Exclusive-China-backed militia secures control of new rare earth mines in Myanmar

Chinese-backed militias are reportedly protecting new rare earth mines in Myanmar's Shan state, providing Beijing with crucial access to minerals like dysprosium and terbium amid trade tensions with the U.S. and disruptions in the Kachin mining belt. These mines, operated by Chinese companies, are under the protection of the United Wa State Army (UWSA), which has long-standing ties to China, and are strategically important as China seeks to maintain control over heavy rare earth elements used in critical technologies, with the price of terbium oxide already up over 27% in the last six months.

Analysis

China is actively securing new sources of rare earth elements in eastern Myanmar, with Chinese-backed militias, specifically the United Wa State Army (UWSA), protecting these mining operations. This development is critical as China, which processes a near-monopoly of heavy rare earths vital for technologies like electric vehicles and wind turbines, faces supply disruptions from the Kachin region and seeks to bolster its control amid ongoing trade tensions, noted in the article as resuming this year under U.S. President Donald Trump. Myanmar supplied nearly half of China's rare earth imports in the first four months of this year, and these new mines in Shan state, with development observed in satellite imagery from Planet Labs and Maxar Technologies since April 2023 and some sites confirmed by analysts as already producing, are now extracting minerals like dysprosium and terbium. The strategic importance is underscored by significant cost advantages, with Benchmark Mineral Intelligence noting that Chinese firms can produce heavy rare earth oxides in Myanmar at a cost seven times lower than in other regions, and the recent price surge of terbium oxide by over 27% in the last six months, while dysprosium oxide rose around 1% during the same period. These operations, managed by Chinese companies and transporting materials towards the Chinese border, leverage China's control over efficient extraction technology and aim to ensure a stable supply, with the UWSA-controlled Shan state perceived as more stable than other conflict-ridden mining areas, thereby reinforcing China's strategic leverage over global rare earth supply chains.

Key Decisions for Investors

• Investors should monitor the evolving supply dynamics and price volatility of critical rare earth elements, particularly dysprosium and terbium, due to new Chinese-backed mining operations in Myanmar, as this could significantly impact input costs for manufacturers in EV, renewable energy, and advanced electronics sectors.
• Assess portfolio exposure to geopolitical risks stemming from China's enhanced control over strategic mineral supply chains and the stability of sourcing from regions like Myanmar, considering potential for increased trade tensions and supply disruptions.
• Consider the role of geospatial intelligence providers like Maxar Technologies (MAXR) and Planet Labs (PL) in uncovering such strategic resource developments, while noting the current neutral-to-slightly-negative sentiment for MAXR as indicated by signals and the article's suggestion it may not be a top AI pick, and evaluate their potential as investments providing unique insights into opaque global supply chains.