Saturday, 12 July, 2025
The global supply of heavy rare earths is increasingly at risk as a months-long conflict escalates between the Chinese-backed military junta in Myanmar and the Kachin Independence Army (KIA), a powerful ethnic rebel group.
Since December, the KIA has been battling junta forces for control of Bhamo, a strategically vital garrison town located less than 100 km from the Chinese border. This town lies near the heart of Myanmar’s Kachin State—home to nearly half the world’s heavy rare-earth supply, which is crucial for the production of magnets used in electric vehicles and wind turbines.
These minerals are extracted in Kachin and shipped to China, which dominates global processing of heavy rare earths. However, Beijing has reportedly issued an ultimatum to the KIA: abandon efforts to seize Bhamo or risk a suspension of Chinese purchases of rare earths mined in KIA-controlled territory.
The demand, made during a meeting between Chinese officials and KIA representatives in May, was revealed to Reuters by three individuals familiar with the talks. It marks the first time this warning has been reported publicly and highlights how Beijing is leveraging its mineral dependency to advance its geopolitical interests.
According to a KIA commander, the delegation from China included foreign ministry officials. A senior KIA general did not respond to requests for comment, and Reuters could not confirm whether China has enforced the threatened blockade.
Fighting has already curtailed mining operations, leading to a sharp drop in rare-earth exports from Myanmar. Chinese customs data shows imports of rare-earth oxides and metals from Myanmar dropped by half in the first five months of 2025 compared to the same period last year, though exports rebounded slightly in May.
Earlier this year, China rattled global markets by restricting rare-earth exports in retaliation to tariffs imposed by U.S. President Donald Trump. Now, it appears to be using the same mineral leverage to prop up Myanmar’s embattled military regime—seen by Beijing as a key guarantor of its regional economic interests.
China’s foreign ministry responded to Reuters inquiries by stating it was unaware of the specifics of the discussions with the KIA. A spokesperson added: “An early ceasefire and peace talks between the Myanmar military and the Kachin Independence Army are in the common interest of both China and Myanmar.”
The KIA official, who spoke on condition of anonymity due to the sensitivity of the matter, said China also offered incentives: expanded cross-border trade with KIA-held areas if the rebels stopped their offensive on Bhamo. Failure to comply, the official warned, would lead to an export ban on all goods from Kachin, including rare earths.
China’s posture is not aimed at resolving Myanmar’s broader civil war but at securing stability to protect its investments, said David Mathieson, an independent analyst specialising in Myanmar. “This is a general pressure campaign by China to cool the conflict,” he said.
The KIA’s push to seize Bhamo intensified after it took control of Kachin’s main rare-earth belt last October. Following its takeover, the militia raised taxes on miners and reduced production of key elements such as dysprosium and terbium, causing global prices to surge.
Despite Chinese threats, the KIA remains confident it can capture Bhamo—and that China, dependent on the minerals, will ultimately not follow through with its ultimatum.
With over 15,000 fighters, the KIA is one of Myanmar’s most powerful armed groups. Founded in 1961, it has long campaigned for autonomy for the Kachin minority and funds itself through taxation and control of natural resources.
The country plunged into chaos after the 2021 military coup that deposed a democratically elected government. The junta has since faced a national uprising, with large swathes of territory falling to anti-junta forces. China has responded by supplying the military with drones and aircraft, according to the U.S.-based Stimson Centre.
China previously brokered a ceasefire allowing the junta to regain control of Lashio, a key town in northeastern Myanmar. Now, more than 5,000 KIA and allied fighters are reportedly engaged in the battle for Bhamo, according to a KIA commander.
Losing Bhamo would be a significant strategic blow for the junta. It would sever land and river routes connecting key parts of northern Myanmar, isolating military outposts and cutting access to vital trade routes. Maj. Naung Yoe, a former junta officer who defected after the coup, said such a loss would severely weaken military control in the region.
A junta spokesperson told Reuters that China may have held discussions with the KIA but did not confirm whether it requested Beijing to threaten a blockade. “China may have exerted pressure and offered incentives to the KIA,” it said.
According to the KIA official, Beijing first warned the group to halt its advance on Bhamo in talks held in early December. However, instead of withdrawing, the KIA escalated the offensive. Subsequent spring negotiations reportedly turned more confrontational, with Chinese officials explicitly threatening to suspend rare-earth imports.
Analysts at the International Institute for Strategic Studies estimate the battle for Bhamo has cost the KIA hundreds of casualties and stretched its resources.
Yet experts warn that any significant disruption to Myanmar’s rare-earth exports could trigger a global shortfall by year-end. “In the short term, during this disruption, prices outside China could surge,” said Neha Mukherjee of UK-based consultancy Benchmark Mineral Intelligence.
According to KIA sources, rebel forces have cornered junta troops into a few remaining strongholds in Bhamo. Nevertheless, the junta retains air superiority and has bombarded the area with airstrikes. Satellite imagery reviewed by the Australian Strategic Policy Institute confirms that much of Bhamo has suffered extensive damage from aerial bombardment.
Civilians have borne the brunt. According to Khon Ja, a Kachin human rights activist from Bhamo whose home was destroyed in an airstrike, “Air raids have killed children, destroyed schools and churches.”
She added, “I don’t know how long the resistance can withstand Chinese pressure,” noting that border restrictions have already led to severe shortages of fuel and medicine in Kachin.
Despite these challenges, KIA leaders believe that securing Bhamo would shift momentum decisively in their favour and increase public backing. Should they succeed in capturing all of Kachin State, they argue, China would be compelled to negotiate directly with them—leaving the junta sidelined.
“China needs rare earths,” said a KIA commander. “It can only tolerate this disruption for so long.”
