The continued shut down of Myanmar’s controversial rare earths mining sector has sent the price of the critical metal sky high.
Led by a swarm of illegal miners, Myanmar has been one of the world’s largest producers of rare earths in recent years, with the majority of its output sent to neighbour China.
The US Geological Survey estimates that about 240,000 tons of rare earth minerals were mined globally in 2020, with China accounting for 140,000 tons, followed by the United States with 38,000 tons and Myanmar with 30,000 tons.
The country is particularly noted for the amount of highly valuable heavy rare earths that it mines, with it rated near the top of the tree amongst global producers.
Heavy rare earths play a key role in technology such as hybrid cars, fibre optics and medical devices and deemed as critical in the make-up of high-performance permanent magnets, making Myanmar’s production particularly valuable.
Global concerns over environmental issues
However, reports of environmental abuse at the rare earth mine sites has attracted significant global concerns, particularly with the number of operations exploding in recent years.
Satellite studies found that a small number of rare earth mines in Myanmar’s Kachin state in 2016 had surged to more than 2,700 mining operations at almost 300 separate locations by early 2022.
Myanmar has become China’s biggest supplier of heavy rare earths in recent years, providing about 40% of its supplies of minerals including dysprosium, yttrium and terbium.
In the first six months of 2023, the value of rare earth minerals exported from Myanmar to China is reported to have reached nearly $1.2 billion.
But that supply has dried up since the mid-year when Myanmar’s Kachin authorities elected to suspend mining activities in the state.
This led to a major spike in early September with Chinese rare earth prices reported to have reached their highest level in 20 months.
Further confirmation and extensions of the suspensions have led to a stockpiling with peak consumption prices continuing to rise, leading to the latest 6.2% price hike on the metals index.
Malaysia also having an effect
The news that Malaysia is considering developing a policy to ban exports of rare earth raw materials is also weighing on market sentiment.
While Malaysia is only home to just a fraction of the world’s rare earth reserves any disruption of supplies is being closely monitored as global demand soars.
GlobalData recently forecast that the global rare earth metals market volumetric demand would reach around 193.3 thousand tonnes in 2023, registering a compound annual growth rate (CAGR) of 4.2% from 2023 to 2030.
Source: small caps