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Rare Earth Prices Soar as Myanmar's Mining Operations Halt

Rare Earth Prices Soar as Myanmar's Mining Operations Halt
“People are running around the world looking for rare earth elements.” This one sentence in the South China Morning Post, quoting James Chin, Professor of Asian Studies at the University of Tasmania, sums up the current rare earths situation well.
Chin’s comment is even more true following the recent supply disruptions in Myanmar, which caused a rise in the global prices of rare earths. Amid the ongoing civil war in that country, a rebel group managed to take over a leading mining center in mid-October. This has directly affected Chinese rare earth miners and suppliers, with some Chinese media outfits reporting that mining operations in Myanmar are effectively suspended due to the takeover.
As much as 50% of the global heavy rare earths supply comes from Myanmar. According to news sources from inside the country, the long haul for rare earths will likely see prices increase even more in the coming months, especially as supply dwindles further. Also, don’t let volatile rare earths prices catch you off guard.
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China Reacts Quickly to the Seizure of Rare Earths Operations
The major rare earth mining areas in Myanmar, which include Chipwi, Pang War, Phimaw and Hsawlaw, came under the control of the Kachin Independence Army (KIA) due to recent military operations.
The KIA seized control of Pang War, the largest rare earth mine in Myanmar, on October 18. According to some media reports, China immediately imposed a trade embargo on Myanmar in response to the occupation, cutting off electricity and imports of essential goods, including fuel, chemicals and food.
Quotes from some local residents indicate that most rare earth mining activities in the region had been suspended due to China’s border closure and import ban, severely disrupting the supply chain.
Impact on Rare Earth Prices
Myanmar exported approximately 50,000 metric tons of rare earth oxides (REOs) from ion-adsorption clays (IACs) to China in 2023.  This amount surpassed China’s own IAC mining quota of 19,000 tons, positioning Myanmar as the leading global exporter of heavy REOs.
An article in theglobatimes.com quoted a research report by Huatai Securities as saying that the stoppage of mining operations in Myanmar, coupled with environmental restrictions on the domestic supply of medium and heavy rare earths, could lead to a shortage in their supply. According to a report in the SCMP, analysts are predicting that rare earth prices will consolidate recent gains due to two key factors:
•    Supply disruptions in Myanmar – Most analysts expect the ongoing disruptions in Myanmar to further curb rare earth supplies, thus supporting prices.
•    Potential export restrictions from Beijing – China may tighten export restrictions on rare earths amid escalating trade tensions with the U.S. following the presidential election. This could further limit global supplies and maintain upward pressure on prices.
The combination of these factors will likely lead to a period of price consolidation as the market absorbs the impact of reduced supplies and potential trade restrictions.
China’s Global Grip on Rare Earth Minerals
As per customs data, China imported over 30,000 tons of RE oxide from Myanmar for domestic use in the first nine months of the year. Some analysts believe that if China gets embroiled in trade disputes with the U.S or the EU, Beijing may put in more export controls. China already controls 90% of the world’s rare earth processing capacity, backed by 60% of global production.
In 2022, a Global Witness investigation reported a disturbing development around the green energy transition. It said mines in Myanmar, which are mostly unregulated, had become a crucial source of heavy rare earth elements, which are essential for producing the magnets found in electric vehicles (EVs) and wind turbines all around the world.
China has effectively outsourced much of its extraction to Myanmar. According to the investigation, this has resulted in significant environmental harm and negative impacts on local communities. The majority of HREE sourced from Myanmar comes from Kachin State, which lie along the country’s border with China.
By Sohrab Darabshaw

Nov 20, 2024 10:53
Number of visit : 63

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