Intensified military offensives in Myanmar's Kachin State are threatening roughly half of global dysprosium and terbium supply, with industry participants reporting that physical availability has displaced pricing as the primary concern. Simultaneously, China is extending its rare earth dominance from mining into the certification, standards, and oversight systems that govern how the entire industry operates globally. India's emergence as an active geopolitical competitor in Kachin adds a third dimension to a crisis that can no longer be described as a simple bilateral contest between Washington and Beijing.
Introduction
In the first two weeks of June 2026, two separate but deeply connected developments are redefining the risk calculus for every manufacturer, government, and investor exposed to heavy rare earth elements. The first is physical: Myanmar's military has launched renewed offensives against the Kachin Independence Army across the northeastern borderlands that produce, according to Adamas Intelligence, 57% of global dysprosium and terbium mine supply. The second is institutional: China is systematically converting its production dominance into durable rule-setting authority over the global rare earth supply chain, from export licensing to environmental certification to supply chain security law.
The two dynamics are not independent. Every week that fighting persists in Kachin State compresses the feedstock pipeline flowing into Chinese separation facilities, reinforcing Beijing's leverage over a world that has not yet built credible processing alternatives. And every administrative instrument China adds to its toolkit, whether a new technical standard, a licensing catalogue update, or a supply chain security decree, makes the eventual reconnection of non-Chinese manufacturers to global rare earth flows more conditional, more costly, and more uncertain.
Layered on top of both developments is an emerging variable that would have seemed unlikely two years ago: India, through its state-owned minerals enterprise and its Ministry of Mines, is actively engaging the Kachin Independence Army directly, collecting ore samples and advancing bilateral discussions at the foreign-minister level. The rare earth geopolitical competition has formally widened beyond the US-China bilateral framework into something more complex and, in some respects, harder to manage.
The Kachin Front: When Half the World's Heavy Rare Earths Are Caught in a War Zone
The strategic weight of Myanmar's Kachin and Shan states in the global heavy rare earth economy is difficult to overstate and even harder to replace. Two-thirds of the terbium and dysprosium processed in China originates from these war-torn provinces, extracted from ion-adsorption clay deposits that are geologically uncommon outside of southern China. Between 2017 and 2024, Myanmar exported over 290,000 tonnes of rare earth material to China with a total value exceeding USD 4.2 billion, 85% of which was generated after the 2021 military coup. In 2023 alone, China imported more than USD 1.4 billion worth of rare earth minerals from Myanmar.
The inflection point arrived in October 2024, when the Kachin Independence Army seized Chipwi and Pangwa townships, the core of the HREE extraction belt. China responded by closing border gates and halting shipments. After discreet negotiations in Kunming in December 2024, the KIA imposed a 20% levy that was subsequently formalized at 35,000 yuan (approximately USD 4,830) per metric ton by April 2025. Trade resumed, but under conditions that had fundamentally changed: a non-state armed group now exercises de facto governance over one of the world's most strategically significant mineral corridors.
As of May 2026, Myanmar's military has launched new offensive operations targeting the Chipwi and Pangwa mining belt. KIA spokesperson Naw Bu left little ambiguity about the armed group's response: "We will welcome them with the barrels of our guns." All major ethnic armed groups, including the KIA and the Karen National Union, have rejected the military's 100-day dialogue proposal. The command transition the Myanmar military underwent in March 2026 has not produced a change in its operational posture, and active offensives are ongoing across at least three state-level fronts simultaneously.
The supply consequences are already measurable. Chinese customs data show that Myanmar-origin rare earth imports fell by approximately 50% in the first five months of 2025 amid the violence. Neha Mukherjee, senior analyst at Benchmark Mineral Intelligence, has warned that Myanmar disruptions, compounded by China's export controls, have put "more than 75% of global mined medium and heavy REEs at risk." Her assessment of the physical market is direct: "A prolonged disruption in supply from Kachin could cause a global shortage by year-end." With offensives now intensifying in mid-2026, that timeline is no longer hypothetical.
