Recent conflict has brought Myanmar’s biggest rare earth mining region under the control of the Kachin Independence Organization, yet it’s uncertain how it will handle the lucrative but environmentally devastating industry.
By EMILY FISHBEIN, JAUMAN NAW, JAW TU HKAWNG and HPAN JA BRANG | FRONTIER
An autonomous border region in northeastern Kachin State contains rare earth mines that are vital to global supply chains. However, mining has shut down almost completely in recent months because of a dramatic change in territorial control and ensuing Chinese border shutdowns.
Since the Kachin Independence Army began a full-scale attack in September, it has seized the mountainous region from a Border Guard Force and militia linked to Myanmar’s military junta. The future of the lucrative rare earths industry now hangs in the balance.
The 17 elements known as rare earths are vital components in manufacturing a wide range of items, including weapons, cell phones and magnets used in electric vehicles and wind turbines.
China has been the world’s dominant exporter of rare earths since the 1990s, but around 2010 it began cracking down on domestic mining amid rising environmental and public health concerns. It has since increasingly outsourced the extraction to Myanmar, where it can dig intensively with almost no regulation.
Chinese companies dominate the industry in Myanmar, extracting rare earths and then transporting them across the Yunnan province border for processing before distributing them globally.
Seng Myet, a worker with a Chinese-run mining equipment company in the border town of Pangwa, who used a pseudonym due to security concerns, said that a mining company typically extracts 30 to 70 truckloads of rare earths from a mountain in two to three years.
His Chinese boss told him that each truckload is worth around 12 million yuan (US$1.7 million).
“Whenever he sees the trucks passing through our area, he always says, ‘Look at all that money going by – truck after truck of money!’” said Seng Myet.
But he and others told Frontier that the trucks had stopped since the fighting started, and that the mining remained on hold.
A ‘closed chapter’
Rare earth mining in Myanmar is overwhelmingly concentrated in an area formerly known as Kachin Special Region 1. Until last month, it was ruled by the BGF and an affiliated militia, and it essentially operated as the fiefdom of the octogenarian warlord Zahkung Ting Ying.
His New Democratic Army-Kachin signed a ceasefire with the former military junta in 1989. In return, the junta granted the group autonomy over the resource-rich border region, which includes the towns of Chipwi, Tsawlaw, Kan Pike Tee, Pangwa and Sadung. In 2009, the NDA-K became the first armed group in Myanmar to come under military command as a BGF.
The Kachin Independence Organization, whose KIA armed wing is the largest anti-junta force in Kachin, completed its takeover of the “special region” with the seizure of the border town of Kan Pike Tee on November 20, and declared the region’s old administrative status abolished a week later. This marked the end of Zahkung Ting Ying’s reign of natural resource plunder. However, the KIO has held smaller stakes in rare earth mining elsewhere in the state and also needs funds to sustain its war against the junta. It is so far unclear how the KIO will manage its newly-won resource wealth.
Matthew Lahpai, who worked for an international NGO promoting transparency and accountability in Myanmar’s natural resource governance sector before the 2021 coup, said Zahkung Ting Ying’s cosy relationship with the military gave his BGF an added layer of impunity when it came to business.
“They were given some of the lucrative natural resource extraction rights, and also a blind eye to what is going on in their region,” he said. “Also, China benefited, so nobody dared to raise a thumb.”
The warlord and a close circle of relatives and affiliates made a fortune in illegal logging in the 1990s and early 2000s. Then the window opened for rare earths. “They soon realised that this is profitable, and that they don’t have to follow the rules,” said Lahpai. “When the world oriented itself toward an energy transition, then Zahkung Ting Ying hit the boom.”
To mine rare earths, workers pour acid into holes dug into mountains and move the resulting sediment into chemical leaching pools. Then, they lay out the rare earths to dry, burn off excess residue, pack it into bags and load it onto trucks bound for China.
The extent of the health effects on workers, who often wear little or no protective gear, remains unclear. But contaminated water supplies, degraded soil and loss of forest cover are clearly evident, according to Sinwa Naw, a Kachin researcher at Sophia University in Tokyo who studies ethnic armed movements and natural resource conflicts in Myanmar.
“The environment and land have been destroyed,” he said. “Companies don’t have waste management plans; they just dispose all of their toxic waste into the river. After they finish mining, they move to new sites without carrying out any environmental rehabilitation process.”
