Myanmar lobbies US to invest in its rare earths sector, dominated by China

Myanmar's military regime is advocating for increased United States engagement and investment in the nation's rare earths mines, which are currently dominated by its powerful neighbor, China. The U.S. State Department has drafted a plan to expand its influence and potentially gain access to Myanmar's rare-earth deposits, following months of covert negotiations with Myanmar officials.

According to a recent newsletter from the Washington-based lobbying firm DCI Group, the U.S. should prioritize Myanmar as a key player in the minerals sector, given its economic potential and alignment with American national security interests.

Myanmar, grappling with civil unrest following a military coup in 2021, is among the world's leading producers of heavy rare earths. Most of these valuable resources are exported to China for processing into magnets used in electric vehicles, wind turbines, and other advanced technologies. China, which accounts for approximately 90% of the global rare earth magnet production, has recently tightened its regulatory grip on the sector.

The Kachin region in northern Myanmar, home to many of the country's major rare earths production sites, is currently controlled by the Kachin Independence Army, a long-standing rebel group opposed to the Myanmar military. This group enjoys support from Beijing. Since the military takeover in 2021, the U.S. has frozen Myanmar's assets at the Federal Reserve Bank of New York and imposed sanctions in an attempt to isolate the generals, although this stance was softened in September when Washington resumed direct talks with Myanmar.

The U.S. strategy seeks to secure at least three significant commercial or investment deals, each exceeding $5 million, for American companies in Myanmar. However, Myanmar's government is requesting more substantial commitments. While this request may seem modest considering Myanmar's vast mineral resources and the U.S.'s ambition to rival China, the lobbying firm DCI Group argues that Myanmar's position in the resource sector, bolstered by China's extensive investments and intermediaries, will be difficult to challenge.

The Myanmar government and China's foreign ministry did not provide immediate responses to Reuters inquiries.