China threatens rare-earth blockade to curb Myanmar rebel advance

China has warned Myanmar's Kachin rebels it will block rare-earth imports from their territory unless they halt an offensive on a key junta stronghold, raising fears over the global supply of critical minerals.

The Kachin Independence Army (KIA), a powerful non-state armed group in northern Myanmar, is pressing ahead with its bid to capture Bhamo, a strategic town near the Chinese border, despite Beijing’s threat to halt the purchase of rare earths mined in KIA-controlled areas.

Nearly half of the world’s heavy rare-earth supply comes from Kachin state and is processed in China for use in electric vehicles and wind turbines. Chinese officials told the KIA in May that exports would be blocked unless the group stopped its advance on Bhamo, according to a KIA official and two other sources familiar with the talks.

The rare-earth ultimatum, disclosed by Reuters for the first time, is part of Beijing’s attempt to support Myanmar’s military junta, which it sees as a regional stabiliser and economic partner. The Chinese foreign ministry said it was unaware of the details but added that peace talks were in the interest of both nations.

KIA commanders said they believed China would ultimately continue buying the minerals due to its reliance on the resources.

“China, which needs rare earths, can only tolerate this for a limited time,” one commander told Reuters.

Since capturing Myanmar’s main rare-earth belt last October, the KIA has throttled production and increased taxes, contributing to a 50% year-on-year drop in Chinese imports from Myanmar in the first five months of 2025, though shipments rose in April and May.

The KIA launched its offensive on Bhamo in December and has pushed junta troops into isolated pockets.

However, the military retains air superiority and has carried out heavy airstrikes, reportedly killing civilians and damaging infrastructure. Satellite imagery reviewed by analysts shows widespread destruction consistent with aerial bombing.

Analysts say the loss of Bhamo would sever key military supply routes and reduce junta control in the north.

China’s effort to prevent this includes not only economic pressure but the reported supply of drones and aircraft to Myanmar’s military.

KIA leaders argue that if they can secure all of Kachin state, China will be forced to negotiate directly with them.

“If we did not accept, they would block exports... including rare-earth minerals,” said a KIA official.

Experts warn that a sustained disruption to Kachin's rare-earth output could lead to a global shortfall by year-end.

“Prices outside of China could shoot up higher,” said Neha Mukherjee of Benchmark Mineral Intelligence.

The KIA, founded in 1961, has grown into one of Myanmar’s strongest armed groups, resisting both junta pressure and now growing Chinese demands. But activists say the costs are high, fuel and medicine shortages are worsening, and civilians are increasingly caught in the crossfire.

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