The Price Signal and What It Cannot Tell You
Dysprosium oxide (Dy2O3, 99.5%) was trading at approximately USD 191/kg on Shanghai Metals Market as of early March 2026, representing a year-to-date gain of over 100% and a 163% increase since the start of 2025. Terbium oxide (Tb4O7) tracked similarly, reaching roughly USD 4,028/kg in March 2026, a comparable year-on-year surge driven by compounding supply pressures. The sharpest single-month move in dysprosium came between December 2025 and January 2026, when prices dropped 21% in one month as partial supply normalizations flowed through, only to resume climbing as Myanmar operations escalated again.
Terbium's price history across 2025 is particularly instructive. From approximately USD 1,396/kg in January 2025, internal resale levels surged toward USD 3,484/kg by mid-year, driven by the convergence of China's stop-start export policy and Myanmar feedstock disruptions. By Q3 2025, liquidity in terbium oxide and metal had tightened to the point where new terbium sales to private investors were temporarily halted to prioritize industrial customers. The ratio of terbium to dysprosium pricing remains above 4:1, reflecting terbium's greater scarcity at an estimated 300-400 tonnes per year of global production versus over 2,000 tonnes for dysprosium.
Yet strategic metals analysts are increasingly pointing to a structural distortion in what price data can communicate. Reuters reported that China's rare earth magnet exports rose 8.2% year-on-year in the first two months of 2026, a figure that could be read as broad relief. But US-bound shipments fell 22.5% in the same period. As one analyst framing captured precisely: "That is not broad relief. That is selective access." Even after trade volumes partially recovered from the April-May 2025 trough, European prices for separated heavy rare earth oxides were reaching up to six times prevailing Chinese levels, making any product manufactured outside China with Chinese-sourced inputs structurally less competitive.
The deeper problem is that non-Chinese dysprosium supply is estimated at under 12% of global demand in 2026, a concentration ratio that cannot shift materially before the late 2020s even under the most optimistic development scenarios. Processing capacity, not mining, remains the binding constraint. Building on my analysis of the processing infrastructure push in June 2026, which covered the DOE-backed Phoenix Tailings demonstration facility and Australian processing investments, the gap between capital commitment and operational capacity remains measured in years, not quarters.
China's Institutional Playbook: From Export Levers to Rule-Setting Authority
China's export control architecture has evolved through identifiable waves since 2023, each adding a new layer of leverage over global supply chains. The April 4, 2025 Wave 1 controls placed seven heavy rare earth categories, including samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium, under immediate export licensing requirements. The impact was rapid and severe: China's total exports of rare earth magnets fell 74% year-on-year in May 2025, reaching just 1.2 million kilograms, the lowest level since the COVID-19 disruptions of February 2020. US-specific declines were even steeper, with shipments to American buyers falling 93.3% year-on-year that month.
The October 9, 2025 Wave 2 controls extended the architecture further, adding five more rare earth elements and reaching into technological know-how and even foreign-made products. Under the extraterritorial provisions, any product containing 0.1% or more of Chinese-origin rare earths, or manufactured using Chinese processing technologies, would require a license regardless of where it was made. Those provisions were subsequently suspended until November 2026 following the Xi-Trump meeting at APEC Busan, but the April 2025 licensing regime was never suspended and remains fully active. Manufacturers dependent on dysprosium, terbium, and yttrium continue to operate under the original licensing framework.
The most consequential institutional development of the past twelve months may not be the export controls themselves but the deeper standards and regulatory infrastructure being constructed alongside them. The November 2025 National Rare Earth Standardization Technical Committee meeting in Tonglu County, Zhejiang brought over 150 industry experts together and produced 26 new technical standards, with 30 more validated for 2026 implementation. Cao Yiding from China's market regulation authority articulated the governing philosophy directly: standards "must align with state industrial policy objectives to advance the sector toward high-end, intelligent, and green development." This is not technical housekeeping. It is industrial policy expressed through standardization.
China's Rare Earth Environmental Product Declaration (EPD) Platform, operating parallel to the standards effort, is constructing carbon-footprint accounting and certification systems for rare earth products that could become conditions of market access in European and Asian import markets. The platform's 2026 plans include pursuing international mutual recognition of its environmental frameworks, a move that, if successful, would give China regulatory gatekeeping authority over supply chain environmental compliance globally, layering on top of its existing production dominance.
