The rise of private cleantech enterprise is undoubtedly positive, yet also presents new challenges for Western governments, with cleantech supply chains deeply entangled in geopolitical risk. 

Take rare earth elements (REEs), a collection of 17 different minerals that, while key to the production of emission-reducing technologies, face a number of sourcing challenges. As it stands, most REEs are mined in regions struggling with various levels of socioeconomic instability, along with weak regulatory frameworks that enable rapid industrial expansion at the expense of environmental and human rights protections. 

In few countries is this more apparent than Myanmar, where the Pangwa region, once known for its stunning forests and mountains, has been plunged into crisis as local governments turn to mineral development to finance local military expenditures. Understandably, this has fueled anti-resource-development sentiment among local populations, further undermining private market investment and reaffirming the government’s reliance on destructive and morality-abject practices to fund government coffers.

Yet, prior to the war, Myanmar’s Naypyidaw government carefully regulated mining operations in Pangwa. Only a few industrial sites existed among the area’s hills, most of which were REE mining operations. Yet, when Myanmar’s military took control of the government in a coup in 2021, the international community responded with heavy economic sanctions, strengthening the regime’s need to exploit all and any revenue streams, which moved quickly to gut existing regulation.

As a result, the number of high-intensity REE mining operations (both official and illicit) operating within the Pangwa region exploded from 15 to 70+ between 2021-2023, forgoing environmental assessments, upending the lives of thousands of locals and destroying critically sensitive habitat in the process.

Unregulated REE mining is extremely destructive to the environment, miners, and local populations, and is in no way compensated for by its use in cleantech supply chains. The extraction and refining of REEs demands harsh chemical solvents that without proper regulation and oversight, leads to improper disposal of massively damaging waste byproducts. Simultaneously, illicit mining often leads to the culling of massive areas of forested mountainside, leading to runoff, erosion, and other issues that cause displacement.

Having gone unregulated for a number of years, toxic waste from REE mining has already poisoned Pangwa’s groundwater supply meanwhile ongoing deforestation efforts have exponentially increased the odds of landslide events.

When it comes to labour protections, REE miners are seldom left better off, reporting regular chemical burns and acute air pollution in facilities that severely impacts quality of life. Furthermore, the extreme stress of working in unregulated REE mining run by a Junta-aligned militia has driven many locals to drug use as a coping mechanism, helping create illicit narcotic markets in local communities.

Despite these dire conditions, the industry continues to thrive — largely due to China’s involvement. The People’s Republic of China (PRC) has become a loyal trading partner with Naypyidaw, sending engineers and mine bosses to operations along the Myanmar-China border to enhance production capacities and oversee the discrete transfer of resources across the border.

Paradoxically, China does not ultimately need the minerals in Pangwa, as Beijing already controls 60% of global REE production and 85% of processing capacity. China achieved this dominant possession primarily through good foresight and central planning, with the PRC moving quickly to invest in REE processing as the demand for green technologies began to rise in the early 20th century. With Beijing making significant investments across the entire supply REE chain while forging international partnerships, suppressing labour costs, and utilizing export controls, they were able to develop a sizable resource vault — one that a world moving away from fossil fuels is desperately dependent on.

By extending its reach into Myanmar’s REE sector, China has further tightened its grip on the global market REE, with its willingness to engage with the military junta allowing it to quietly monopolize this emerging supply. This dominance made it far more convenient for nations — especially those in the West — to rely on Chinese REE components rather than build out domestic supply chains, which would require navigating opposition from miners’ unions, environmental groups, and other third parties. As a result, REE supply chains are now a matter of national security, something China’s rivals are only beginning to fully grasp.

Recognizing the threat of China’s monopoly on REEs, other nations are increasingly taking action to challenge its dominance. The U.S. government, in particular, has redirected significant resources toward both REE mining and processing, though it’s not just governments seeking to diversify supply chains.

U.S., European, and Japanese automakers entering the increasingly lucrative EV market are actively seeking alternatives to China-controlled supply chains. For years, EV companies have relied on REE-derived permanent magnets as the most efficient way to generate torque, with non-magnet motors dismissed as too bulky, inefficient, and costly. Incentivized to decouple from China, however, automakers, including General Motors, Jaguar, Land Rover, Tesla, BMW, and Nissan, are intensively researching the viability of REE-free motors, like Externally Excited Synchronous Machine (EESM) motors, which could be in production by the end of this year.

This R&D push isn’t driven solely by politics — there’s a clear economic incentive as well. Rare earth elements are notoriously volatile in price; for instance, neodymium fluctuated from $65/kg in 2020 to $233/kg in 2022, before dropping to $125/kg in 2023. In contrast, electrically excited synchronous motors (EESMs) have remained stable in value, making them an attractive investment for the future.

Further innovations are working to reduce REE dependence beyond just motors. Since 33% of the REEs in EVs are used in sound systems, UK-based Warwick Acoustics has developed an entirely rare-earth-free alternative, demonstrating how effective investment in R&D can help cut reliance on problematic supply chains.

Western businesses and governments must recognize that incremental change is not enough. A systemic transformation is required to reclaim control over critical REE supply chains and dismantle foreign markets that rely on environmental and human rights violations. This transformation cannot be achieved through isolated extraction projects. It requires a comprehensive overhaul of how Western nations view supply chains, from ethical sourcing to responsible production practices, if China’s monopoly on these critical resources, and thus on the future of green technology, is going to be broken.

The need for systemic change in rare earth element sourcing is urgent. Western nations can no longer afford to rely on the status quo, where ethical, environmental, and geopolitical concerns are sidelined in favor of cheaper, China-controlled supply chains. Instead, a holistic shift in how we approach mining, production, and trade is essential to breaking China’s monopoly on these critical materials. 

By fostering developing robust domestic REE supply chains, lessening our dependence on rare minerals, and investing in regulated, conflict-free mining operations, Western nations can build the foundations for a greener, more resilient future — while reaping the economic rewards of it. Now is the time for businesses, governments, and consumers to take decisive action and build a supply network that aligns with the values we want to see in the future.