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Roskill: Myanmar crisis set to disrupt rare earth supply availability

On 1 February 2021, a coup d’état in Myanmar brought down the civilian government and imposed military rule. The coup and resulting state of emergency quickly resulted in concerns in China over metal and mineral supplies from its neighbor.

  • Myanmar is the world’s third-biggest miner of tin and in 2020 accounted for more than 95% of China’s imports of tin concentrate, used by smelters to make refined tin for circuit-board soldering. China’s overall import reliance is 30-35%.

  • While China is the world’s dominant producer of rare earths, it relied on Myanmar for about half its heavy rare earth concentrates in 2020.

  • Myanmar was the world’s 18th-biggest copper producer in 2019, with all output coming from two projects led by China’s Wanbao Mining, a unit of military supplier Norinco. Refined copper cathode shipments to China from Myanmar were 108,584 tonnes in 2020—a negligible part of record imports of 4.5 million tonnes from all countries.

The conflict in Myanmar has escalated significantly in recent weeks. As of 1 April, at least 500 people have been killed in protests against the coup, with at least 1,700 more detained. Protestors have ransacked Chinese-owned businesses after accusations that Beijing had supported the coup.

Although the northern states of Myanmar, such as Kachin, have been less affected by the unrest in the country since the coup, there are now reports that the trade of products across the border with China are being impacted, disrupting the rare earth supply, note Roskill analysts David Merriman and Ross Embleton.

Disruption to the transportation of material is stated as being the main cause of delays to trade across the border between Myanmar’s Kachin state and China’s Yunnan province. The relationship between local militia (which control the rare earth mines) and state military (which allows the rare earth mines in Kachin to operate freely), is also being placed under increasing strain. This has the potential to reduce Myanmar’s rare earth production sharply and swiftly.

Disruption to the supply of rare earth ores, concentrates and semi-processed products between Myanmar and China has the potential to create significant supply chain issues for processors in southern China, the Roskill analysts said.

As reported by Roskill on 25 March, all ionic adsorption clay (IAC) mining operations in China, including those who had operated throughout in 2020, asked to be suspended in late February, and there are no signs of any re-start yet. The proposed introduction of ammonia-free in-situ leaching technology at various IAC projects in China has not materialized over continued concerns regarding pollutants, recovery rate and social impacts.

This means that there are very few operational alternatives to Myanmar-derived production of heavy rare earth elements (HREEs) such as dysprosium and terbium, with viable sources either only in pilot scale production or producing mixed HREE products as a by-product of Nd-Pr, the Roskill analysts said.

In 2020, Myanmar accounted for 39% of global HREE mine production, with China itself the only other major producer of HREE mined products at 48% of global supply. In comparison, the next largest producer of HREE mined products was Lynas Corporation at roughly 5.5% global supply. There are reported to be stockpiles of refined HREEs, including dysprosium and terbium compounds, held by both private and public inventories, which could be drawn down in China, though without primary production these inventories would soon become depleted.

As a result of the growing uncertainty and tight supply availability in China, prices for dysprosium and terbium are expected to be supported at higher levels, following the strong price performance observed during 2020 and Q1 2021. This will result in better economic performance for many projects under development and further incentivize investment in capacity, Roskill said.

The payability of certain rare earth products will be unaffected by higher Dy and Tb prices, particularly those with dominant light rare earth (LREE) content, Roskill added. However, with the potential for significant supply deficits for many HREEs if Myanmar production is heavily disrupted for an extended period, even LREE products may see increased payability for certain HREEs.

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