Post-coup mining boom
The mining expanded after the 2021 coup. While the illicit nature of the industry masks its full scale, Chinese customs data show that rare earth imports from Myanmar jumped from 17,400 tonnes in 2020 to more than 40,000 in 2023.
Throughout this time, Special Region 1 remained peaceful even as the country descended into war and economic turmoil. A Chipwi Township resident, who asked not to use his name for safety reasons, said the KIA and Zahkung Ting Ying’s groups may have initially found peace more profitable than war, especially in places where they mined in close proximity or collected taxes from vehicles passing through their respective territories.
“I think all armed groups work together to benefit from rare earths,” he said before the recent clashes. “They might have an agreement of mutual understanding.”
According to Ze Naw, who is from the Pangwa area and commented using a pseudonym, this peace became harder to maintain as the KIA’s fight against the junta accelerated. Since the coup, it has taken a leading role in training and arming other anti-junta groups, while stepping up its decades-long fight for self-determination. In March, it launched a new offensive with its ally, the Kachin People’s Defence Force.
“The operation has been widespread in Kachin … At the same time, [the KIA] are supporting others,” said Ze Naw. “Clearly they need money now. It needs to be quick … and Kachin Special Region [1] is the only place they can get it very quickly.”
For months leading up to its September offensive on Special Region 1, the KIA steadily took control of areas leading into the territory, including through attacks in June on BGF and militia positions in the Sadung area.
Such attacks left the BGF and militia stranded in “defenceless islands” according to Jason Tower, Myanmar country director for the United States Institute of Peace.
“As those supply lines were cut, it became increasingly clear that Ting Ying would no longer be receiving support from the Myanmar military,” Tower said.
About a month into its direct assault on the special region, in early October, KIA-led forces seized the towns of Chipwi and Tsawlaw. On October 17, they closed in on Pangwa, the BGF and militia headquarters. “When the KIA entered, many militia members panicked, abandoned their weapons, changed out of their uniforms, and fled with the civilians in the border area,” Seng Myet said.
Videos taken by citizen journalists show thousands of people gathered at the border in the town, where China had constructed a barbed-wire-topped fence during the COVID-19 pandemic. While a source told Frontier she had obtained a temporary pass to cross through the separate Hpimaw border gate just north of Pangwa, those in Pangwa itself were overwhelmingly blocked from crossing.
“China’s approach has been to sort of cut off the border and prevent instability from spilling over onto the Chinese side,” Tower said.
However, a humanitarian crisis in Pangwa was averted on October 18, when KIA-led forces easily took control of the town.
Multiple sources told Frontier they believed that Zahkung Ting Ying and BGF and militia commanders had crossed into China or relocated to junta-controlled areas before the KIA’s offensive even started. Frontier was unable to confirm this.
Borders closed
Over the following week, China officially closed six border crossings into Kachin that are now under the control of the KIO.
Tower speculated that China was trying to pressure the KIA to end its attacks. China has also closed border crossings in northern Shan State and put pressure on ethnic armed groups there to halt a year-long offensive against the junta, which has lost key towns and garrisons.
“China wants to help the Myanmar military achieve a so-called soft landing,” Tower said.
The border shutdowns have had far-reaching effects. Food, petrol and commodity prices have risen across Kachin according to Kachin News Group, which also reported petrol shortages in the state capital Myitkyina.
Rare earth mining operations also stopped. “The necessary materials for the companies aren’t coming from China…so almost no rare earth mining sites can operate,” said a former labourer at a rare earth mining site near Pangwa, citing conversations with other workers.
The worker himself was recruited into the KIA in September, along with around 20 others from his company.
“The KIA came to talk with our site manager, and then we had to go volunteer,” he said. His duties have included cooking, guarding prisoners of war and transporting ammunition, for which he is paid 100 yuan ($14) a month.
When he finishes his three-month term of service, he plans to search for another job in the rare earth mining business, which he expects will be back on its feet soon. “There are still a lot of mountains that haven’t been mined yet. As soon as the border gate opens, they will start mining again.”
Joint ventures
When the mining does resume, it could look very different than before.
Seng Hkum, a Kachin researcher of the political ecology of critical minerals at the University of Montana, said the companies involved in rare earth mining in Kachin have so far generally operated as joint ventures with or shells for Chinese investors.
“Chinese are directly involved with this mining process, and the local militias are like proxies,” he said. “Most of the investment, technology, everything is coming from China.”
