In recent developments, Myanmar’s military government is urging the United States to enhance its engagement and expeditiously increase investments in the country’s rare earth minerals. The Myanmar administration argues that such actions would empower the United States to challenge the Chinese Communist Party’s dominance in these critical mineral sectors. Currently, a significant portion of Myanmar’s rare earths is exported to China for processing.
Following months of clandestine discussions between U.S. officials and their counterparts in Myanmar, the U.S. State Department outlined a strategic plan in a document released last week. This plan aims to expand America’s influence while seeking opportunities to tap into Myanmar’s rare earth mineral resources. The talks between U.S. and Myanmar officials covered the acquisition of rare earth minerals primarily located in conflict zones, which are presently being exported to China.
On November 9, the Washington lobbying firm DCI issued a communication on behalf of Myanmar’s government, stating that the United States should consider Myanmar as a priority partner for critical minerals, rather than merely viewing it as a diplomatic challenge.
“Mineral resources serve as a natural entry point for deepening relations between both sides, as they connect Myanmar’s economic potential with U.S. national security and supply chain priorities,” DCI remarked.
A spokesperson from the U.S. State Department conveyed to Reuters that Washington is encouraging Myanmar to make progress in several key areas, including improvements in the business environment for American companies and fostering a genuine peace process aimed at stabilizing the nation.
The Myanmar government engaged DCI last year to assist in rebuilding relations with the U.S. following the military coup that occurred in 2021. After the coup, the U.S. government froze Myanmar’s assets held at the Federal Reserve Bank in New York and implemented numerous sanctions aimed at isolating the military leadership. However, in September, direct communications with Myanmar marked a significant shift in U.S. policy, which had sought to isolate the military for several years.
Myanmar is one of the world’s principal sources of heavy rare earths. Since the outbreak of civil conflict following the military coup in 2021, most of the rare earths produced in Myanmar have been shipped to China for processing into magnets, which are utilized in electric vehicles, wind turbines, and other high-tech products.
According to Global Witness, in 2023, Myanmar supplied China with $1.4 billion worth of rare earths, constituting a majority of the raw materials for China’s rare earth processing. China produces approximately 90% of the world’s rare earth magnets, and in recent years, rare earths have emerged as a tool for the Chinese Communist Party to exert economic coercion on other nations. Beijing has frequently employed export restrictions on rare earths to compel Western countries to make concessions on issues that are significant to China, prompting European and American nations to seek diversification of the rare earth supply chain to reduce their dependency on China.
The primary rare earth production areas in Myanmar are located in Kachin State in the north, which is currently under the control of the Kachin Independence Army, a rebel group that has been engaged in a prolonged conflict with the Myanmar military. The U.S. diplomatic mission in Myanmar has stated its commitment to advocating for a ceasefire, paving the way for reaching a lasting peace agreement by 2030.
Washington’s new strategy aims to secure at least three major commercial or investment agreements for U.S. businesses, each valued at over $5 million. However, the demands set forth by the Myanmar government extend beyond this.
DCI argued that “considering Myanmar’s mineral resources and the ambitions of the U.S. to compete with China, this proposed scale of investment appears overly conservative.” The firm emphasized that China has solidified its position in Myanmar’s resource sector over many years, making it difficult for U.S. companies to supplant the advantages held by Chinese firms and their associated intermediaries.