Since the February 2021 coup in Myanmar, rare earth extraction has expanded rapidly in Kachin State, a state in northern Myanmar bordering China. There, the ethnic armed organization Kachin Independence Army (KIA) has taken control of some of the most valuable mines for key rare earth minerals essential for manufacturing electric vehicles and other high tech products. By controlling the lucrative export of these rare earths to China, where the minerals are processed, the KIA has brought China to the negotiating table. But it remains to be seen whether this model of resource-backed diplomacy can bring stability.
In October 2024, the Kachin Independence Army (KIA) seized control of Chipwi and Pangwa, two towns at the center of one of the world’s most valuable concentrations of heavy rare earth elements. These materials, particularly dysprosium and terbium, are essential to the production of electric vehicles, wind turbines, and advanced defense systems. China responded by closing border gates along the Yunnan corridor, halting rare earth shipments from Myanmar.
Negotiations followed but moved slowly. It was only in December 2024, after a discreet meeting in Kunming, China, between KIA representatives and members of the Chinese People’s Political Consultative Conference, that momentum shifted. A new taxation regime was introduced, with the KIA imposing a 20 percent levy on exported rare earth concentrates. Chinese buyers initially resisted. By April, both sides agreed on a fixed rate of 35,000 yuan (USD 4,830) per metric ton. Trade resumed under KIA regulation, formalizing the role of a non-state armed group as the de facto governor of a critical supply corridor.
This development was not isolated. It reflects a broader reordering of Myanmar’s conflict economy following the February 2021 coup. Since the military takeover, rare earth extraction has expanded rapidly in northern Kachin State. According to ISP-Myanmar, the number of active mining sites rose from about 130 in 2020 to over 370 by the end of 2024. In Chipwi alone, more than 2,500 leaching pits have been recorded.
The export boom has mirrored this expansion. Between 2017 and 2024, Myanmar exported over 290,000 tons of rare earth material to China, with a total value exceeding USD 4.2 billion, 85% of which was generated after the coup. The year 2023 was particularly productive, with exports of USD 1.4 billion. Myanmar has become China’s most important external supplier of heavy rare earth elements, accounting for more than 60 percent of import value each year in recent years.
The KIA’s seizure of Chipwi and Pangwa disrupted this trade but also redefined the group’s strategic role: no longer solely a territorial insurgency, the KIA now governs key resource zones, manages export taxation, and negotiates directly with a major regional power. This is not without precedent; in the wake of its 1994 ceasefire with the Myanmar government, the KIA administered jade mining in Hpakant, using revenues to entrench its autonomy and build administrative capacity.
Today, the KIA’s role is beginning to resemble that of the United Wa State Army (UWSA), which has long controlled tin exports to China from Wa State. The UWSA operates a system of informal taxation, providing stable access to resources in exchange for political non-interference. China has tolerated this model of armed commerce in Wa State and may do the same in Kachin. Yet key differences remain. Unlike the UWSA, which governs an internally consolidated and politically isolated territory, the KIA operates in a region with strong Christian influence and extensive diaspora ties. Many Kachin diaspora communities support the National Unity Government, reinforcing the KIA’s political alignment with Myanmar’s opposition. These connections bind the KIA more closely to transnational advocacy and democratic agendas, making its position more exposed but also more globally engaged. As a result, while the KIA may be a valuable resource partner for China, its political affinities and international linkages may also generate tension, particularly if the group leans further toward Western engagement. This dual alignment could complicate cross-border trade relationships and make China more cautious in its dealings.
Despite growing efforts to diversify its supply chains, China remains vulnerable to disruptions in Myanmar. Domestic production of dysprosium and terbium, concentrated in Guangdong and Jiangxi, is limited by grade and environmental costs. Myanmar’s clays remain commercially attractive due to low labor costs and weak regulation. Recent investigations by Global Witness, ISP-Myanmar (2024), and regional journalists have tracked the expansion of extraction sites and documented cross-border trade flows, underscoring the strategic significance of these operations. These structural advantages explain China’s preference for negotiated access over disengagement, even as it reaffirms its principle of non-interference.
