China's dominance in Myanmar's rare earth resources: A growing risk for global supply chains

22 August 2025

In June 2025, Reuters reported that China had opened new rare earth mines in northern Myanmar’s Shan State with operational support from the United Wa State Army (UWSA), an Ethnic Armed Organisation (EAO) with longstanding ties to Beijing. This development expands upon the existing 370 rare earth mining sites and 2,700 in-situ leaching ponds in neighbouring Kachin State.

As rare earth elements (REEs) gain strategic significance amid the global transition to green energy, China is taking pre-emptive action to secure access to REEs beyond its borders. By expanding its presence in northern Myanmar, China not only reinforces its dominant position in the global REE supply chain but also strengthens its capacity to use REEs as geopolitical leverage at the negotiating table — both as a carrot and a stick.

China’s strategic exploitation of Myanmar’s rare earth resources

China has strategically positioned itself as a major beneficiary of Myanmar’s rare earth resources, leveraging the country’s political instability and economic deterioration. Following the 2021 military coup, Myanmar has faced international sanctions and diplomatic isolation, enabling Beijing to take advantage of minimal global oversight, lax environmental regulations, and the country's declining economy. Since 2021, China has secured 84 per cent of Myanmar’s rare earth exports — particularly heavy REEs such as terbium and dysprosium — at prices up to seven times lower than the typical rates. These REEs, which are essential for producing advanced technologies such as electric vehicles (EVs) and wind turbines, are exported from Myanmar in their unprocessed form and then refined domestically in China. By largely outsourcing the extraction process, China avoids the environmental backlash triggered by rare earth mining. The refined REEs are subsequently exported to global markets.

Given the Quad’s and the EU’s ongoing efforts to build resilient and diversified critical mineral supply chains, a more proactive and coordinated approach with other like-minded global actors is urgently needed — before China further consolidates its dominance over Myanmar’s REE resources and, by extension, the global REE supply chain.

China’s recent UWSA-backed expansion of rare earth mining in Shan State reveals two critical dynamics. First, the state in northern Myanmar holds vast, untapped reserves of REEs that are increasingly vital and strategically significant. Second, Beijing’s actions are by no means passive, as it has clearly demonstrated a willingness to exert influence — both through the junta and EAOs — to secure and control these valuable resources. According to recent reports, Myanmar accounted for approximately 57 per cent of China’s REE imports in 2023. This dependency underscores a strategic vulnerability for China: any disruption or diversification in Myanmar’s rare earth mining would directly impact Beijing’s REE supply chain.

The shifting landscape of Myanmar’s rare earth politics

Beijing currently holds significant influence over Myanmar’s REE resources. However, its dominance is not without friction. Since the launch of Operation 1027 in late 2023 — a coordinated offensive by multiple EAOs against the military regime — Myanmar’s political situation has deteriorated significantly. Resistance forces have steadily gained territory, which the Tatmadaw is struggling to reclaim. This ongoing unrest has repeatedly disrupted REE exports to Beijing, as China-Myanmar border trade posts were closed multiple times due to security concerns. The situation was further exacerbated in October 2024, when the Kachin Independence Army (KIA) — the armed wing of the Kachin Independence Organisation (KIO) — took control of the Pangwa and Chipwi townships in Kachin State, where the majority of Chinese rare earth mines are located. The supply chain disruptions were temporary, but they prompted direct negotiations between the KIO and Chinese officials, resulting in a levy of CNY 35,000 (USD 4,860) per tonne on REE exports.

For the KIO, asserting control over rare earth mining within its territory is less about undermining China’s REE supply chain and more about leveraging its territorial authority to gain political legitimacy and economic benefits. Rather than opposing Chinese extraction operations outright, the KIO seeks to generate revenue from mining activities to fund its movement and position itself as a quasi-governmental stakeholder. Crucially, this also signals the KIO’s interest in broader engagement with global actors. There are two main reasons why the KIO may be interested in expanding its external engagement. First, local discontent over Chinese-run mining operations has grown significantly, fuelled by concerns about environmental degradation and unregulated extraction. Second, the KIO is seeking economic partners beyond China, as Beijing’s continued political and military support for the junta clashes with the KIO’s fight for autonomy against the junta.