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The global supply of heavy rare earths is increasingly at risk as a months-long conflict escalates between the Chinese-backed military junta in Myanmar and the Kachin Independence Army (KIA), a powerful ethnic rebel group.
Since December, the KIA has been battling junta forces for control of Bhamo, a strategically vital garrison town located less than 100 km from the Chinese border. This town lies near the heart of Myanmar’s Kachin State—home to nearly half the world’s heavy rare-earth supply, which is crucial for the production of magnets used in electric vehicles and wind turbines.
These minerals are extracted in Kachin and shipped to China, which dominates global processing of heavy rare earths. However, Beijing has reportedly issued an ultimatum to the KIA: abandon efforts to seize Bhamo or risk a suspension of Chinese purchases of rare earths mined in KIA-controlled territory.
The demand, made during a meeting between Chinese officials and KIA representatives in May, was revealed to Reuters by three individuals familiar with the talks. It marks the first time this warning has been reported publicly and highlights how Beijing is leveraging its mineral dependency to advance its geopolitical interests.
According to a KIA commander, the delegation from China included foreign ministry officials. A senior KIA general did not respond to requests for comment, and Reuters could not confirm whether China has enforced the threatened blockade.
Fighting has already curtailed mining operations, leading to a sharp drop in rare-earth exports from Myanmar. Chinese customs data shows imports of rare-earth oxides and metals from Myanmar dropped by half in the first five months of 2025 compared to the same period last year, though exports rebounded slightly in May.
Earlier this year, China rattled global markets by restricting rare-earth exports in retaliation to tariffs imposed by U.S. President Donald Trump. Now, it appears to be using the same mineral leverage to prop up Myanmar’s embattled military regime—seen by Beijing as a key guarantor of its regional economic interests.
China’s foreign ministry responded to Reuters inquiries by stating it was unaware of the specifics of the discussions with the KIA. A spokesperson added: “An early ceasefire and peace talks between the Myanmar military and the Kachin Independence Army are in the common interest of both China and Myanmar.”
The KIA official, who spoke on condition of anonymity due to the sensitivity of the matter, said China also offered incentives: expanded cross-border trade with KIA-held areas if the rebels stopped their offensive on Bhamo. Failure to comply, the official warned, would lead to an export ban on all goods from Kachin, including rare earths.
China’s posture is not aimed at resolving Myanmar’s broader civil war but at securing stability to protect its investments, said David Mathieson, an independent analyst specialising in Myanmar. “This is a general pressure campaign by China to cool the conflict,” he said.
The KIA’s push to seize Bhamo intensified after it took control of Kachin’s main rare-earth belt last October. Following its takeover, the militia raised taxes on miners and reduced production of key elements such as dysprosium and terbium, causing global prices to surge.
Despite Chinese threats, the KIA remains confident it can capture Bhamo—and that China, dependent on the minerals, will ultimately not follow through with its ultimatum.
With over 15,000 fighters, the KIA is one of Myanmar’s most powerful armed groups. Founded in 1961, it has long campaigned for autonomy for the Kachin minority and funds itself through taxation and control of natural resources.
The country plunged into chaos after the 2021 military coup that deposed a democratically elected government. The junta has since faced a national uprising, with large swathes of territory falling to anti-junta forces. China has responded by supplying the military with drones and aircraft, according to the U.S.-based Stimson Centre.
China previously brokered a ceasefire allowing the junta to regain control of Lashio, a key town in northeastern Myanmar. Now, more than 5,000 KIA and allied fighters are reportedly engaged in the battle for Bhamo, according to a KIA commander.
Losing Bhamo would be a significant strategic blow for the junta. It would sever land and river routes connecting key parts of northern Myanmar, isolating military outposts and cutting access to vital trade routes. Maj. Naung Yoe, a former junta officer who defected after the coup, said such a loss would severely weaken military control in the region.
A junta spokesperson told Reuters that China may have held discussions with the KIA but did not confirm whether it requested Beijing to threaten a blockade. “China may have exerted pressure and offered incentives to the KIA,” it said.
According to the KIA official, Beijing first warned the group to halt its advance on Bhamo in talks held in early December. However, instead of withdrawing, the KIA escalated the offensive. Subsequent spring negotiations reportedly turned more confrontational, with Chinese officials explicitly threatening to suspend rare-earth imports.
Analysts at the International Institute for Strategic Studies estimate the battle for Bhamo has cost the KIA hundreds of casualties and stretched its resources.
Yet experts warn that any significant disruption to Myanmar’s rare-earth exports could trigger a global shortfall by year-end. “In the short term, during this disruption, prices outside China could surge,” said Neha Mukherjee of UK-based consultancy Benchmark Mineral Intelligence.
According to KIA sources, rebel forces have cornered junta troops into a few remaining strongholds in Bhamo. Nevertheless, the junta retains air superiority and has bombarded the area with airstrikes. Satellite imagery reviewed by the Australian Strategic Policy Institute confirms that much of Bhamo has suffered extensive damage from aerial bombardment.
Civilians have borne the brunt. According to Khon Ja, a Kachin human rights activist from Bhamo whose home was destroyed in an airstrike, “Air raids have killed children, destroyed schools and churches.”
She added, “I don’t know how long the resistance can withstand Chinese pressure,” noting that border restrictions have already led to severe shortages of fuel and medicine in Kachin.
Despite these challenges, KIA leaders believe that securing Bhamo would shift momentum decisively in their favour and increase public backing. Should they succeed in capturing all of Kachin State, they argue, China would be compelled to negotiate directly with them—leaving the junta sidelined.
“China needs rare earths,” said a KIA commander. “It can only tolerate this disruption for so long.”
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