This access has come at a cost. In Kachin, rare earth mining has caused severe environmental degradation, including deforestation, groundwater contamination, and toxic runoff. Local communities have protested against these impacts, viewing them as threats to livelihoods and land sovereignty. In some cases, environmental damage from mining has spilled into northern Thailand. These grievances add a layer of volatility to resource-driven arrangements and may affect the long-term viability of ceasefires premised on extraction.
This approach also reflects larger geopolitical shifts. The rare earth standoff has developed alongside escalating U.S.-China trade tensions. China has imposed a series of escalating measures related to rare earths, with the latest being tighter restrictions from Beijing on the export of rare earths following a major U.S. escalation of tariffs on Chinese goods. While peripheral to many outside observers, Myanmar’s northern corridor has become a critical pressure point in this global contest.
India has taken notice. In December 2024, officials from Indian Rare Earths Limited, a government-owned company, visited Kachin to assess upstream partnerships. India, with limited domestic reserves of heavy rare earths, sees access to Kachin’s deposits as a way to reduce dependence on China. Strategic concerns also inform Delhi’s interest. Gaining a foothold in the region would offset Chinese influence along India’s eastern frontier. Yet India faces serious constraints. While it has initiated limited engagement with ethnic armed groups along the India–Myanmar border, most notably with Arakan and Chin actors, it has no precedent for negotiating with non-state armed groups at this depth or scale, particularly in resource governance contexts. Border infrastructure also remains underdeveloped. Indian analysts have urged greater involvement, but operational pathways remain unclear.
The KIA, meanwhile, has gained not only revenue but leverage. With export volumes near 2023 levels and a fixed price reportedly agreed at 35,000 yuan per ton, the KIA could generate well over USD 200 million annually. This figure surpasses the budgets of several small states. Recent interviews with local actors suggest exploratory discussions on a new ceasefire model. These talks do not center on federalism or political power-sharing, but on border trade, taxation, and mining control. For many ethnic armed organizations, however, resource control has always been integral to their federalist vision. In this sense, resource-sharing is not a substitute for political settlement, but a core component of it.
The KIA’s influence extends beyond resource governance. It commands Military Region 1 under the National Unity Government and conducts joint operations with People’s Defense Forces. Its role in coordinating military efforts has increased since 2022, making it a central actor in the resistance movement. The KIA is also a founding member of the Federal Political Negotiation and Consultative Committee, a coalition of ethnic armed organizations led by the UWSA. This bloc serves as a primary vehicle for China’s engagement with Myanmar’s non-state actors, offering a platform for informal mediation outside of official state channels.
Whether this model of resource-backed diplomacy can produce stability remains uncertain. What is clear is that rare earths now shape the political landscape of northern Myanmar. Rebel governance, cross-border trade, and great power rivalry are converging in a zone once seen as peripheral. The KIA’s rise as a gatekeeper of strategic resources redefines the logic of armed legitimacy. For China, the priority is access through engagement. For India and others, the question is whether to acknowledge quasi-state actors as stakeholders or risk exclusion from Southeast Asia’s mineral future.
The reason mediation around resource governance is even feasible is due to military advances by groups like the KIA. Control over territory and extraction sites has created leverage, reinforcing the perception among ethnic armed organizations, the National Unity Government, and People’s Defense Forces that China will pragmatically engage with whoever holds power on the ground. This underscores the continued relevance of military victories in shaping diplomatic outcomes.
Rare earths, meanwhile, have become a double-edged sword. On one hand, they offer Myanmar a rare entry point into strategic policy discussions in Washington, particularly under a second Trump administration. On the other hand, framing Myanmar’s crisis through a narrow lens of rare earth access risks encouraging a transactional rather than strategic response. This could reduce prospects for long-term stability and heighten geopolitical rivalry in contested regions of the country. Rare earths are no longer a subplot in international dynamics; they now sit at the intersection of conflict resolution, international recognition, and geopolitical risk.