The capstone of this institutional architecture arrived on March 31, 2026, when Premier Li Qiang signed State Council Order No. 834, promulgating the Provisions on the Security of Industrial Chains and Supply Chains. The regulation is the first dedicated administrative instrument in China focused specifically on supply chain security. In 18 articles, it establishes cross-agency investigation procedures, vests broad countermeasure authority over foreign states and private actors, restricts supply chain information gathering within Chinese territory, and imposes compliance obligations on every organization and individual operating in China. The interaction with foreign legal regimes is not incidental: legal analysts at major international firms have concluded that Orders 834 and 835 together make it legally impossible to simultaneously satisfy both Chinese law and US UFLPA or EU CSDDD requirements in full.
India Enters the Arena: The Geopolitics of Kachin Ore Samples
In mid-2026, India's engagement with Myanmar's rare earth sector crossed from diplomatic interest into operational activity. Indian Foreign Secretary Vikram Misri confirmed in June 2026 that critical minerals and rare earths had come up during discussions between Prime Minister Narendra Modi and Myanmar's President U Min Aung Hlaing. Misri described this as "a subject that had been under bilateral consideration for some time, with both governments committing to maintain close engagement and advance cooperation in these areas going forward."
The operational dimension predates the diplomatic confirmation. According to reporting by Reuters, India's Ministry of Mines directed both state-owned IREL India Ltd and private firms, including Midwest Advanced Materials, to explore direct procurement options from the Kachin Independence Army. In July 2025, a government-led initiative coordinated the transfer of rare earth ore samples from KIA-controlled territory to Indian laboratories for analysis and feasibility assessment. The move to directly engage a non-state armed group signals a significant policy evolution for New Delhi, which has historically maintained close ties with the Myanmar military junta.
India's strategic motivation is specific rather than general. The National Critical Minerals Mission, approved by the Union Cabinet on January 29, 2025 with a total outlay of INR 16,300 crore supplemented by an expected INR 18,000 crore in public and private investment, identifies rare earths as a priority. In the fiscal year ending March 2025, India imported more than 53,000 metric tonnes of rare earth magnets, the vast majority from suppliers dependent on Chinese-processed materials. Domestic rare earth production remains below 3,000 tonnes annually. Myanmar's Kachin deposits address a specific gap in India's diversification matrix: they are geographically proximate, HREE-rich, and potentially accessible via land-based logistics corridors that more distant sources cannot replicate.
The broader multilateral context reinforces India's positioning. The Quad Critical Minerals Initiative Framework, announced at the Quad Foreign Ministers' Meeting in New Delhi on May 26, 2026, commits Australia, India, Japan, and the United States to coordinated diversification of critical mineral supply chains. India's simultaneous engagement with Myanmar, its bilateral critical minerals framework signed with the United States on the same day, and its role in the Quad framework together position New Delhi as a potential processing intermediary between Kachin State ore and allied industrial consumers. Some analysts have explicitly described this as a role India is suited to play: accessing Myanmar material through its regional relationships and providing processed rare earths to Quad partners.
Practical constraints remain substantial. India lacks high-purity rare earth separation infrastructure at the scale required for commercial HREE processing. Logistics corridors through conflict-affected territory are inherently unreliable, and any large-volume commercial arrangement would require either transit cooperation from Myanmar's central government or a logistical route that bypasses government-controlled areas entirely. India has also maintained parallel diplomatic engagement with Myanmar's junta to avoid foreclosing the infrastructure access those relationships provide. The current stage of engagement, sample collection and feasibility study, is far removed from commercially operational supply.
