A bit of M&A with Silicon Valley's Nerd Reich and they could take over the world.
From Bloomberg Businessweek, July 17:
The Kachin Independence Organization fought for decades in obscurity. Now it’s supplying essential minerals to manufacturers around the world.
Along Myanmar’s 1,300-mile border with China, a town called Pangwa sits in a small valley, surrounded by forested peaks that are occasionally dusted with snow. For years, this hardscrabble outpost was controlled by an aging warlord, an ally of Myanmar’s brutal military junta, who ran his fiefdom largely according to his own whims. Loggers felled precious hardwoods and spirited them over the border. Farmers were permitted to grow opium poppies, as long as they paid steep taxes.
Then, in the mid-2010s, workers began arriving from southern China in search of a precious resource: rare earths, metallic elements with exceptional magnetic and conductive properties that are crucial to dozens of modern technologies. They carved collection pools into the terraced slopes, which soon filled with a milky, turquoise-tinted stew of chemicals, soil and water. Gambling and drug use flourished, the vices of a frontier boomtown.
This new reality continued until early last year, when an organization called the Kachin Independence Army started an offensive—part of a civil conflict between the junta and hundreds of armed groups, rooted in resource-rich areas abutting China, India and Thailand, that’s now in its seventh decade. Formed in 1961 to fight for greater autonomy for the ethnic minority of the same name, the KIA had built itself into a formidable military force, with deep experience operating in mountainous terrain. By October it was advancing steadily toward Pangwa, encountering meager resistance. After sporadic exchanges of fire, the government-affiliated soldiers defending the town opted to retreat; some stashed their weapons in drainage ditches and changed into civilian clothes, aiming to blend in with crowds of refugees streaming toward China. On Oct. 18, Pangwa fell.
Measured by the number of bodies atop the battlefield, the victory was unremarkable. Measured by the spoils below, it was one of the KIA’s most significant ever. Myanmar is the world’s third-largest source of rare earths after China and the US, and last year it accounted for almost half of the global mining of two especially important elements: dysprosium and terbium, which are essential for electric vehicles, wind turbines and certain military gear. According to Adamas Intelligence Inc., a research and advisory company that tracks the industry, this makes the country “a critical, imminently irreplaceable supplier into trillion-dollar technology value chains.”
They include the operations of major global manufacturers. The watchdog group Global Witness recently found that Chinese companies with links to Myanmar rare-earth supplies have listed as customers Ford Motor, Hyundai Motor, Siemens, Tesla, Vestas Wind Systems, Volkswagen and others. (Of these, only Siemens AG responded to a request for comment from Bloomberg Businessweek; according to a spokeswoman, the company has “a comprehensive due diligence framework … to prevent materials from conflict-afflicted and high-risk areas entering our supply chain.”)
Nearly all of Myanmar’s rare-earth mines are in Kachin State, mostly clustered around Pangwa, and the KIA now appears to control every one of them—supervising large teams of informal laborers who perform dirty, dangerous work with next to no protection. This doesn’t mean the army’s leaders are about to get a seat at the top tables in international economic negotiations. China remains the leading rare-earth producer by far, with roughly 10 times Myanmar’s annual output. Moreover, the KIA has no capacity to process the elements mined within its territory; all must be sent for refining to Chinese plants and onward to manufacturers globally. Dysprosium and terbium were among the seven materials whose export China recently restricted in response to US President Donald Trump’s trade war, and for now, at least, there’s no alternative path for them to reach global markets.
The KIA’s situation is remarkable nonetheless. Amid the global race to secure supplies of rare earths, even modest resources, controlled by governments with few other assets, can provide powerful leverage. Greenland, the Danish territory that Trump has said he wants to acquire for its icebound resources, has no active rare-earth mines. Nor does Ukraine, with which the US recently signed a major critical minerals deal. Kachin, by contrast, has hundreds.
The KIA has been silent so far about its intentions for these new mineral riches. The army and its political wing, the Kachin Independence Organization, are opaque to outsiders, with leadership roles filled by a cadre of aging generals who’ve spent most of their life fighting the Myanmar military. They have no diplomatic representation in foreign capitals and no formal connections to international economic bodies. (They do have a media spokesman, Colonel Naw Bu; he didn’t respond to requests for comment.) Yet their role in the production of rare earths, and especially of dysprosium and terbium, is now significant enough that millions of consumers worldwide will soon be using products that contain material mined from their territory, in a violent enclave of a country at war with itself. Ryan Castilloux, the founder of Adamas Intelligence, is incredulous about the situation. Five years from now, he says, “we will look back on this and say, ‘Oh, I can’t believe that happened.’”....
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