Possible Impact of Myanmar Coup on China's Rare Earth Supply - 1/2

Myanmar's military coup and declaration of a state of emergency have sparked concern in China over metal and mineral supplies amid high rare earth, tin, and copper prices. China is the world's dominant producer of rare earths, a group of 17 minerals used in consumer electronics and military equipment. But it relied on Myanmar for about half its heavy rare-earth concentrates in 2020, says Adamas Intelligence managing director Ryan Castilloux.

heavy rare earth supply image

The Myanmar military announced that it would take over the regime and declared a 1year state of emergency, and said that Min Aung Hlaing, the commander-in-chief of the armed forces will take power. The leader of the country Aung San Suu Kyi, President Win Min and other senior government leaders were arrested in a raid launched in the early hours of February 1, and claimed that the arrest of officials of the ruling party was "a response to fraud in the legislative election last November."

It is reported that the economic cooperation between China and Myanmar involves many aspects, including industrial transfer (especially the textile and clothing industry), deep-water ports, hydroelectric power plants, Sino-Myanmar oil and gas pipelines, oil and gas exploration and development, minerals, gems, timber, etc. Among them, in terms of minerals, local media have always only mentioned copper mines, but since 2018, the country has become a "rare earth powerhouse".

Rare earth is a collective term for 17 special metal elements. According to the difference of atomic weight, rare earth elements (REEs) can be divided into two categories - light REEs (8 elements) and heavy REEs (9 elements). The distribution of light REEs and heavy REEs is extremely unbalanced on the earth.

Among the world's proven resources, light REEs account for the vast majority, and heavy reserves only account for less than 1% of the total reserves. About 90% of these few heavy rare-earth reserves are concentrated in mainland China. The vast majority of the resources in other countries are light REEs. The total rare-earth reserves in the Mainland are also dominated by light REEs, with heavy REEs accounting for only a small part.

China rare earth concentrate imports by country image

However, although heavy REEs account for a very small proportion of the total global REEs reserves, they account for about a quarter of the consumption. In other words, heavy REEs are much rarer than light REEs. The already scarce heavy REEs will soon be exhausted if mining is not restricted. Therefore, from 2017 to 2018, China has significantly reduced the amount of local heavy rare earth mining, and the alternative source is Myanmar.

Possible Impact of Myanmar Coup on China's Rare Earth Supply - 2/2