While Beijing tightens its grip on global rare earth exports, a critical vulnerability has emerged in its supply chain: a deep reliance on war-torn Myanmar. China has effectively outsourced its dirtiest mining operations, making the small, unstable nation a key supplier of the world’s most valuable heavy rare earths.
This unusual dependence began when China cracked down on the environmentally devastating mining methods used to extract these metals domestically. Chinese companies have simply shifted their operations across the border, where regulations are less stringent. As a result, Myanmar now accounts for a staggering 57% of China’s rare earth imports, particularly the highly sought-after dysprosium and terbium, which are vital for defense, aerospace, and green technology.
However, this reliance has evolved into a significant strategic risk. Myanmar is wracked by civil war, and earlier this year, an armed rebel group, the Kachin Independence Army, seized control of mines responsible for half of the world’s heavy rare earth production.
The move immediately disrupted supply chains and sent prices spiking. Chinese customs data already shows a dramatic one-third drop in imports from Myanmar in the first five months of this year, exposing the fragility of Beijing’s monopoly.
Faced with this instability, Beijing is now scrambling to diversify its sources to other nearby countries but will likely face tougher environmental standards. In outsourcing its environmental problems, China has inadvertently created a volatile supply chain that now threatens its industrial dominance.
