Myanmar might be in economic freefall – with the International Labour Organisation estimating the loss of 1.6 million jobs in 2021, the year of the military coup – but in border areas far from the centres of power, illicit industries are booming. One such industry involves the mining of a core ingredient in the world’s transition from fossil fuels to green energy, whose extraction is nonetheless decimating a remote, mountainous area of Myanmar on the Chinese border.

“Rare earth” elements, as this key ingredient is called, are not really all that rare. These metals are found throughout the Earth’s crust, but rarely in the concentrations that make commercial mining viable. They are used in electric car motors, wind turbine generators and the LED screens of computers and smart phones. The 17 rare earth elements are divided into seven “light” and 10 rarer, and more valuable, “heavy” rare earths. The latter are also used in high-tech weapons and drones, and they account for most of the rare earth mined in Myanmar.

While rare earth mining happens in multiple locations in Myanmar, it is heavily concentrated in the vicinity of the Chinese border town of Pangwa, in Kachin State’s Chipwi Township. Rare earth ores extracted from the once-beautiful hillsides of this region, home to the Lachik (or Lashi) and other ethnic minority groups, are dumped straight onto trucks bound for China. Myanmar rare earths are then processed by Chinese state-owned companies and sold as key industrial components to the rest of the world. Some of these components – in particular, the permanent magnets that help to power electric cars and wind turbines – end up in Europe, according to a report last year by Danish investigative outlet Danwatch and Myanmar’s Frontier magazine. There, they are used by companies claiming to be at the forefront of the green energy transition.

But while rare earths have become indispensable to plans to reduce carbon emissions, the mining process is potentially ruinous to the local environment. In Pangwa it involves denuding hillsides of forest cover – destroying ecosystems and causing soil erosion – and then pumping a chemical solution through holes in the hillsides. The runoff is then evaporated in tanks, with the help of yet more chemicals, and the residue is burnt, leaving the ore.

A mine worker told Radio Free Asia that oxalic acid and ammonium bicarbonate are used in the process, alongside three other “toxic” chemicals. Kachin-based environmental groups say these chemicals, and the metals themselves, have contaminated the soil and water sources in the area, based on tests conducted in 2018.

Miners told RFA, as well as Frontier and Danwatch, that the contamination is so bad that both their drinking and bathing water now have to be sourced from elsewhere, and that intense mining has created a wasteland. “In the areas we worked on the mountains, there’s nothing left, not even a small bird. Anything that drinks the liquid we put in the mountains will die. Nothing can live there,” one worker told Frontier and Danwatch. 

This environmental ruin is why China, which sensed the economic potential of rare earths early on and pioneered their extraction for decades, has imposed tight regulations on the industry since 2015. These regulations prompted Chinese rare earth companies to switch to sourcing their ore from outside the country. This demand turbo-charged rare earth mining in Myanmar, which accounted for about half of China’s “heavy” rare earth imports in 2020. It also single handedly made Myanmar the world’s third-biggest exporter of rare earths, behind China and the United States. In this way, the environmental damage of China’s rare earths industry was exported to its southwestern neighbour.

However, the harm is not limited to the hills and streams of Pangwa. Another report by Frontier and Danwatch exposed how rare earth mining is helping to enrich the leaders of a local armed group allied to the Myanmar military. The armed group is one of several “Border Guard Forces” across Myanmar that have supported the military in its efforts to crush resistance groups since the coup. In exchange, BGFs have been permitted to continue illicit business ventures, which include the unlawful extraction of Myanmar’s natural resources. The Frontier and Danwatch investigation shows that even before the coup, rare earth mining was taking place in a legal vacuum, and under the close control of the local BGF. Only one company, led by BGF leaders, has received an exploration permit for rare earths, accounting for just a fraction of the actual mining; the remainder of permits have been for other metals, held by other companies with BGF links.

Given that rare earth mining in Pangwa has thrived on the area’s lawlessness, the coup has likely given it a boost. While we await hard data to confirm this, the RFA report published this month quoted a resident of Pangwa saying that “illegal miners” were “more active than ever”. Following the coup, “the number of people coming to this region from the lower parts of the country [to mine rare earths] increased significantly,” the resident said, putting these arrivals in the “tens of thousands” since late last year. 

This influx of miners coincided with China’s relaxing in November of border controls that were intended to stop the spread of COVID-19 from Myanmar. This relaxation unblocked shipments of Myanmar rare earths that had been held up at border crossings for months. These crossings were shut again early this year, amid the worldwide spread of the Omicron variant of COVID-19, and have yet to be fully reopened.

But while the ebb and flow of the pandemic will continue to disrupt cross-border trade, Chinese state newspaper Global Times quoted industry sources as saying that the demand in China for Myanmar rare earths is bound to increase in the years ahead, thanks partly to the Chinese “government's focus on green development”.

This focus is, of course, shared by countries across the world. An industry source told Global Times that Chinese exporters trading in Myanmar-sourced rare earths “may not be able to catch up with demand”.

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