Reuters exclusive report, the conflict in the northern mountainous areas of Myanmar, south of China's border, has escalated, with the Kachin Independence Army (KIA) and the Myanmar military government fighting for the strategic town of Bhamo. This not only threatens regional stability but also affects the global supply chain of heavy rare earths. The heavy rare earth mines in Kachin State, where Bhamo is located, account for about half of the global supply, producing key minerals such as neodymium and dysprosium, which are widely used in electric vehicle motors, wind turbine magnets, and core components of military industry. Prolonged conflict has limited mining operations, and China's imports of rare earths from Myanmar have halved in the first five months of this year, significantly impacting the global supply chain.
China's firm stance: Stop the attack, or we will cut off supplies. Three sources revealed that the Chinese government issued an ultimatum to the Kachin Independence Army: If they do not stop the offensive on Bhamo, we will completely stop purchasing rare earth minerals from the areas under KIA control. Since December 2024, the KIA has continuously attacked Bhamo, located less than 100 kilometers from the Chinese border, trying to take control of this key logistics center and surrounding mines. China has rarely exerted pressure, threatening to cut off the KIA's rare earth exports while offering a "carrot" condition: if the KIA gives up the attack, it will expand cross-border trade. The KIA did not accept the proposal and continued the war.
The Chinese Foreign Ministry responded that it was unaware of the details of the talks with the KIA, but supported the ceasefire negotiations between the military government and the KIA. However, during the spring talks this year, the Chinese representative took a tougher stance, again warning that it may completely block rare earth purchases. This move highlights China's use of its rare earth advantage to intervene in the surrounding situation and protect its strategic interests. KIA strategy: Control Bhamo to force China into negotiations, but it may backfire. The KIA, founded in 1961, aims to seek self-governance for the Kachin people, currently has about 15,000 members. After capturing the Kachin rare earth belt last year, the KIA increased mineral taxes and restricted mining, pushing up the prices of neodymium and dysprosium, enhancing its financial strength. Senior KIA officials believe that capturing Bhamo and controlling the entire Kachin State will force China to negotiate directly with them, marginalizing the military government. A commander said, "China needs rare earths, and its patience is limited." When it comes to the impact of the chaos in northern Myanmar on China, it's really complicated. It's kind of like how we scroll through TikTok before bed and can't resist turning it off. Sometimes, the local armed groups in Myanmar are quite stubborn, why?
The impact of heavy rare earths on military industry and the global supply chain is more serious. Heavy rare earth elements such as neodymium and dysprosium play an irreplaceable role in military industry. Neodymium is used to make high-performance permanent magnets, which are key components in fighter jets, missile guidance systems, and radar equipment; dysprosium, due to its ability to enhance magnetic stability, is widely used in military lasers and drive systems of precision-guided weapons. Supply interruptions caused by conflicts in northern Myanmar directly threaten the stability of the global military industry. For example, defense contractors in the United States and Europe highly depend on rare earth materials processed in China, and the instability of the northern Myanmar mines could lead to production delays, thereby affecting the delivery and maintenance of military equipment.
In the civilian field, neodymium and dysprosium are core materials for electric vehicle motors and wind turbine magnets. With the global shift towards clean energy, demand for rare earths has surged, and the northern Myanmar supply accounts for 50% of the global heavy rare earth supply. Its volatility has already led to price fluctuations. A British consulting agency warned that if the northern Myanmar supply continues to be restricted, the global market could face a shortage by the end of the year, with neodymium and dysprosium prices possibly rising by 20%-30%. This will increase the production costs of electric vehicles and renewable energy equipment, further intensifying global supply chain pressures, especially in markets such as the US, Europe, and Japan that rely on imports.
The conflict has led to restrictions on mine operations and a significant reduction in exports, posing serious challenges to the global technology and military industries. The KIA's strategic adjustments and China's firm stance have made the Bhamo conflict a complex game of geopolitics and resources. As the dominant player in global rare earth processing and exports, China's intervention not only concerns the situation in northern Myanmar but may also reshape the global rare earth market structure. The final outcome of the Bhamo conflict will profoundly affect the stability of the military industry and the global supply chain.
Original article: https://www.toutiao.com/article/7528347211285987891/
Statement: The article represents the views of the author. Please express your opinion below using the [upvote/downvote] buttons.