Myanmar fighting escalates around key rare earth mining sites

In recent days, the Kachin Independence Army (KIA), part of an allied rebel group fighting the junta for territory and autonomy since the 2021 coup kicked off, took control of the No. 1002 Border Guard Force Battalion located around 16 kilometers (10 miles) from Panwa, a rare earth mining center and key border crossing into China.

Fighting in the region has centered on control of the area’s rare earth and gem mining sites, as well as key trade routes into Myitkyina (Kachin state’s capital) and north into China.

Rebel control of these mining sites could potentially disrupt rare earth concentrate shipments into China, which have declined for four months straight owing to the monsoon season and other challenges. In June, a landslide at a rare earth mining site in Ngilot village in Panwa region claimed 10 lives and left at least 30 people missing.

With Myanmar responsible for 57% of global dysprosium and terbium mine supply last year, a prolonged disruption would strain availability of feedstock supplies for magnet makers during what is typically a seasonally strong quarter for magnet demand.

Adamas take:

In early October, the KIA took control of nearly all of Kachin state’s Chipwi township and are now looking to consolidate control over the remaining junta camps and border posts in the area.

Doing so will give the KIA more leverage in negotiating with China, which to-date has appeared to favor the junta military. Earlier this year, China brokered talks between fighting parties with the goal of restoring overland trade (interrupted by fighting) between China’s Yunnan Province and Myanmar. To China’s chagrin, negotiations collapsed in May and by mid year the rebel alliance restarted its anti-junta offensive.

Chipwi Township is an area that until recently was claimed by the New Democratic Army Kachin (NDA-K), which is a junta-associated Border Guard Force led by so-called warlord Zahkung Ting Ying.

The Chipwi and Panwa areas, collectively referred to as Kachin Special Region 1, are host to dozens of rare earth mines controlled by the NDA-K. As of this week, we expect the NDA-K will lose control of at least some of those mines as hundreds of rare earth workers fled to the Myanmar – China border last week.

Not only is the current escalation of fighting cause for concern, it further reinforces the conflicted nature of the world’s existing heavy rare earth supplies and, consequently, the conflicted nature of supply chains feeding China’s manufacturers of high performance magnets.

Rising production from Myanmar and low prices have made it easy for OEMs and other magnet importers to turn a blind eye to the environmental destruction and social upheaval that rare earth mining fuels in the country.

Should the recent border seizure and expected capture of rare earth mines this week result in a disruption of rare earth concentrate flows to China from Myanmar, importers of Chinese rare earths and magnets may soon have to pay, literally and figuratively, for failing to support and secure alternative sources of supply in time.

Want to know more about emerging alternatives to the China-Myanmar supply chain?

Contact our expert team to discuss further.

With a coup underway since February 2021 and ongoing, and often escalating, fighting between the military government and rebel armies, the future of supplies from Myanmar remains uncertain on a month-by-month basis, let alone over the medium- to long-term.

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