Since the February 2021 coup in Myanmar, rare earth extraction has expanded rapidly in Kachin State, a state in northern Myanmar bordering China. There, the ethnic armed organization Kachin Independence Army (KIA) has taken control of some of the most valuable mines for key rare earth minerals essential for manufacturing electric vehicles and other high tech products. By controlling the lucrative export of these rare earths to China, where the minerals are processed, the KIA has brought China to the negotiating table. But it remains to be seen whether this model of resource-backed diplomacy can bring stability.
In October 2024, the Kachin Independence Army (KIA) seized control of Chipwi and Pangwa, two towns at the center of one of the world’s most valuable concentrations of heavy rare earth elements. These materials, particularly dysprosium and terbium, are essential to the production of electric vehicles, wind turbines, and advanced defense systems. China responded by closing border gates along the Yunnan corridor, halting rare earth shipments from Myanmar.
Negotiations followed but moved slowly. It was only in December 2024, after a discreet meeting in Kunming, China, between KIA representatives and members of the Chinese People’s Political Consultative Conference, that momentum shifted. A new taxation regime was introduced, with the KIA imposing a 20 percent levy on exported rare earth concentrates. Chinese buyers initially resisted. By April, both sides agreed on a fixed rate of 35,000 yuan (USD 4,830) per metric ton. Trade resumed under KIA regulation, formalizing the role of a non-state armed group as the de facto governor of a critical supply corridor.
This development was not isolated. It reflects a broader reordering of Myanmar’s conflict economy following the February 2021 coup. Since the military takeover, rare earth extraction has expanded rapidly in northern Kachin State. According to ISP-Myanmar, the number of active mining sites rose from about 130 in 2020 to over 370 by the end of 2024. In Chipwi alone, more than 2,500 leaching pits have been recorded.
The export boom has mirrored this expansion. Between 2017 and 2024, Myanmar exported over 290,000 tons of rare earth material to China, with a total value exceeding USD 4.2 billion, 85% of which was generated after the coup. The year 2023 was particularly productive, with exports of USD 1.4 billion. Myanmar has become China’s most important external supplier of heavy rare earth elements, accounting for more than 60 percent of import value each year in recent years.
The KIA’s seizure of Chipwi and Pangwa disrupted this trade but also redefined the group’s strategic role: no longer solely a territorial insurgency, the KIA now governs key resource zones, manages export taxation, and negotiates directly with a major regional power. This is not without precedent; in the wake of its 1994 ceasefire with the Myanmar government, the KIA administered jade mining in Hpakant, using revenues to entrench its autonomy and build administrative capacity.
Today, the KIA’s role is beginning to resemble that of the United Wa State Army (UWSA), which has long controlled tin exports to China from Wa State. The UWSA operates a system of informal taxation, providing stable access to resources in exchange for political non-interference. China has tolerated this model of armed commerce in Wa State and may do the same in Kachin. Yet key differences remain. Unlike the UWSA, which governs an internally consolidated and politically isolated territory, the KIA operates in a region with strong Christian influence and extensive diaspora ties. Many Kachin diaspora communities support the National Unity Government, reinforcing the KIA’s political alignment with Myanmar’s opposition. These connections bind the KIA more closely to transnational advocacy and democratic agendas, making its position more exposed but also more globally engaged. As a result, while the KIA may be a valuable resource partner for China, its political affinities and international linkages may also generate tension, particularly if the group leans further toward Western engagement. This dual alignment could complicate cross-border trade relationships and make China more cautious in its dealings.
Despite growing efforts to diversify its supply chains, China remains vulnerable to disruptions in Myanmar. Domestic production of dysprosium and terbium, concentrated in Guangdong and Jiangxi, is limited by grade and environmental costs. Myanmar’s clays remain commercially attractive due to low labor costs and weak regulation. Recent investigations by Global Witness, ISP-Myanmar (2024), and regional journalists have tracked the expansion of extraction sites and documented cross-border trade flows, underscoring the strategic significance of these operations. These structural advantages explain China’s preference for negotiated access over disengagement, even as it reaffirms its principle of non-interference.