The Gap Between Diversification Ambition and 2026 Reality
The global response to China's export controls and Myanmar's conflict has generated genuine and unprecedented momentum. The Trump administration has mobilized financing across multiple US government agencies, established price floors at USD 110 per kilogram for domestically produced rare earths, and initiated bilateral frameworks with Australia, Japan, Malaysia, and Saudi Arabia. A fully integrated rare earths refinery under construction near Geraldton in Western Australia, backed by a USD 1.65 billion Australian Government loan, is targeting commissioning in 2027 and will be one of the few facilities outside China capable of producing separated dysprosium and terbium oxides at commercial scale. Japan and France have also committed support to the Caremag refining project, targeting roughly 20% of Japan's future dysprosium and terbium demand.
Europe's exposure underlines the urgency. The EU sources all of its heavy rare earth elements and 85% of its light rare earth elements from China, as well as 98% of its rare earth magnets. Economists from the European Central Bank have estimated that over 80% of large European firms are no more than three intermediaries from a Chinese REE producer. As explored in my coverage of Técnicas Reunidas' RARETECH® milestone and the PERMANET initiative in June 2026, Europe is investing in upstream separation capabilities, but the timeline between first commercial kilograms of NdPr oxide and a fully vertically integrated supply chain spans years and multiple regulatory hurdles.
The honest assessment of the current moment is captured in a single sentence that runs through every credible analysis of the non-Chinese supply build-out: all of the diversification activity matters, and none of it solves 2026. The US faces a capability gap between mining and magnets that requires refineries, separation plants, and magnet production lines requiring billions in capital and years of permitting before yielding a single kilogram of magnet-grade NdPr metal. Non-Chinese dysprosium supply at under 12% of global demand does not move meaningfully within a single fiscal year regardless of policy ambition or capital commitment.
In the interim, the market splits not by price but by access. Licensing data confirm that US-bound magnet shipments have not recovered to pre-April 2025 levels even during periods of nominal easing, while European volumes rebounded more sharply. Chinese customs data show only 17 tonnes of yttrium exported to the United States in the eight months between April and December 2025, compared to 333 tonnes in the equivalent prior period. The April 2025 controls were never suspended. The November 2026 suspension of Wave 2 extraterritorial provisions expires without any confirmed extension mechanism. If geopolitical conditions deteriorate before renewal, the IEA estimates that USD 6.5 trillion in annual economic activity outside China faces exposure from full reimplementation.
Conclusion: The Compounding Architecture of Dependency
What is unfolding across Myanmar's Kachin State and in Beijing's regulatory chambers is not a single supply shock but the construction of compounding dependencies, each reinforcing the others. Myanmar's conflict compresses the feedstock flowing into Chinese separation facilities. Chinese export licensing then conditions who receives the separated oxides that emerge from those facilities. China's standards apparatus defines what technical specifications global manufacturers must meet to use the products. And its supply chain security decree, Order 834, restricts the information those manufacturers can gather about their own upstream exposure while they are operating within Chinese territory.
India's entry into the Kachin engagement adds complexity without yet adding supply. New Delhi's simultaneous engagement with the KIA, the Myanmar junta, the United States bilaterally, and the Quad multilaterally reflects a strategic assessment that the rare earth competition is entering a phase where positioning matters as much as production. But sample collection and feasibility studies do not flow into EV traction motors, and the gap between India's HREE ambitions and operational separation infrastructure is measured in years of capital investment and technical development.
For manufacturers, the current period demands a distinction the aggregate export statistics obscure: availability, not price, is the binding constraint for dysprosium and terbium in 2026. The price data shows volatility. The licensing data shows selectivity. The military situation in Kachin shows no trajectory toward near-term resolution. And the institutional architecture China is assembling through standards, certification, environmental frameworks, and supply chain security law means that even as physical flows fluctuate, the regulatory infrastructure governing who accesses what, on what terms, and under what conditions is being set by one party for the entire global system.
The Cambridge carbonatite research I covered in June 2026 offers exploration geologists a new predictive framework for identifying the next generation of HREE deposits. The processing investments from Western Australia to Madrid are building the separation capacity that will eventually reduce Chinese processing dependency. But geological prediction and capital commitment operate on decade timescales. The procurement officers, defense program managers, and EV plant operators working in mid-2026 are navigating a market where the rules are being written in real time, by one dominant player, from a position of structural strength that no near-term diversification effort can fully offset.