Rare earth metals used in electric vehicles may come from mines controlled by Myanmar junta 

Amid the global effort to combat climate change, giant carmakers like Tesla hope to sell millions of electric vehicles to replace petrol-powered cars and trucks.

But there’s a snag: one of the main source countries of a key metal used in the motors of many electric vehicles is military-ruled Myanmar.

Campaigners say that profits from heavy rare earth metals mined in Myanmar are helping to strengthen the brutal junta, and the metals should now be legally designated as conflict minerals. 

That would compel manufacturers to check that they are not being mined in a way that contributes to human rights abuses and, if they are, to disclose that the metals are sourced from conflict zones.

US and European laws, passed in response to the war in the mineral-rich Democratic Republic of the Congo, now require these checks for gold, tungsten, tantalum and tin.

But heavy rare earths, a sought-after subset of the strategically vital group of metals known as rare earths, are not subject to the same regulations. That, says London-based resources watchdog Global Witness, ought to change. 

“Heavy rare earths from Myanmar should absolutely be treated as conflict minerals. They’re being mined in conditions of armed conflict, and they are sold by armed groups,” said Clare Hammond, a campaigner with the group. 

“Their extraction and sale also indirectly benefits Myanmar’s military, which is responsible for widespread human rights abuses,” she added.

Yadanar Maung, a spokesperson for the Justice For Myanmar campaign group, said: “Electric vehicle manufacturers must act urgently to ensure that they are not using any rare earths mined in Myanmar.” 

Rare earth metals are used in transport, communications, and military equipment, and are increasingly a source of geopolitical rivalry between China and the West. China dominates the global industry and about half of its supplies are reported to come from Myanmar.

Much of the mining of heavy rare earths happens in areas of Kachin State controlled by the Kachin Border Guard Force (BGF), a militia under the command of the Myanmar military. 

Rare earth mining in Pangwa Township, Kachin State, in 2019 (Myitkyina News Journal)

Supply shortage

Prices of rare earth metals have rocketed over the past 12 months as China has clamped down on domestic output. This means that in all likelihood the Myanmar military and its allies will be making more money off of the supplies under their control.

“Allowing the Kachin BGF to profit from the heavy rare earth industry buys the military political support, strengthening its hold on power, territory and influence and thereby facilitating its human rights abuses against Myanmar’s people,” said Hammond.

Dysprosium, a rare earth element found in Myanmar, is commonly added to magnets to improve their resistance to demagnetisation. The magnets are used in the motors of electric vehicles and wind turbines and the great majority of them are made in China.

Industry consultancy Adamas Intelligence warned its clients in a recent newsletter that if they are using such magnets made in China or Japan “there is a very high probability that your magnets contain some fraction of rare earth elements sourced from Myanmar.” 

“Thereby your company is indirectly and unintentionally supporting the nation’s military junta and crumbling environmental protections,” the consultancy added.

The Chinese authorities shut the Myanmar border in July to slow the spread of Covid-19, temporarily halting the export of rare earths while Chinese firms were allowed to mine more at home instead.

But Myanmar’s richly deposited soils are a key source of world supply, and it is unlikely that they will be replaced with an alternative soon. 

“Ionic clays exist in southern China, northern Vietnam, Myanmar and nearby regions. But I don’t see them, except for Myanmar, becoming large suppliers, perhaps only modest suppliers – into the Chinese industry,” US rare earths expert Steve Constantinides told Myanmar Now.

China’s government curbed domestic mining of heavy rare earths in recent years because it is highly polluting. As a result, much of the mining moved over the border to less-regulated Myanmar.

Heavy rare earths are found in other countries, such as Australia and India, but mining has been limited there due to environmental concerns. New mines are being opened in Canada but may take years to come into production.

There are alternatives such as recycled dysprosium, or using less of it in magnets, or installing different types of motors in electric vehicles. But global demand for dysprosium has grown too fast for these alternatives to keep up, experts say.

Not using dysprosium in magnets means that electric vehicles will be less powerful and less profitable for the companies that make them.

Reputation risk

Manufacturers determined to protect their reputations by stopping heavy rare earths from Myanmar getting into their electric vehicles will have to grapple with a complex supply chain that stretches through China.

“It’s possible if they forge a multi-party supply agreement all the way back to the miner, but would be challenging to enforce, and not something favoured by the industry, which wants the freedom to produce from a variety of different feedstocks,” Ryan Castilloux, the managing director of Adamas Intelligence, told Myanmar Now.

Top vehicle manufacturers are keen to show that they are policing their supply chains for conflict minerals and risky raw materials in general. But they seem reluctant to talk about heavy rare earths from Myanmar.

Myanmar Now put questions to six major car producers. France’s Renault and the The Netherlands-based Stellantis, which owns Fiat-Chrysler and Peugeot, did not respond.

Tesla, BMW, Volkswagen and Volvo Group all pointed to their existing processes for checking where their raw materials come from. All said they require their suppliers to sign up to commitments on human rights and the environment, and that suppliers face audits to check whether they and their own suppliers are meeting these commitments.

But none of the four companies would say if they have specifically checked for dysprosium from Myanmar in their supply chains, or even how widely they use components that include the metal.

BMW told Myanmar Now that it was no longer using any rare earths in some of its motors. “Our goal for the future is to avoid rare earths wherever possible.” it said.

Volkswagen said that it pays special attention to 16 high-risk materials, including rare earths. “For some of the covered raw materials our actions and mitigation measures are in an early stage due to the very complex supply chains and the traceability challenges that our group faces in some regions globally,” the company said.

The Volvo Group said it could not rule out the possibility that metals from Myanmar were used in its components. 

“In the era of globalized supply chains and networks, we cannot exclude that we have raw materials originating from any country or region [but we] do not tolerate any form of modern slavery, forced labour or other human rights abuses,” it said. 

Yadanar Maung, of Justice for Myanmar, said that it was not good enough for companies to claim ignorance on the matter. 

“It is shocking that more than nine months since the military’s brutal and illegal coup, it can’t be verified that these automotive giants have controls in place to ensure their rare earths supply chain is not driving atrocities in Myanmar,” she said. 

This story is a collaboration between Myanmar Now and Finance Uncovered

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