Civil war, warlords and rare earths: Myanmar’s mines in global supply chains

The world is currently dependent on the People’s Republic of China (PRC) for the processing of these rare earths, with as much as 90 percent of the global supply refined by China, particularly the rarer heavy rare earths. These are then exported globally. 

However, a lesser-known element of the trade is that whilst China used to mine the majority of its rare earths domestically in recent years, it has turned to other sources, with next-door neighbour Myanmar (also known as Burma) developing into the principal source of rare earths for China’s processing industry. 

The emergence of Myanmar as a mining hub

China’s dominance in the rare earth sector began in the 1980s. The Chinese government supported the industry by investing heavily in developing both the mining and processing of these resources. State-owned entities such as the China Northern Rare Earth Group and China Rare Earth Group have since been established as bulwarks of the industry.

By 2016, extreme environmental and health consequences forced the Chinese government to impose stricter controls on local processing operations. This led to the widespread closure of mines, particularly in Jiangxi province, where cleanup costs are estimated at almost USD 6 billion and full recovery is expected to take over a century. The decline of domestic sources pushed state-owned processors to seek new sources abroad. They turned to Myanmar.  

Myanmar’s rich rare earth deposits, its long porous border with China and weak state structures and contested authority in the borderlands proved an attractive choice. Chinese State-owned entities thus partnered with local actors, primarily local warlords and militias, to establish rare earth mining operations. 

Chinese processors have become dependent on Myanmar’s mines as sources. Whilst there is limited publicly available data, estimates suggest that since 2017, shipments from Myanmar have accounted for between 60 to over 85 percent of all Chinese rare earth imports. For heavy rare earths, experts believe that as much as 50 to 75 percent of global supplies originate in Myanmar before being processed in China. 

Myanmar’s warlords and insurgents take up mining

Pre-coup 

All rare earth mining in Myanmar has been concentrated in areas of existing conflict. Until 2021, rare earth mining was concentrated in Northern Myanmar in Kachin state.  Home to the ethnic-Kachin minority people, the state has significant deposits of dysprosium and terbium, which are used in everything from nuclear reactors and wind turbines to precision-guided munitions and drones. 

This region has been in an almost constant state of conflict with the central government since 1961. When rare earth mining began in the state, it was coordinated between Chinese state-owned entities and local warlords. These local warlords, nominally aligned with the widely sanctioned Myanmar military, allowed Chinese companies to open these mines, high up in the mountains, largely out of the sight of legal and regulatory oversight of Myanmar’s authorities. The mines have caused irreparable environmental damage, destroying the livelihoods and health of local communities. 

Post coup

In February 2021, the Myanmar military, or Tatmadaw, overthrew the democratically elected government. The country was subsequently consumed by a civil war that remains ongoing today, with the new junta being widely sanctioned.  

Intensified conflict and military setbacks for the Tatmadaw have increased autonomy in Myanmar’s border regions. In Kachin, this led to a surge in mining, with overall capacity expanding by almost 200 percent. This boom contributed to an expansion in exports to China. 

However, it also highlighted China’s heavy reliance on Kachin’s rare earths. This became evident when, in 2024, the anti-Junta Kachin Independence Army (KIA), a local ethnic armed organisation, seized control of much of the border region with China. This triggered a collapse in over three-quarters of Chinese imports of rare earths from Myanmar and a global supply shock. 

The aftermath of this supply shock has seen a Chinese push to expand sources in Myanmar. Whilst Kachin state has returned to being a key supplier in 2024 and 2025, new mines have opened up in other parts of the China-Myanmar borderlands. This includes territories controlled by the National Democratic Alliance Army (NDAA) and the US-sanctioned United Wa State Army (UWSA), both are autonomous armed groups. Unlike the KIA, neither of these organisations conflicts with the junta. 

The UWSA and NDAA have a long history of operating in economic grey zones. Territories controlled by these groups have been associated with human rights abuses, gambling, drug production, forced labour, smuggling and online fraud hubs. These groups also retain complex business links with various companies affiliated with the Tatmadaw, several of which have been sanctioned by the US, Europe and the UK.  

Unregulated mines in their territories have also been blamed for contaminating the local rivers, affecting the health of communities downstream in Thailand and Laos. 

Risk implications

Competition for rare earths is increasingly becoming an issue for governments as they look to secure the raw materials underpinning the energy transition and the infrastructure required for AI.  It is clear that the trade has also become central to China’s global political and economic position, underlined by its decision in April this year to suspend exports of rare earths, causing turmoil for manufacturers worldwide.

The role of Myanmar in the trade is attracting increased attention globally, with both India and the Trump administration taking note. The reputational risk to companies regarding the fueling of a civil war and transnational grey zone economics is thus increasing as scrutiny into the trade increases. Furthermore, it is likely that should the Tatmadaw gain ground in Myanmar, it will seek to further involve itself and affiliated companies in this highly lucrative trade. 

For companies that import or use rare earths in their supply chain, it is crucial that they examine their supply chain, the actors involved and how that translates into risk exposure to their organisations, whether from sanctions, human rights or environmental issues.  

At Risk Advisory, we have more than 25 years of experience helping organisations in the metals & mining industry to navigate above-ground risks. We combine on-the-ground human intelligence with deep regulatory insight to map procurement processes, vet counterparties and flag issues before they compromise a transaction.   

Image credit: Photo by YE AUNG THU/AFP via Getty Images