Myanmar's generals want US money for their rare earth mines: why Washington is tempted, and why China and Kachin rebels stand in the way

Why is Myanmar courting American investors? Because it has something Washington badly wants: heavy rare earths. Myanmar's military led government is urging the United States to step up its re engagement and rapidly boost investment in the country's rare earth mines, a sector now dominated by China, Reuters reported via The Straits Times. "Ultimately, the United States should treat Myanmar as a critical minerals priority, not simply a diplomatic challenge," lobbying firm DCI Group wrote on behalf of Myanmar's information ministry.

The pitch comes days after the US State Department released a strategy document outlining plans to expand influence in Myanmar and potentially gain access to its rare earth deposits, after months of quiet talks. It is a remarkable shift for a country whose generals Washington sanctioned after the 2021 coup. But there are big obstacles: civil war, China's grip on the supply chain and the fact that the richest mines are not controlled by the government at all.

What Myanmar is asking for

DCI Group, which Myanmar hired last year to help rebuild US ties, argued in a newsletter published on Monday 9 November that minerals are "the natural place for this deepening relationship to grow, since they connect Myanmar's economic potential to US national security and supply chain priorities". The message is that Washington should move quickly and think big.

The firm described the US strategy's target of at least three major commercial or investment deals worth more than 5 million dollars each as "modest, given Myanmar's mineral resources and America's stated ambition to compete with China". It warned that Chinese companies and intermediaries hold advantages "that will not be easily displaced".

A State Department spokesman told Reuters that Washington was encouraging Myanmar to make progress on priorities including "improving the domestic operating environment for US businesses, and building towards a genuine peace process that stabilizes the country". China's foreign ministry and Myanmar's government did not immediately respond to requests for comment.

Why rare earths matter so much

Rare earths are a group of metals used to make powerful permanent magnets for electric vehicles, wind turbines, electronics and defence systems. Heavy rare earths such as dysprosium and terbium are especially valuable because they help magnets work at high temperatures, and supplies are concentrated in very few places.

Myanmar is one of the world's main sources of heavy rare earths, and most of its output is exported to China to be turned into magnets. China produces about 90 percent of the world's rare earth magnets, partly relying on raw material shipped from Myanmar, and has recently tightened state control of the sector. Beijing has used export controls on rare earths as leverage in trade disputes, most recently extending a suspension of new controls until January.

President Donald Trump has made rare earths a national security priority since returning to office, pouring billions of dollars into companies trying to loosen China's grip. Access to heavy rare earth ore outside China is one of the hardest parts of that puzzle, which is why Myanmar's deposits draw attention despite the country's turmoil.

Myanmar is offering Washington a shortcut around China's rare earth monopoly. The catch is that the road runs through a war zone held by Beijing's friends.

China's leverage has been on display throughout 2026. Its rare earth export controls have featured in its trade talks with Washington, and its export machine has kept growing, as we showed in our report on China's trillion dollar trade surplus. The US has also used tariffs heavily, including the Section 301 measures we examined in our analysis of the US tariff wall.

The Kachin problem

The biggest obstacle is geography and war. Myanmar's main rare earth production sites in the northern region of Kachin are controlled by the Kachin Independence Army, a long standing rebel group fighting the military that has the backing of Beijing, Reuters reported. The government making the pitch does not control the mines it is offering.

Myanmar has been engulfed in civil war since the military seized power in February 2021. Resistance groups and ethnic armed organisations control large parts of the country, and fighting continues. This week, state media reported the army seized a key resistance headquarters and several bases, while Thailand put ten border provinces on alert over fighting near the frontier.

For US companies, that makes any rare earth investment extraordinarily risky. Mines in contested territory face security threats, legal uncertainty and the possibility that whichever group controls the area changes. China's long established relationships with armed groups along its border give its companies a practical advantage that money alone cannot easily overcome.

A dramatic shift in US policy

Washington's approach to Myanmar has changed sharply. After the 2021 coup, the United States froze Myanmar's assets at the Federal Reserve Bank of New York and imposed sanctions to isolate the generals. In September 2026, it reversed course by holding direct talks with the military government, and the new strategy now treats Myanmar partly as a minerals opportunity.

Critics warn that engagement could legitimise a military government accused of serious abuses. Supporters argue that leaving the field entirely to China serves neither US interests nor Myanmar's people. The State Department's emphasis on a "genuine peace process" suggests Washington wants to tie economic engagement to political progress, at least on paper.

For Southeast Asia, the shift matters. ASEAN has struggled to make progress on its own peace plan for Myanmar, the Five Point Consensus, and some members are debating how far to re engage with the military. US involvement through minerals could change those calculations, for better or worse.

What it means for markets and the region

For investors, the key points are:

• Myanmar's heavy rare earths are strategically valuable but sit in contested territory
• US engagement is beginning cautiously, with small deal targets
• China retains strong advantages through processing, logistics and local ties
• sanctions, security risks and reputational concerns will deter many companies

For other Southeast Asian countries, the race for critical minerals is an opportunity. Malaysia hosts one of the few large rare earth processing plants outside China, and Vietnam has significant deposits. Governments that can offer stability and transparent rules may attract more of the investment that Washington wants to direct away from China than a country at war.

For Myanmar's people, the question is whether minerals deals bring any benefit to communities near the mines, where unregulated mining has caused severe environmental damage in recent years. Without peace and accountable governance, rare earth wealth risks fuelling conflict rather than ending it.

Myanmar is offering the United States a way into the heavy rare earths it needs to compete with China, and Washington is listening. But the mines sit in rebel held territory backed by Beijing, in a country still at war. For now, the minerals pitch says more about the shifting geopolitics of critical materials than about any deal likely to move ore to American factories soon.