Myanmar’s rare earth sector has become a geopolitical flashpoint where critical minerals, armed conflict and strategic competition intersect. In 2024, the Kachin Independence Army (KIA) suspended mining operations in northern Myanmar’s Kachin State, sharply curtailing Chinese access to heavy rare earth elements. Through closer collaboration, Australia and India can take this opportunity to reshape the regional resource landscape.
China has expanded control over rare earth resources in eastern Myanmar, where China-backed militias have enabled extraction by Chinese firms. The recent disruption exposed the fragility of China-dominated supply chains, but Myanmar remains a key source that Beijing is likely to continue consolidating to safeguard its downstream industrial advantage.
Myanmar is the world’s third-largest producer of rare earths and holds significant reserves of dysprosium and terbium—two heavy rare earth elements prized for their role in permanent magnets and precision military equipment. China has historically sourced over two-thirds of its rare earths from Myanmar. After China cracked down on environmentally destructive mining practices domestically in 2010, Chinese companies shifted operations to northern Myanmar. There, junta-aligned militias enabled access to untapped deposits, profiting from unregulated and conflict-linked extraction. The expansion of rare earth mining, particularly in the aftermath of the 2021 coup, has reportedly led to widespread deforestation, increased flooding, water contamination and displacement of indigenous communities.
From 2017 to 2024, Myanmar was China’s largest supplier of rare earth minerals, accounting for roughly two-thirds of China’s annual rare earth imports. This was made possible by militia control over mining sites in Chipwi and Pangwa, near the Chinese border in northern Myanmar. However, in late 2024, the KIA and allied armed groups seized control of much of the mineral-rich northern region and suspended mining operations. Chinese imports of rare earth compounds from Myanmar have plummeted 89 percent, dropping to just 311 metric tons by February 2025 compared to the year-ago period due to the mining suspension and China’s retaliatory border closures. China’s new export controls on heavy rare earth elements, coupled with supply disruptions in Myanmar, have intensified price volatility and raised concerns over long-term supply security.
Since 2024, China has taken a more assertive posture in Myanmar. In January 2025, China pressured the Myanmar National Democratic Alliance Army, a major ethnic resistance force, to withdraw from Lashio, a city in northern Shan State. It is likely that Beijing, leveraging its trade ties and control over key border crossings, exerted pressure on other ethnic resistance forces—particularly the KIA—to enter a truce with the Myanmar junta and relinquish control over rare earth mining areas in Kachin State, with the aim of resuming extraction and restoring supply flows.
In this volatile context, the KIA’s current blocking of junta and Chinese access to key rare earth sites presents a rare window to disrupt Beijing’s dominance. India initiated talks in March with Kachin authorities to reduce reliance on China. As Myanmar’s immediate neighbour with longstanding border trade ties and shared concerns over Chinese influence, India is well positioned to engage local ethnic stakeholders. Encouragingly, KIA officials appear open to promoting good governance and local benefit-sharing in order to legitimise their administration.
This moment calls for broader Australian engagement. Its experience implementing environmental, social and governance frameworks in challenging environments and promoting indigenous-community benefit-sharing makes Australia uniquely suited to support resource governance in contested areas such as northern Myanmar. Its 2019 support for Myanmar’s Extractive Industries Transparency Initiative—including co-funding for civil society through the Natural Resource Governance Institute—provides a precedent. Although direct engagement with Myanmar’s military-controlled institutions has not been viable since the 2021 coup, Australia can still support values-aligned pathways through regional initiatives.
Given the ongoing conflict and governance risks in Myanmar, direct engagement in the country’s rare earth sector remains infeasible. However, Australia and India can pursue interim values-based arrangements that lay the groundwork for future engagement.
A governance-first approach enables Australia and India to assist without legitimising the junta. While operational risks and fragmented authority pose challenges, these can be mitigated by indirect support through NGOs, academic partners and civil society dialogue.
A practical start would be supporting the KIA in maintaining export restrictions to disrupt illicit rare earth flows. This should be accompanied by engagement with ethnic resistance organisations and local civil society to enhance transparency through regular, if partial, reporting on revenue allocation, restrict mining near major waterways, and build capacity for environmental monitoring aligned with international standards.
Cooperation between Australia and India on rare earths can be framed under broader plurilateral structures such as the Quad and the Mineral Security Partnership, through which both countries can discuss ways to reduce dependency on China’s supply. The deepening entrenchment of Chinese firms in Myanmar’s border economies underscores the urgent need for transparent sourcing and resilient supply chains.