Myanmar’s rare earth mining industry sits at the intersection of short-term opportunity, environmental degradation, and geopolitical conflict, shaping the future of local communities and global rare earth supply chains.

Key takeaways

1. Some local communities stand to gain economically from rare earth mining, which generates jobs and raises wages for workers, who make roughly twice the national average. Risks associated with these opportunities include potential health risks from dangerous conditions at work, lack of regulatory oversight, and exploitation by foreign corporations.
2. Local communities, the Myanmar military (SAC), and foreign companies, particularly from China, significantly impact the country’s rare earth mining sector. Increased conflict and instability could result from the struggle to control these valuable resources, especially between the military and the Kachin Independence Army (KIA).
3. Deforestation, destruction of soil, and water pollution are the major environmental problems brought on by rare earth mining’s uncontrolled nature. These effects put communities’ long-term health and nearby ecosystems at risk. Sustainable practices and efficient governance are essential to balance economic development and mitigate these issues.

1. Overview of Rare Earth Elements

The rare earth elements are divided into two groups, which are Light Rare Earth Elements (LREE-La, Ce, Pr, Nd, Sm) and Heavy Rare Earth Elements (HREE-Eu, Gd, Tb, Dy, Ho, Er, Tm, Yb, Lu, Y). The 17 chemical elements known as rare earth elements (REEs) are essential for many high-tech devices, such as smartphones, electric cars (EVs), and renewable energy sources. Rare earth elements are necessary to produce many goods, especially in the energy and technology industries. As the world moves toward clean energy and cutting-edge technologies, the demand for rare earth elements (REEs) is predicted to circle, possibly increasing three to seven times by 2040. With more than 58% of the world’s supply, China controls most of the rare earth market, although Myanmar is making a growing contribution.

Additionally, According to Investing News, globally, the producers of Rare earth are in first place, China with 68%, second place, Australia with 10%, Third place, USA 9%, and fourth place, 8% Myanmar, abundance of heavy rare earth element (HREE) deposits has made it a major player in the global rare earth supply chain. The stakeholders in Myanmar’s rare earth mining industry—mostly from Kachin State—the economic consequences and the social and environmental effects of this profitable industry are covered in this analysis.

2. The Stakeholders in Myanmar’s Rare Earth Mining

2.1. Local Communities

Rare earth mining operations in Myanmar directly impact local communities, especially in Kachin State. There are negative impacts, such as social unrest and environmental weakening, even though some locals profit from employment prospects and higher incomes—earning much more than the national average. According to reports, local laborers can make about $600 a month, roughly twice the average salary in Myanmar. However, considering that mining operations are unregulated, the long-term viability of these jobs is uncertain.

2.2. Chinese Companies

Chinese businesses are mainly involved in Myanmar’s rare earth mining industry. One of the studies contradicts the belief that rare earth mining has decreased in China and increased in Myanmar. It shows a 130% increase in extractive mining area on the Chinese side and a 327% increase in surface mining area extraction on Myanmar’s side. According to Voice of America, since 2014, they have been actively engaged in mining activities, making significant investments in areas such as Chipwi, Panwah, and Kanpaitee Townships. Since the Chinese government has long dominated the world market for rare earths, Chinese companies have looked to Myanmar to secure their supply chains as domestic production has been challenged. In 2014, Myanmar exported only $1.5 million, and by 2021, it had reached $ 780 million and found over 27,00 mining pools. ISP Myanmar reported that China imported rare earths from Myanmar, valued at almost $900 million in 2023 alone.

2.3. Myanmar Military and Local Governments

The rare earth mining sector and Myanmar’s military government, the State Administration Council (SAC), have a complicated relationship. Although the SAC has declared that rare earth mining is not officially allowed, mining operations have continued because the prohibitions have not been effectively enforced. The military uses the money from these operations to support its operations during ongoing conflicts, “Civil War.” Similarly, Kachin Independence Organization (KIO) spokespersons had mentioned “strict rules” regarding the Rare Earth mining companies due to the environmental shocks and ecosystems. Even though the KIO Chairman General N-Ban La met with residents, more than 1500 residents in Mai Ja Yang, he said, “Rare earth mining will stop.” On the other hand, General N-Ban La said that “the mining had been intended as a way to fund development projects and procure weapons for its war against the military junta.” This is evidenced by the local administration unit from Salingyi under the command of the National Unity Government (NUG), warning businesses like Wanbao Mining to stop working with the SAC.

2.4. International Corporations

International companies indirectly profit from Myanmar’s rare earth mining, especially those in the automotive and technology industries. Businesses in the West depend more on rare earth elements (REEs) to produce high-tech goods like electric cars as the demand for these minerals rises. According to industry experts, heavy rare earths from Myanmar will almost certainly be used in EV motors, underscoring the interconnection of global supply chains.

3. Economic Implications

3.1. Revenue Generation

According to Global Witness, Myanmar’s rare earth mining industry has grown to be a significant source of income. By 2021, the nation’s rare earth exports to China had hit 780 million, up from just 1.5 million in 2014. Although this revenue infusion is essential for a nation dealing with economic difficulties, it questions whether such practices can be continued. The economic situation is made more difficult by the SAC’s confidence in mining profits to finance its military operations.

