Myanmar has emerged as a pivotal player in the global contest for critical minerals, particularly rare earth elements (REE) such as dysprosium and terbium, which are essential for technologies like electric vehicles, wind turbines, and advanced defense systems. With total rare earth production estimated to reach around 31,000 metric tons in 2024, Myanmar has risen to become the third-largest producer of REE, following China and the United States. This marks a significant increase from the 12,000 metric tons produced in 2022.
The primary site for rare earth extraction is northern Myanmar’s Kachin State, a region deeply affected by prolonged conflict. Over the years, mining in areas like Chipwi and Pangwa has grown substantially, partly driven by the need to finance ongoing military operations and the involvement of ethnic armed groups. By 2024, the number of active mining sites had expanded from around 130 in 2020 to over 370, and the Kachin Independence Army (KIA) has seized control of key mining areas, making the KIA and its political wing, the Kachin Independence Organization (KIO), the gatekeepers of Myanmar’s rare earth resources.
Mining operations, previously managed by Chinese firms, have faced significant environmental and community challenges, with toxic leaching methods damaging local ecosystems and farmland. After the 2021 coup, these activities surged fivefold, contributing to the growing importance of Myanmar’s rare earths on the global stage.
Despite Myanmar’s pivotal role in rare earth extraction, the political and logistical landscape remains fraught with challenges. The country’s military regime holds limited control over the mining areas in Kachin, which are now primarily under the control of the KIA. While China maintains dominance in refining and processing, controlling nearly 90% of global capacity, Myanmar’s rare earths continue to flow through Yunnan for refinement. In late 2024, a new agreement between China and the KIA allowed for the resumption of ore exports at a fixed price, signaling China’s strategic adaptation to the shifting dynamics in Myanmar.
India, seeking to secure a stable supply of critical minerals for its clean energy, technology, and defense sectors, has been exploring ways to engage with Myanmar. The country’s reliance on China for rare earth processing and its limited domestic production underscore the urgency of finding alternative sources. India has targeted securing investments of approximately ₹18,000 crore (about $2.2 billion) by 2030 as part of its Critical Minerals Mission. Furthermore, the Indian government has been in talks with both the military junta and the KIA to explore direct procurement options from Kachin, while also engaging with regional partners like Japan and the U.S. to build refining capacity.
However, there are significant obstacles. Myanmar’s Kachin region is landlocked, and transportation infrastructure is inadequate, with mountainous terrain and conflict zones complicating logistical efforts. The lack of all-weather roads and reliable transit routes remains a major challenge for large-scale commercial supply.
India’s approach has been to balance diplomacy with pragmatic economic engagement. While no formal contracts have been finalized, India has coordinated initiatives to verify rare earth samples from Kachin, with the KIA playing an active role in gathering and preparing these samples. The Ministry of Mines has also directed state-owned and private companies to explore direct procurement options, recognizing the strategic importance of rare earths in the global supply chain.
India’s long-term strategy may involve partnering with international allies like the U.S. and Japan to develop processing capabilities within the country. Small-scale modular refining facilities, potentially backed by Japanese or South Korean firms, could help mitigate India’s dependence on Chinese refining in the future. However, these efforts would require significant capital, expertise, and political will, and the broader geopolitical dynamics, including the U.S.-China rivalry, could complicate these ambitions.
In the midst of these complexities, a narrow but potentially viable path for India and other global players may lie in cautiously engaging with the KIA and KIO. Encouraging the adoption of sustainable and transparent mining practices could help mitigate environmental concerns while creating options for diversifying the global rare earth supply chain. Although this approach faces substantial risks—such as the ongoing civil war, governance challenges, and poor infrastructure—some experts believe it is worth pursuing in the context of long-term strategic interests.
In conclusion, while Myanmar’s critical role in the global rare earths market presents significant opportunities, the geopolitical and logistical challenges surrounding the region suggest that any solutions will require a careful, long-term strategy involving multiple stakeholders. The battle for control over these vital minerals is set to play a central role in the geopolitics of the 21st century.
Asia Pacific Newslog 