Heavy Rare Earths: Supply Situation Could Tighten

According to media reports, rare earth mining in Myanmar is currently on hold. Given the country’s global importance, particularly in the field of heavy rare earths, this could lead to rising prices.

Frankfurt am Main, November 6, 2024 – Myanmar accounts for roughly half of the world’s production of heavy rare earth elements, such as terbium. However, a shortage now appears imminent, as China’s Global Times reported. The state-affiliated newspaper notes that mining activities in the neighboring country have come to a standstill.

Geopolitical Risks in Myanmar

Myanmar primarily exports medium rare earths like gadolinium and heavy rare earths to China, where they are further processed. Part of the heavy rare earths is for example terbium, which enhances the performance of rare earth magnets. Demand for these magnets is rising steadily in areas like electric mobility, wind power, and consumer electronics.

The primary source of heavy rare earths are ion-adsorption clays, which are mined on a large scale only in Myanmar and China. About half of the world’s heavy rare earth production comes from Myanmar, which is governed by a military junta following a coup in February 2021. Various rebel groups have formed resistance against the junta, likely contributing to the current mining halt. According to Reuters, one armed group, the Kachin Independence Army (KIA), reportedly took control of a major rare earth mining center in the country’s north recently. In this region, the Kachin State, a large portion of Myanmar’s mining industry is located. It directly borders China, which is understandably concerned and has, in the past, attempted to mediate between the conflicting parties.
This week, the junta leader is expected in China for talks aimed at improving bilateral relations. In addition to political strife, Myanmar has been hit hard this year by monsoon rains, particularly affecting Kachin State, according to the non-governmental organization ACAPS.

Keeping an Eye on Possible Developments

TRADIUM expert Jan Giese summarizes the potential consequences of the current situation: “The recent mine closures in Myanmar could, as seen in fall 2023, lead to a shortage of rare earth metals and thus to price adjustments. Given Myanmar’s significant role in mining and China’s nearly monopolistic influence in processing, even minor supply changes can noticeably impact the supply chain. Although the market situation remains calm for now, buyers and market observers should pay close attention to ongoing developments and prepare for potential scenarios.”

In a market commentary last December, we highlighted Myanmar’s importance to China’s rare earth industry. The article, created in collaboration with the news portal Rawmaterials.net, can be found here.