3.2. Employment Opportunities

This briefing paper series from the University of Warwick describes the various job categories in the rare earth mining industry. Men comprise most of the workforce in rare earth mining regions, though women work in some capacities, most notably as chefs and “water watchers.” Jobs in the local economy, such as operating guesthouses, chopping firewood, and offering transportation services, are brought about by rare earth mining. Additionally, migrant workers generate demand for products frequently imported from China, such as clothing, cigarettes, snacks, alcohol, and toiletries. In isolated locations with high cash flow, some business people open local prostitutes, gambling establishments, and drug stores, all of which are unethical but profitable. However, these positions frequently carry risks, such as the possibility of being taken advantage of by foreign corporations and exposure to dangerous working conditions. Workers might not receive sufficient benefits or protections due to a lack of regulatory oversight.

3.3. Trade Relations with China

China, the world’s largest producer of rare earth minerals, is the leading destination for Myanmar’s exports. Military conflicts and political tensions complicate trade dynamics between China and Myanmar. For example, China’s trade restriction caused mining operations in Kachin State to temporarily halt due to the recent KIA taking over many rare earth mining areas. Myanmar’s economy is significantly at risk from this dependence on a single market if geopolitical tensions increase.

4. Environmental and Social Impacts

4.1. Environmental Degradation

Significant environmental effects result from the extraction of rare earth elements. Rare earth mining (REE) in China and Myanmar has caused environmental degradation and social harm. Despite high global demand, surface mine extents increased by 211% from 2005 to 2020. Land degradation and small-scale mining in areas like Kachin State indicate potential negative impacts on water resources. Mining operations negatively impact local ecosystems and communities. Concerns regarding the effects of mining on nearby communities and wildlife have been voiced by church leaders in Kachin State’s Bamaw Diocese, according to a Union of Catholic Asia News report. These activities’ unregulated status worsens environmental decline, which has long-term effects on the area. Although in situ leaching is less expensive, doesn’t involve excavation, and doesn’t cause deforestation, it can lead to landslides and soil contamination. Comprehensive environmental assessments and regulations are necessary for proper management.

4.2. Social Disruption

Concerns regarding drug use and migrant populations have arisen as a result of mining in Kachin State. Rural areas have changed, which has brought jobs. However, the loss of land, environmental harm, and pollution of rivers and streams also present new risks to livelihood. Farmers find it difficult to sell their products near mining sites, and water shortages impact farming livelihoods. Additionally, the Chipwe/Pangwa area is experiencing broader impacts from the rare earth mining boom, including sexual violence, rising drug use, community tensions, armed actors’ control, and rural-to-urban migration. The situation has been made more difficult by the involvement of the Kachin Independence Army (KIA) and the Myanmar Military in those areas. The more significant conflict over controlling the region’s valuable resources is reflected in the KIA’s interest in creating its rare earth mine benefits. This competition may further impact local communities if there is increased violence and instability.

4.3. Health Risks

Exposure to toxic substances used in rare earth extraction puts workers’ health in the rare earth mining industry at risk. These risks are made worse by the absence of regulation and oversight in Myanmar’s mining sector, risking locals’ and employees’ health and safety. Insufficient information on how mining operations affect health is essential for comprehending and reducing negative consequences. A more substantial evidence base requires evaluating local health data and assisting researchers and CSOs in gaining expertise, which raises questions about the long-term effects on community health.

5. Future Prospects

5.1. Regulatory Challenges

Given the continuous political unrest and conflict, the future of rare earth mining in Myanmar is unclear. The SAC’s inability to enforce mining laws questions the industry’s viability. Furthermore, increased analysis of Myanmar’s mining practices may result from international pressure for ethical mineral sourcing. If a company is discovered to be involved in environmental degradation or human rights violations, its reputation may be at risk.

5.2. Global Demand for Rare Earths

Myanmar’s position with an 8% contribution (4^th place) in the supply chain might become even more crucial as the demand for rare earth elements rises globally. However, there are drawbacks since the nation has to balance social and environmental obligations and economic gains. If not handled appropriately, the possibility of more investment in the industry could result in more illegal exploitation.

5.3. Potential for Conflict

Potential escalation of civil war in Myanmar may result from the struggle for control of rare earth resources. Increased violence and instability in the area could result in the KIA and SAC trying to take control of mining operations. Establishing a stable and sustainable mining industry needed to reflect on the Environmental Impact assessment plans (EIA), which were made more difficult during the ongoing conflict.

Conclusion

The rare earth mining operation in Kachin State, Myanmar, presents a complex trap of benefits and challenges. While some local communities, Chinese companies, and international corporations stand to gain economically, environmental and social costs to the local community cannot be overlooked. As the global demand for rare earths grows, Myanmar’s role in this sector will be essential. Still, it must navigate the complicated balance between economic development and sustainable practices. The future of rare earth mining in Myanmar will depend on effective governance, responsible corporate practices, and the well-being of local communities.