Country focus Myanmar: Raw material supplier for heavy rare earths and a source of unrest
Myanmar's importance as a supplier of particularly critical heavy rare earths is in question following the military coup. Political uncertainties and export problems could jeopardise the supply chain. The current developments emphasise the need to examine alternative sources of supply.
When it comes to the topic of Rare earths one of the first things that comes to mind is probably China. For many years, the country has dominated the market with its quasi-monopoly; a large part of the world is dependent on exports from the Middle Kingdom. However, it is often overlooked that China has also been the is the largest importer of rare earths, which are refined there and processed into magnetic components, for example. One of the most important countries of origin is neighbouring Myanmar. It is mainly heavy rare earths that come from there, including dysprosium and terbium. They occur less frequently than representatives of the light rare earths such as cerium or lanthanum. Their revenues are correspondingly higher, but also their criticality, as they are indispensable for the energy transition and a large number of other areas of application.
Whitepaper Country focus Myanmar: Raw material supplier for heavy rare earths and a source of unrest
Special geology makes Myanmar interesting
One of the most important sources of heavy rare earths are Ion adsorption stonewhich mainly occur where areas are subject to strong weathering processes. They occur worldwide, but their mining is limited to a significant extent to southern China and Myanmar. In this type of deposit, the rare earth elements accumulate on the surface of the clays and can be extracted through leaching processes.
Myanmar's most important mines are located in the north-eastern states of Kachin and Shan. The official Goods handling to China mainly takes place via the harbours of Tengchong and Ruili in the south-western Chinese province of Yunnan. There are also likely to be separate routes through the often impassable area for illegally extracted resources.
Myanmar's mineral resources increasingly became the focus of China's attention from 2012 onwards. Rethinking the raw materials strategy which assigned greater importance to the utilisation of mineral resources abroad. As a result, the country began to look abroad for new sources, and since at least 2014, more and more Chinese mining companies have settled in the multi-ethnic state of Myanmar. The export of rare earths to China rose sharply in the following years.
According to the U.S. Geological Survey the country exported its entire production to the People's Republic in 2018. Due to the rapid and partially unregulated expansion of mines under Chinese leadership, the government of Myanmar issued a Export ban on rare earths to China. Although this ban was lifted in September 2019 officially cancelled againNevertheless, there were always Occasional interruptions of deliveries to neighbouring countries.
Political uncertainties after the military coup
Since gaining independence from Great Britain in 1948, Myanmar's history has repeatedly been characterised by political uncertainty and armed conflict. Most recently, the military coup against the democratically elected government under State Counsellor Aung San Suu Kyi in 2021 brought the country to the attention of the global public. This also had a direct impact on the country's extractive industry. Even before the coup, the military junta had already Mines under their control, afterwards the number of mines increased many times over.
The junta also uses violence to exert its influence over regions with large deposits of raw materials. The local population rarely succeeds in preventing the construction of new mines, as is the case with for example in April 2023 happened. Meanwhile, the junta is trying to control the effects of the partly uncontrolled mining with inspections. Mining activities in the state of Kachin have therefore been suspended since 4 September. The uncertain duration of the inspections led to Uncertainties in the industrywhich shows the great importance of the country for China's rare earth industry. The same applies to border traffic, which has been interrupted several times due to the coronavirus pandemic.
Despite the sometimes uncertain supply chain, exports of rare earths to China are constantly growing. In 2021, 71 per cent of rare earths imported to China came from Myanmar; currently, for example, the Adamas industry service assumes that the share is 41 per cent. That is 70 per cent more than in the second half of 2022 and nine times more than in the first half of 2022. It should be noted that China only lifted all Covid measures at the end of 2022, allowing border traffic to flow freely again.
Resistance to military rule grows
Myanmar may be facing another ordeal as resistance to the junta grows. At the end of October 2023, one of only five official border crossings to China into the hands of rebellious local minorities. Military experts doubt that the rebels have the means to weaken the junta in the long term. However, should border crossings in Kachin also fall to them, exports to China and thus this important supply chain for heavy rare earths as a whole would be jeopardised.
Assessment of the situation by Jan Giese, Senior Manager Minor Metals and Rare Earth Elements at TRADIUM China's raw materials strategy is geared towards securing access to critical minerals outside its own country and diversifying its sources of supply abroad. To this end, China is seeking cooperation with resource-rich partner countries such as Myanmar, which has large deposits of heavy rare earths. These trade relations conserve China's own raw material resources and strengthen its international economic position, e.g. as the world market leader in the production of rare earth products. The current situation in Myanmar is considered tense. It could therefore be difficult to ensure stable imports of rare earths from Myanmar to China. Against this background, it is all the more urgent in the long term to find Western sources of heavy rare earths as alternatives. There are currently only a few mining projects. In the future, the aim should also be to build up and expand refining capacities in a targeted manner: So that junior miners have an alternative for selling their extracted concentrate and their material does not always flow to China. However, such value streams do not materialise overnight. In addition to financial support and technological expertise, it takes many years of development. TRADIUM has been supplying the processing industry with strategic raw materials for more than 20 years and fulfils the highest quality standards. Our care extends across the entire supply chain, starting with the selection of raw material producers. In the field of rare earth imports, we have been successfully maintaining partnerships with Chinese companies that have their own mining and refining capacities for many years. Regular on-site visits and close dialogue enable us to check compliance with ESG guidelines. Our next planned visit is scheduled for autumn 2024. TRADIUM stands for transparency, sustainability and long-term partnerships in the procurement of strategic raw materials.
About Jan Giese, Senior Manager Minor Metals and Rare Earths at TRADIUM
Jan Giese has been working in industrial sales for technology metals and rare earths at TRADIUM in Frankfurt am Main since 2022. Previously, the business administration graduate spent 2.5 years in charge of global purchasing at Heraeus Quarzglas GmbH, a business unit of the globally active family-owned company Heraeus. During his time at Heraeus, Jan Giese was responsible for purchasing rare earths as raw materials and knows the challenges first-hand from an industrial perspective. Since joining TRADIUM, he has deepened his knowledge of the rare earth markets and their players.
