports are rich in heavy rare earth elements, which are more valuable due to their rarity.

Myanmar's contribution has bolstered China’s dominance, effectively creating a monopoly for China over the global heavy rare earth supply chain.

Myanmar stands out as a crucial provider of dysprosium and terbium, two invaluable elements crucial in high-tech manufacturing industries spanning defense to renewable energy.

The extraction done in Myanmar primarily involves removing rare earths, which are then sent to China as rare earth oxides for additional processing.

Why Choose Myanmar?

David Merriman, from Project Blue, notes that Myanmar boasts deposits with notably high heavy rare earth content.

These deposits, known as "ionic adsorption clays," are processed through chemical leaching, though this approach comes with significant environmental repercussions.

Previously, Southern China was home to the majority of these operations; however, a shift in national policies led to the shutdown of many sites.

As southern Chinese projects were curtailed, the geological similarities in Northern Myanmar's deposits made it an attractive alternative for development.

Numerous Chinese enterprises participated in establishing new extraction projects in Myanmar, effectively substituting domestic production.

China Faces Risk in Rare Earth Dependence

Myanmar’s tumultuous state poses significant risks to China’s rare earth supply chain.

Many rare earths sourced from Myanmar are extracted from the conflict-ridden Kachin State, which borders China.

Following Myanmar's 2021 military coup and ensuing instability, certain areas have fallen under the control of local armed factions, threatening rare earth production.

Reports have indicated that the seizure of these assets by rebel groups has led to disruptions that have caused price increases.

China's import of rare earth oxides from Myanmar dropped by more than a third in the first five months of this year compared to the previous year.

A complete halt in imports from Myanmar would leave China struggling to meet heavy rare earth demands swiftly.

In response, China is actively seeking new sources for these necessities.

Nearby nations like Malaysia and Laos, possessing IAC deposits, have seen some Chinese investments.

Yet, stricter environmental regulations in these countries mean mining operations may face additional challenges.

Moreover, China's cutbacks in heavy rare earth extraction serve as a caution regarding environmental and economic impacts on potential new projects.