Fuelling the future, poisoning the present: Myanmar’s rare earth boom, 23 May 2024

In 2022, a Global Witness investigation revealed a shocking reality at the heart of the green energy transition. Unregulated mines in Myanmar had become an essential source of heavy rare earth elements (HREE), vital ingredients for the magnets used in electric vehicles (EV) and wind turbines worldwide.

China, which controls nearly 90% of global rare earth processing capacity, had in effect outsourced much of its extraction to Myanmar, at terrible cost to the environment and local communities. Most of the HREE from Myanmar originate from Kachin State, on the border with China.

Two years after our last report, we have revisited this region’s toxic mining landscape. New trade data, satellite imagery and community testimony reveal that the world’s dependence on a remote corner of Myanmar has only deepened, and so too have the consequences for the people who live there.

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…[I]mports of heavy rare earth oxides from Myanmar to China skyrocketed from their previous highs of 19,500 tons in 2021 to reach 41,700 tonnes in 2023 – more than double China’s own quota for domestic HREE mining. […]

Myanmar’s lucrative trade in HREE – worth $1.4 billion in 2023 – risks financing conflict and destruction in a highly volatile region. [...]

Demand for permanent magnets, mostly used in EVs and wind turbines, is driving the boom in rare earth mining across Kachin state. It appears that Myanmar’s HREE output goes predominantly to rare earth processors in China, then on to magnet manufacturers, before finding their way to EV and wind turbine firms – some of which are household names.

The extraction and processing of rare earths is tightly controlled by an official quota in China. Following a period of consolidation, that quota is currently allocated to just two state-owned companies - China Northern Rare Earths Group and China Rare Earths Group (REGCC). REGCC was created by a 2022 merger of existing Chinese rare earths firms, at least one of which previously disclosed sourcing HREE from Myanmar.

[...]REGCC said the company “ [...] took Global Witness’ findings seriously and would therefore “form a special team to carry out relevant in-depth investigation and research, and strengthen targeted regulatory measures so that the Group's subsidiaries can better operate with standards and efficiency.”

After processing, a significant proportion of HREE is used to make permanent magnets. [...]Two major Chinese magnet makers who are known to have signed rare earth supply agreements with REGCC are JL Mag Rare Earth and Yantai Zhenghai Magnetic Material (also known as ZH Mag).

In company documents JL Mag has boasted of a range of high-profile clients including electric vehicle manufacturing giants Tesla and Volkswagen, as well as major wind turbine makers Siemens Gamesa and Goldwind. [...]JL Mag denied sourcing HREE from Myanmar “whether directly, through suppliers or by any other means”. [...]

ZH Mag meanwhile said in its 2021 annual report that it supplied magnets to carmakers including Volkswagen, Toyota, Nissan, Ford and Hyundai as well as automotive parts makers such as Germany’s Brose. It also listed European wind power firms Siemens Gamesa and Vestas amongst its clients. Shipping records show that ZH Mag was also a supplier of magnets to the major automotive parts manufacturer Nidec during 2023.

Global Witness wrote to all the downstream companies named in this report requesting comment. Most of them did not respond. Of those that did, Brose said: “we have confirmed with our supplier that our products are free of any rare earth minerals sourced from Myanmar. Nissan told us “We are committed to working with our business partners … to enhance transparency and traceability in our supply chain.” Toyota said “We …are aware that there is a growing concern that the mining of heavy rare earths…might be associated with certain environmental, social and governance issues,” …They also said that they would investigate Global Witness’ claims and if necessary would ask suppliers “to make corrective improvement actions.” …

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