An appreciation of the United States’ acute dependence on Chinese rare earths supply has been a common thread throughout Donald Trump’s two presidencies. Trump deserves credit for taking tangible steps to highlight this dependency, including passing a law in 2018 that directed the Pentagon to phase out usage of Chinese-made permanent magnets. High-performance permanent magnets require a mixture of heavy and light rare earths and have vital applications across defence, the automotive sector and wind turbines. China manufactures more than 90 per cent of the world’s permanent magnets and until recently had a monopoly on the commercial processing of heavy rare earths.
Outside of China, Myanmar has some of the best geology for heavy rare earths used in permanent magnet production.
Aspects of Trump’s latest approach to securing rare earths supply – made more acute by recent Chinese export controls – have been characteristically erratic. Trump’s musings over the imperial acquisition of Greenland, proposed minerals-for-security deal with the Democratic Republic of Congo and a joint resources development fund with Ukraine, are all driven by the exigency to break China’s rare earths dominance.
The Trump administration has also brokered an unconventional but promising deal to support US miner MP Materials’ production of permanent magnets. However, one area where this bid to revitalise permanent magnet production could come unstuck, is limited access to heavy rare earths.
Here’s where Myanmar comes into the picture.
Outside of China, Myanmar has some of the best geology for heavy rare earths used in permanent magnet production, namely terbium and dysprosium. Rare earths production can be a messy and polluting business. China progressively increased scrutiny of the most environmentally ruinous operations over the last decade.
Regulation is more permissive in the badlands of northern Myanmar. Starting in 2010, Chinese miners piled south into a patchwork of fiefdoms controlled by ethnic rebel groups and forces aligned with Myanmar’s Tatmadaw. Since 2017, Myanmar has consistently been China’s largest source of imported rare earths, with the country producing around two-thirds of global terbium and dysprosium. Most if not all of these proliferating mines have Chinese involvement because of the complexity of the extraction process.
Myanmar’s long-running civil war, which intensified anew after the 2021 coup, has weakened whatever state oversight existed, and more mines have sprung up. Myanmar’s continued fragmentation has also led to a change in control over some of the country’s most important mines. In October 2024, the Kachin Independence Army (KIA) seized control of swathes of northern Myanmar’s Kachin State – including areas abutting the Chinese border, which produce about half the world’s heavy rare earths.
The KIA has imposed steep export taxes on mines under its control, partially aiming to push back at Chinese attempts to pressure it to cease fighting the junta. In July, a US businessman well connected in Myanmar reportedly met with officials from the office of US Vice President JD Vance to suggest an arrangement whereby rare earths from Kachin would be sent via India (which borders Kachin) to the United States. An Indian delegation from state-owned company IREL is confirmed to have visited Kachin in December 2024 for initial discussions. There are also indications that US officials initiated and held numerous discreet discussions with KIA officials in the first half of the year.
Adding to the cloak-and-dagger mystique is a parallel pitch for the United States to help broker a peace deal between the junta and KIA that would allow rare earths to be shipped from southern Myanmar. There is speculation – denied by US officials – that Trump’s latest rare earths gambit led to the removal in July of sanctions against several junta-linked companies.
Whatever Washington’s main play is, getting rare earths out of Myanmar won’t be easy.
Transporting meaningful volumes of rare earths from Kachin to India would necessitate the building of roads and other infrastructure in isolated and rugged terrain – or exports through junta-controlled territory. The sluggish pace of India’s other major infrastructure projects in Myanmar does not inspire confidence.
China is cultivating rare earths export controls as arguably its most potent geoeconomic weapon.
Attempting to broker a peace agreement between the junta and the KIA would, to say the least, be a fraught exercise. The KIA has been fighting Myanmar’s central authorities on and off for more than 60 years. The Tatmadaw sees itself as the guardian of national unity and will be deeply reluctant to offer the KIA special concessions.
China presents an even more insuperable challenge. Beijing has adopted a strategy of temporarily closing cross-border trade and services to pressure ethnic armed organisations – including the KIA – to respect its core interests. China has also this year shifted decisively towards supporting the beleaguered junta after fearing its collapse.
Beijing retains many avenues to pressure both parties.
China is cultivating rare earths export controls as arguably its most potent geoeconomic weapon. This includes developing the ability to trace the entire supply chain from mine to customer. The chances of it acquiescing to the KIA sending heavy rare earths to the United States or India are vanishingly small.
Instead of pursuing flights of fancy, the Trump administration would be better served by deepening collaboration with allies who have existing rare earths mining and permanent magnet capabilities.
