A Chinese-backed militia has secured control over new rare earth mines in Myanmar’s Shan State, giving Beijing continued access to vital minerals used in electric vehicles, aerospace, and weapon systems, amid an ongoing trade war with Washington.

Rare Earth Supply Shifts from Kachin to Shan

As armed conflict in Myanmar’s north disrupted key rare earth supply routes in Kachin, China turned to Shan State, where mining has expanded under the protection of the UWSA. Satellite images reviewed by Reuters show rapid construction of leaching pools and infrastructure at at least two sites between Mong Hsat and Mong Yun, 30km from Thailand’s border.

Industry analysts confirm the mines are producing high-value elements like terbium and dysprosium, essential for permanent magnets used in defense and green tech.

Chinese Operators, Strategic Leverage

Four sources—including miners and Shan Human Rights Foundation activists—report the sites are run by Chinese-speaking managers. One mine worker described company logos in Chinese characters. Rare earth exports from Myanmar make up nearly half of China’s imports, according to 2025 customs data.

Beijing’s strategy of outsourcing extraction to Myanmar, where environmental and labor standards are looser, allows production costs up to seven times lower than in other countries, said Neha Mukherjee of Benchmark Mineral Intelligence.

Militia Rule Enables Unregulated Extraction

The UWSA, a 30,000-strong armed group with deep ties to China, enforces access control in the region. Civilians must carry UWSA-issued ID cards to enter. Patrick Meehan of the University of Manchester notes the Shan mines represent the first major development outside the Kachin belt.

The Wa region, largely untouched by Myanmar’s civil war, offers a “stable” environment for Beijing, said Jason Towers of USIP, giving China a long-term foothold in critical mineral extraction.

Rare Earths as Trade War Leverage

As the U.S.-China trade dispute intensifies, China has tightened export restrictions on rare earths while securing new supply lines in Myanmar. Prices for terbium oxide have risen over 27% in six months. Analysts say the Shan mines reflect a shift to maintain China's grip on supply and global pricing power.