This access has come at a cost. In Kachin, rare earth mining has caused severe environmental degradation, including deforestation, groundwater contamination, and toxic runoff. Local communities have protested against these impacts, viewing them as threats to livelihoods and land sovereignty. In some cases, environmental damage from mining has spilled into northern Thailand. These grievances add a layer of volatility to resource-driven arrangements and may affect the long-term viability of ceasefires premised on extraction.
This approach also reflects larger geopolitical shifts. The rare earth standoff has developed alongside escalating U.S.-China trade tensions. China has imposed a series of escalating measures related to rare earths, with the latest being tighter restrictions from Beijing on the export of rare earths following a major U.S. escalation of tariffs on Chinese goods. While peripheral to many outside observers, Myanmar’s northern corridor has become a critical pressure point in this global contest.
India has taken notice. In December 2024, officials from Indian Rare Earths Limited, a government-owned company, visited Kachin to assess upstream partnerships. India, with limited domestic reserves of heavy rare earths, sees access to Kachin’s deposits as a way to reduce dependence on China. Strategic concerns also inform Delhi’s interest. Gaining a foothold in the region would offset Chinese influence along India’s eastern frontier. Yet India faces serious constraints. While it has initiated limited engagement with ethnic armed groups along the India–Myanmar border, most notably with Arakan and Chin actors, it has no precedent for negotiating with non-state armed groups at this depth or scale, particularly in resource governance contexts. Border infrastructure also remains underdeveloped. Indian analysts have urged greater involvement, but operational pathways remain unclear.
The KIA, meanwhile, has gained not only revenue but leverage. With export volumes near 2023 levels and a fixed price reportedly agreed at 35,000 yuan per ton, the KIA could generate well over USD 200 million annually. This figure surpasses the budgets of several small states. Recent interviews with local actors suggest exploratory discussions on a new ceasefire model. These talks do not center on federalism or political power-sharing, but on border trade, taxation, and mining control. For many ethnic armed organizations, however, resource control has always been integral to their federalist vision. In this sense, resource-sharing is not a substitute for political settlement, but a core component of it.
The KIA’s influence extends beyond resource governance. It commands Military Region 1 under the National Unity Government and conducts joint operations with People’s Defense Forces. Its role in coordinating military efforts has increased since 2022, making it a central actor in the resistance movement. The KIA is also a founding member of the Federal Political Negotiation and Consultative Committee, a coalition of ethnic armed organizations led by the UWSA. This bloc serves as a primary vehicle for China’s engagement with Myanmar’s non-state actors, offering a platform for informal mediation outside of official state channels.
Whether this model of resource-backed diplomacy can produce stability remains uncertain. What is clear is that rare earths now shape the political landscape of northern Myanmar. Rebel governance, cross-border trade, and great power rivalry are converging in a zone once seen as peripheral. The KIA’s rise as a gatekeeper of strategic resources redefines the logic of armed legitimacy. For China, the priority is access through engagement. For India and others, the question is whether to acknowledge quasi-state actors as stakeholders or risk exclusion from Southeast Asia’s mineral future.
The reason mediation around resource governance is even feasible is due to military advances by groups like the KIA. Control over territory and extraction sites has created leverage, reinforcing the perception among ethnic armed organizations, the National Unity Government, and People’s Defense Forces that China will pragmatically engage with whoever holds power on the ground. This underscores the continued relevance of military victories in shaping diplomatic outcomes.
Rare earths, meanwhile, have become a double-edged sword. On one hand, they offer Myanmar a rare entry point into strategic policy discussions in Washington, particularly under a second Trump administration. On the other hand, framing Myanmar’s crisis through a narrow lens of rare earth access risks encouraging a transactional rather than strategic response. This could reduce prospects for long-term stability and heighten geopolitical rivalry in contested regions of the country. Rare earths are no longer a subplot in international dynamics; they now sit at the intersection of conflict resolution, international recognition, and geopolitical risk.