He added that the KIO is in a unique position where it could leverage its control over Kachin’s valuable rare earth mines for economic and political advantage.
Rare earths are considered “critical minerals” by countries including the United States, Canada and the United Kingdom, meaning they are vital to these countries’ economies or national security but their supply is vulnerable to disruption.
The extent to which existing investors will work with the KIO remains unclear, but it is likely to have no shortage of potential partners, according to Tower.
“The KIA has a very different set of relationships in China, and that could also prove to be an opportunity,” he said. “Will some wealthy, politically connected Jingpo elites in China look to come in and play a role as brokers?”
Yunnan province is home to tens of thousands of people of Kachin heritage, who are recognised in China as Jingpo.
Another possible player is the United Wa State Army, which also has stakes in Kachin’s multi-billion-dollar jade mining industry. The KIO’s previous rare earth mining projects in Mansi Township and the Hpare area of Chipwi Township involved a Wa company, according to local media reports and interviews conducted by Frontier, although the company’s relationship with the UWSA is unclear.
But, says Tower, for the UWSA to invest in rare earth mining in KIO territory, it would have to consider the potential backlash from China, which has exerted heavy pressure on the avowedly neutral group to cut its ties with anti-junta resistance forces.
Environmental considerations are also at play. “You’re talking about some of the most egregious and horrifically polluting mines in the world,” said Tower. “Is that something that the KIA wants to take on?”
The KIO’s track record on that front is mixed. In April last year it cancelled plans to allow rare earth mining in the Nbapa area of Mansi Township following intense public protests. But when protests erupted against new rare earth mines in Hpare in February this year, the KIO responded by firing grenades to disperse the crowd and detaining more than 40 people.
If the KIO were to start seriously regulating the industry, Tower said, it would not only force Chinese investors to change the way they do business in Myanmar, but also drive up costs across the entire supply chain. This could potentially push China to search for alternative places to mine rare earths. “On the other hand, getting the industry right and introducing safeguards might make the industry more sustainable over the long term,” he added.
A ‘new chapter’
Mangshang Yaw Bawm, a Kachin political analyst, believes Zahkung Ting Ying’s forces are unlikely to stage a comeback any time soon. “Their chapter has been closed,” he said. “The new chapter under the KIO is to begin.”
He urged the KIO to use its new authority to clean up the rare earth mining industry. “The KIO has to show that it is different from Zahkung Ting Ying and from the military,” he said. “It has to show that it manages resources responsibly, and it has to show that the resources are also for the benefit of the people in the region.”
The KIO says it is aware of the challenges ahead. Colonel Naw Bu, the KIO’s information officer, told Frontier on November 29 that the organisation had suspended all rare earth mining in its newly seized territory while preparing a policy paper.
“It will outline how we will develop that region, how we plan to extract resources, and how we will continue or regulate the mining activities,” he said. “There will definitely be environmental protections included in the policy, as well as plans for roads, infrastructure, schools and hospitals.”
Lieutenant-General Sumlut Gun Maw, who serves as vice chairman of the Kachin Independence Council, an advisory body to the KIO, said in an interview with BBC Burmese on November 18 that the KIO would only allow mining to proceed in its new territory when it was able to systematically manage the process for the benefit of the public.
He added that during two or three meetings, Chinese officials had offered to support the KIO in developing mining methods, but said they had not yet reached a stage where they could continue the discussions.
This is not the first time the KIO has pledged to formalise its management of natural resources, which have largely funded the group since its establishment in the 1960s. In the years leading up to the 2021 military coup, the KIO participated in consultations with the Kachin public on a resource governance policy, but the process remains stalled despite growing public pressure.
Seng Hkum stressed that the KIO must learn from the past, and especially from its ceasefire with the military from 1994 to 2011, when Kachin saw a massive expansion of logging and jade mining to the detriment of the environment and society.
“The KIO mismanaged the resources during the ceasefire without any tangible benefit to the people, and they can’t let it happen again this time with rare earths,” he said, calling on the group to look beyond quick financial gain towards the long-term impacts.
“It is crucial to avoid turning our region into a ‘dumping ground’ or ‘green sacrifice zone’ for China and others, especially as China shifts away from its own environmentally costly rare earth production,” he said. “I hope KIO can seize this opportunity to achieve their political objectives while managing resources sustainably for the benefit of the local community and future generations.”