However, despite the potential shift towards diversifying Myanmar’s REE exports, the mining regions along the Chinese border remain largely inaccessible to other external actors. Both Kachin State and Shan State lie in the rugged, mountainous terrain of northern Myanmar, with no direct maritime access. Resources extracted from these areas must pass through military-controlled territory and contested zones between EAOs and the Tatmadaw in order to reach coastal trade routes in Rakhine State. This poses significant logistical challenges, even if other countries express interest in trade. Moreover, most of the rare earth mines in Myanmar are informal or illegal, with no adherence to environmental standards — conditions that deter engagement from other countries.

Nonetheless, it is imperative that global actors recognise Myanmar’s crucial role in China’s REE supply chain. This is especially relevant for the Quad countries, given the partnership’s ongoing efforts to diversify global critical mineral supply chains and reduce dependence on China. The recent launch of the Quad Critical Minerals Initiative at the Foreign Ministers’ Meeting in July 2025 underscores the group’s commitment to securing and diversifying critical mineral sources essential for producing emerging technologies. Moreover, the EU — which has similarly prioritised critical mineral security through its Critical Raw Materials Act — must also factor Myanmar into its broader efforts to build a resilient, transparent and sustainable REE supply chain. Therefore, despite Myanmar’s political instability and logistical challenges, it remains a key actor whose strategic importance must be carefully assessed within the evolving geopolitics of critical minerals.

The high stakes of inaction on Myanmar’s rare earth resources

The prospect of engaging with stakeholders in Kachin State and other resource-rich areas in Myanmar comes with high stakes, given ongoing political turmoil, fragmented governance, and the fact that large parts of these areas are controlled by non-state actors. However, the cost of inaction is far greater. China currently dominates the global REE supply chain, accounting for 60 per cent of global production and controlling nearly 90 per cent of global refining capacity. Allowing China to further consolidate control over these critical resources would entrench its monopoly over REEs and hinder global efforts to diversify supply chains. Given China’s recent export restrictions on REEs and its history of leveraging such measures for geopolitical advantage — as seen with Japan in 2010 — Beijing is likely to employ similar tactics amid strained bilateral relations.

There has been minimal engagement with Myanmar’s REE resources from other global actors. Although the Quad countries have recently shown interest, tangible progress has been limited given Myanmar’s volatile political landscape and significant logistical challenges. Likewise, the EU has yet to take concrete steps targeting Myanmar’s REE sector, despite its broader strategic focus on critical mineral security.

This divergence — between the Quad’s and the EU's stated interest in diversifying the REE supply chain, and their lack of tangible engagement in Myanmar — highlights both a strategic gap and a potential opportunity. By failing to engage meaningfully with non-state actors in Myanmar such as the KIO, despite recognising the need to reduce dependency on China for critical minerals, these global actors have left a vacuum for China to fill and further entrench its dominance. However, there is an opportunity to address this gap by pursuing engagement with relevant non-state actors in Myanmar — under carefully structured, transparent frameworks that comply with environmental laws and regulations, minimise environmental damage and uphold accountability. This could pave the way for REE supply chain diversification and curb China’s current dominance. Given the Quad’s and the EU’s ongoing efforts to build resilient and diversified critical mineral supply chains, a more proactive and coordinated approach with other like-minded global actors is urgently needed — before China further consolidates its dominance over Myanmar’s REE resources and, by extension, the global REE supply chain.

DISCLAIMER: All views expressed are those of the writer and do not necessarily represent that of the 9DASHLINE.com platform.

Author biography

Ophelia Yumlembam is a Research Associate at the Organisation for Research on China and Asia (ORCA) in New Delhi. Her work focuses on security and strategic developments in Myanmar, India's Act East Policy, India-Myanmar relations, and China-Myanmar relations. Image credit: Arezarni/Wikimedia Commons.