Europe’s industries are increasingly reliant on rare earth elements—not just for the green transition but for a wide array of high-tech applications. These minerals are essential for batteries, semiconductors, electric motors, and wind turbines, yet the continent has very limited domestic deposits. Mining these resources locally is complex, environmentally challenging, and slow, leaving Europe dependent on imports—primarily from China.
However, China itself relies heavily on Myanmar for critical heavy rare earths, particularly dysprosium and terbium, which are key for permanent magnets used in over 95% of electric vehicles, wind turbines, industrial robots, and a variety of household and industrial appliances.
Myanmar: A Critical but Risky Supplier
Myanmar’s Kachin region in the north is the global leader in heavy rare earth mining. Chinese trade data shows imports of roughly 41,700 tons—over twice China’s domestic quota. Other mining countries, including the USA, Australia, and Brazil, produce only minimal quantities of these specialized metals.
The extraction process is highly polluting. Chemicals used to separate minerals contaminate rivers, soil, and groundwater, threatening local livelihoods and health. Historically, mining was controlled by militias aligned with the military junta, funneling revenues into conflict and oppression.
Shifting Control and Emerging Risks
Recently, the Kachin Independence Organization/Army (KIO/A) has taken control of the mines and trade with China. This shift has raised hopes for improved labor conditions and environmental protection, but it also introduces new risks. The KIO/A has imposed export taxes and temporarily halted trade, highlighting how civil conflict directly impacts global supply and prices—the price of terbium alone has surged over 21% following these disruptions.
Europe’s Responsibility and Supply Chain Challenges
European industries face a dilemma: technological advancement cannot come at the expense of human rights or the environment in Myanmar and other Global South countries. The Supply Chain Due Diligence Act (LkSG) in Germany requires companies to track environmental and human rights risks and take corrective action. However, the new CDU/CSU-SPD coalition plans to repeal it, citing bureaucracy.
Repealing the law would weaken corporate risk management and increase dependency on fragile foreign supply chains. European law will likely reintroduce supply chain oversight by 2028, but potential regulatory changes may dilute its effectiveness.
Mitigating Risks Through Responsible Practices
The Myanmar example shows that good labor and environmental practices reduce the risk of export interruptions. By supporting ethical mining standards and fostering local governance improvements, Europe can:
-
Lower the risk of supply disruptions.
-
Encourage stable trade relations with Myanmar and China.
-
Ensure that the green and tech transitions rely on ethically sourced materials.
