How one tiny Myanmar town controls the globe's rare earth supply and is holding the world hostage

Time of India

6 hours ago

Bhamo, a town in the northern hills of Myanmar, home to just 166,000 people, may appear to be a small town, but it is where almost half of the world's heavy rare earths are found, like the minerals essential for electric cars and wind turbines, as per a report.
The Civil War That Could Disrupt EVs Worldwide
Since December,
Kachin Independence Army
(KIA), an ethnic militia, has been fiercely fighting Myanmar's junta for control of Bhamo, which is a civil war that started after the military's 2021 coup, as reported by Reuters. The town is within 100 kilometres of the Chinese border and is a strategically vital garrison town, according to the report. The takeover of Bhamo would grant the KIA control of the primary rare-earth mining area, something that has shaken China and caused supply chain disturbances globally, as per the Reuters report.
China's Critical Role in Rare Earth Processing
The heavy rare earths are usually shipped to China for processing into magnets that power electronic vehicles and wind turbines, as China has a near-monopoly over the processing of the minerals, as reported by Reuters.
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Beijing's Ultimatum
China has now reportedly threatened to stop buying the minerals mined in KIA-controlled territory unless the militia stops trying to seize full control of Bhamo, Reuters reported, citing people familiar with the matter.
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A KIA official told Reuters that, in May, China had made its demand, and a KIA commander pointed out that Beijing was represented by foreign ministry officials at the talks, according to the report.
The ongoing fight in the region has limited mining operations, and rare-earth exports from Myanmar and now China is "using its dominance to shore up Myanmar's beleaguered junta, which China sees as a guarantor of its economic interests in its backyard," wrote Reuters in its report.
While China's foreign ministry told Reuters that it was not aware of the specifics of deliberations with the KIA, but said that, "An early ceasefire and peace talks between the Myanmar military and the Kachin Independence Army are in the common interests of China and Myanmar as well as their people," as quoted in the report.
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The KIA official revealed that Beijing had offered a greater cross-border trade with KIA-controlled territories if the militia stopped efforts to seize Bhamo, as reported by Reuters. The official said, "And if we did not accept, they would block exports from Kachin State, including rare-earth minerals," as quoted in the report.
An independent Myanmar-focused analyst, David Mathieson, pointed out that Beijing is not seeking to resolve the wider civil war, but it wants fighting to stop as it wants to advance its economic interests, and said that, "China's pressure is a more general approach to calming down the conflict," as quoted in the Reuters report.
Conflict Disrupts Mining and Exports
The ongoing conflict in Bhamo started just after the KIA wrested control of the main rare-earth belt in Kachin last October, and since its takeover, the KIA has increased taxes on miners and throttled production of dysprosium and terbium, sending prices of the latter skyrocketing, as reported by Reuters.
FAQs
Who is fighting over Bhamo?
The Kachin Independence Army is fighting Myanmar's military junta for control of the region, as per the Reuters report.
What happens if China follows through on its threat?
Global supply chains could be shaken, prices for rare earths could spike, and manufacturers might struggle to get the materials they need, as per the Reuters report.