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Friday, 14 May 2021 06:44 GMT

Is Myanmar's junta benefiting from rare-earth boom?


(MENAFN - Asia Times) Illegal rare-earth mining in Myanmar's northern border state of Kachin — a common occurrence in the region and a major export to China — has seen a five-fold increase since the February 1 military coup, raising fears the profits could be helping fund the junta.

Environmental groups have reported the surge in excavations for the minerals, commonly used in mobile phones and electronics, as Chinese miners flood across the frontier to the townships of Pangwa and Chipwi, The Telegraph reported.

'Before the coup, we only saw one or two trucks per day. Now, there is no proper inspection (and) we are seeing 10 to 15,' an activist in Chipwi told The Irrawaddy .

He said the trucks are loaded with ammonium sulphate fertilizer bags filled at illegal mines.

Ja Hkaw Lu, from the Transparency and Accountability Network Kachin (TANK), told the Irrawaddy that the situation had spiralled out of control since the overthrow of the civilian government.

'Currently, vehicles carrying heavy rare-earth leave day and night. The situation is getting worse,' she said.

Clare Hammond, a campaigner for human rights group Global Witness , said it was difficult to quantify the scale of the problem due to the 'lawless nature of the entire area' and the porous border.

Many of the illegal mines are in areas controlled by border guard forces and militias which have links to the country's military.

Hammond said the military was engaging in 'ceasefire capitalism' in Myanmar's restive borderlands, where militias were allowed to earn from the illicit mining of rare-earths in return for giving up arms and performing security duties.

'Operations like this don't exist in a vacuum — they rely on high-level corruption or tacit support from neighbours like China and Thailand. There is scope for cooperation to tackle the crime and money-laundering risks and through that cut off sources of illicit funding to Myanmar's military,' she said.

According to a report released by the group Independent Economists for Myanmar (IEM) this week, Myanmar accounted for 39% of global heavy rare-earth element production in 2020.

'Many illegal mines are in territory controlled by Border Guard Forces and militias, some of which are allied to the Tatmadaw,' said the IEM, using the local term for the armed forces. 'The scale of military benefits from illegal mining activity is unknown.'

China is the world's dominant producer of rare earths, a group of 17 minerals used in consumer electronics and military equipment.

But it relied on Myanmar for about half its heavy rare earth concentrates in 2020, says Adamas Intelligence managing director Ryan Castilloux.

Myanmar is therefore an 'exceptionally critical supplier of … feedstocks that are essential ingredients in high-strength permanent magnets for electric vehicle traction motors, wind power generators, industrial robots and a wide array of defence-related applications,' he said.

Heavy rare earth from Kachin State is exported to China for refining and processing and then sold around the globe.

According to TANK, at least 10 new rare earth mines have opened near the border in Zam Nau, which is controlled by the military-affiliated New Democratic Army Kachin (NDAK).

In total, environmental groups estimate that there are more than 100 rare earth mines in Pangwa and Chipwe townships controlled by the militia and Chinese investors.

Brang Awng of the Kachin State Working Conservation Group told The Irrawaddy that the mines cause environmental destruction, polluting waterways and groundwater.

'Illegal digging is on the rampage since there are no checks by government officials since the military coup. More digging will further damage the environment,' he said.

The group said more than 20 villages were suffering from polluted soil and water from rare earth mining. In 2020 and 2019, the Chipwe river twice turned red due to mining waste.

In the January-February period, rare-earth oxide imports went up 24.6% year-on-year to 3,546 tons, customs data showed.

China's rare-earth imports from Myanmar rose by 23% from 2019 to around 35,500 tons last year, accounting for 74.39% of total imports, followed by Malaysia with 17.06% and Vietnam with 4.46%t, according to customs data. 

The reports come amid rising pressure from rights groups and the ousted civilian government for the international community to choke the junta's finances.

A bipartisan group of US senators has urged the Biden administration to step up existing sanctions by blocking royalties flowing from businesses including US energy major Chevron Corp to Myanmar Oil and Gas Enterprise, or MOGE, an agency within the Energy Ministry.

MOGE provides financial support to military leaders, including coup leader General Min Aung Hlaing, who is already under US sanctions.

Sanctioning the regime's foreign assets generated from natural gas, mining, forestry, shipping and airlines would cut off roughly US$2 billion per year in financing for the military, it said.

Sources: The Telegraph, Irrawaddy, Global Witness, Reuters, Global Times

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