Myanmar Conflict Threatens Global Rare Earth Supply Chain Amid Strategic Power Play by China

 The stability of the global supply of heavy rare earth elements now hinges, in part, on an escalating conflict in northern Myanmar between the Kachin Independence Army (KIA) and the Chinese-backed military junta. Since December 2024, the KIA has intensified its offensive around the strategically significant town of Bhamo—located less than 100 kilometers from the Chinese border—amid Myanmar’s ongoing civil war that erupted following the 2021 military coup.

Nearly half of the world’s heavy rare earths, essential for manufacturing electric vehicle motors and wind turbines, originate from mines in Myanmar’s Kachin State, particularly in regions north of Bhamo. These raw materials are primarily shipped to China, which holds a near-monopoly in their global processing. However, this supply chain now stands at risk.

According to multiple sources familiar with the matter, Chinese officials have issued an ultimatum to the KIA: cease attempts to take full control of Bhamo, or face a suspension of Chinese purchases of rare earth minerals extracted from KIA-controlled areas. The demand was reportedly delivered during a meeting earlier this year, attended by representatives from China’s foreign ministry.

While it remains unclear whether Beijing has enacted this threat, ongoing hostilities have already disrupted mining operations. As a result, rare earth exports from Myanmar have plunged in 2025, creating concern across global supply networks.

In response to earlier U.S. tariffs, Chinese authorities restricted exports of rare earths this spring, further alarming international markets. Now, Beijing appears to be leveraging its economic influence to stabilize Myanmar’s embattled junta, which serves as a strategic partner in the region.

In a statement to Reuters, China’s Foreign Ministry claimed no knowledge of specific talks with the KIA but reiterated support for a ceasefire and political dialogue between the two warring factions. Meanwhile, KIA officials have alleged that Beijing offered enhanced cross-border trade as an incentive to halt their advance on Bhamo—alongside the threat of an economic blockade.

Independent Myanmar analyst David Mathieson notes that China’s interest is less in resolving the broader civil conflict and more in maintaining control over the region’s resource corridors.

KIA Pushes Back Against Chinese Pressure

The battle for Bhamo intensified after the KIA seized control of Kachin’s primary rare earth belt in October 2024. The group subsequently raised mining taxes and curtailed production of critical elements like dysprosium and terbium—moves that sent global prices soaring.

Despite these risks, the KIA, estimated to have a force exceeding 15,000 fighters, remains defiant. Founded in 1961, the group has long fought for Kachin autonomy and draws strength from a mix of local taxation and natural resource revenues.

KIA commanders believe China’s dependence on rare earths may ultimately deter it from following through on its threats. However, they acknowledge that Chinese military support—including drones and air support—continues to bolster junta positions, particularly in urban strongholds like Lashio and Bhamo.

Bhamo, home to over 160,000 residents, is a crucial logistics hub for the junta. Losing control of the town would severely disrupt military access to key routes across Kachin and neighboring regions. According to Maj. Naung Yoe, a former junta officer who defected after the coup, Bhamo’s fall could isolate several military bases in the north.

In an effort to prevent such a scenario, authorities in Beijing reportedly urged the KIA to retreat during initial discussions in December. Instead, the rebels intensified their operations, prompting a more aggressive diplomatic response from China by spring 2025.

Mounting Human and Strategic Costs

The International Institute for Strategic Studies reported that the KIA has suffered heavy losses in its Bhamo campaign, both in resources and personnel. Yet, despite airstrikes and mounting pressure, the group has successfully pushed junta forces into isolated pockets.

Bhamo itself has been devastated. Satellite imagery reviewed by the Australian Strategic Policy Institute confirms widespread damage, largely attributed to airstrikes. Civilians, including children, have been killed, and critical infrastructure such as schools and places of worship destroyed.

Local activist Khon Ja, who lost her home in the bombardment, warned that border restrictions have further strained life in Kachin, leading to shortages of fuel and medicine. “I don’t know how long the revolutionary groups can resist China’s pressure,” she said.

Still, KIA leadership remains committed to capturing Bhamo. They argue that full control over Kachin would leave China no choice but to negotiate directly with the ethnic army, marginalizing the junta in the process.

“China needs rare earths,” a KIA commander said. “They can only endure this disruption for so long.”