Beijing has been stepping up controls on rare earth exports, triggering global shortages and exposing industries’ dependence on Chinese supply chains. 

However, over recent years, China itself has become reliant on rare earth supplies from an unexpected source: the relatively small and war-torn economy of Myanmar. 

While China is the world’s top producer of rare earths, it still imports raw materials containing the coveted metals from abroad.

Myanmar accounted for about 57% of China’s total rare earth imports last year, Gracelin Baskaran, director of the Critical Minerals Security Program at the Center for Strategic and International Studies, told CNBC.

According to Chinese Customs data, Myanmar’s rare earth exports to China significantly picked up in 2018 and reached a peak of nearly 42,000 metric tons by 2023.

Baskaran added that the imports from Myanmar are also particularly high in heavy rare earth element contents, which are generally less abundant in the earth’s crust, elevating their value and scarcity. 

“Myanmar’s production has significantly strengthened China’s dominant position, effectively giving Beijing a de facto monopoly over the global heavy rare earths supply chain — and much of the leverage it wields today.” 

The country has become a key source of two highly sought-after heavy rare earths, dysprosium and terbium, that play crucial roles in high-tech manufacturing, including in defense and military, aerospace and renewables sector.

“This dynamic has given rise to a supply chain in which extraction is concentrated in Myanmar, while downstream processing and value addition are predominantly carried out in China,” said Baskaran.

According to Merriman, the vast majority of the world’s IAC operations were in Southern China in the early to mid-2010s. But, as Beijing began implementing new environmental controls and standards in the rare earths industry, a lot of these projects began to close down.

“Myanmar, particularly the North of the country, was seen as a key region which had similar geology to many of the IAC deposit areas within China,” Merriman said. 

“You started to see quite a rapid build out of new IAC type mines within Myanmar, essentially replacing the domestic Chinese production. There was a lot of Chinese business involvement in the development of these new IAC projects.”

The rare earths extracted by these IAC miners in Myanmar are then shipped to China mostly in the form of “rare earth oxides” for further processing and refining, Yue Wang, a senior consultant of rare earths at Wood Mackenzie, told CNBC.

In 2024, a report from Global Witness, a nonprofit focused on environmental and human rights abuses, said that China had effectively outsourced much of its rare earth extraction to Myanmar “at a terrible cost to the environment and local communities.”

Since the seizure, there have been reports of supply disruptions causing spikes in the prices of some heavy rare earths. According a Reuters report, the KIA was seeking to use the resources as leverage against Beijing. 

Chinese customs data shows, imports of rare earth oxides from Myanmar fell by over a third in the first five months of the year compared to the same period last year.

“If Myanmar were to cease all exports of rare earth feed stocks to China, China would struggle to meet its demand for heavy rare earths in the short term,” said Project Blue’s Merriman. 

Not surprisingly, Beijing has been looking to diversify its sources of heavy rare earths.  

According to Merriman, there are IAC deposits in nearby countries, including Malaysia and Laos, where some projects have been set up with Chinese involvement.

Still, he notes that environmental standards are expected to be higher in those countries, which will present challenges for rare earth miners. 

China’s decision to cut back on its own extraction of heavy rare earth elements may serve as a warning to other countries about the costs of developing such projects. A report by Chinese media group Caixin in 2022 documented how former IAC operation sites in Southern China had left behind toxic water and contaminated soil, hurting local farmers’ livelihoods.

Tesla was contacted by the National Highway Traffic Safety Administration on Monday after videos posted on social media showed the company’s robotaxis driving in a chaotic manner on public roads in Austin, Texas.

Elon Musk’s electric vehicle maker debuted autonomous trips in Austin on Sunday, opening the service to a limited number of riders by invitation only.

In the videos shared widely online, one Tesla robotaxi was spotted traveling the wrong way down a road, and another was shown braking hard in the middle of traffic, responding to “stationary police vehicles outside its driving path,” among several other examples.

A spokesperson for NHTSA said in an e-mail that the agency “is aware of the referenced incidents and is in contact with the manufacturer to gather additional information.”

Tesla Vice President of Vehicle Engineering Lars Moravy, and regulatory counsel Casey Blaine didn’t immediately respond to a request for comment.

The federal safety regulator says it doesn’t “pre-approve new technologies or vehicle systems.” Instead, automakers certify that each vehicle model they make meets federal motor vehicle safety standards. The agency says it will investigate “incidents involving potential safety defects,” and take “necessary actions to protect road safety,” after assessing a wide array of reports and information.

NHTSA previously initiated an investigation into possible safety defects with Tesla’s FSD-Supervised technology, or FSD Beta systems, following injurious and fatal accidents. That probe is ongoing.

The Tesla robotaxis in Austin are Model Y SUVs equipped with the company’s latest FSD Unsupervised software and hardware. The pilot robotaxi service, involving fewer than two-dozen vehicles, operates during daylight hours and only in good weather, with a human safety supervisor in the front passenger seat.

The service is now limited to invited users, who agree to the terms of Tesla’s “early access program.” Those who have received invites are mostly promoters of Tesla’s products, stock and CEO.

While the rollout sent Tesla shares up 8% on Monday, the launch fell shy of fulfilling Musk’s many driverless promises over the past decade.

In 2015, Musk told shareholders Tesla cars would achieve “full autonomy” within three years. In 2016, he said a Tesla EV would be able to make a cross-country drive without needing any human intervention before the end of 2017. And in 2019, on a call with institutional investors that helped him raise more than $2 billion, Musk said Tesla would have 1 million robotaxi-ready vehicles on the road in 2020, able to complete 100 hours of driving work per week each, making money for their owners.

None of that has happened.

Meanwhile, Alphabet-owned Waymo says it has surpassed 10 million paid trips last month. Competitors in China, including Baidu’s Apollo Go, WeRide and Pony.ai, are also operating commercial robotaxi fleets.

WATCH: Tesla launches robotaxis in Austin as robotaxi race heats up

Meta spoke with artificial intelligence startup Runway about a potential takeover ahead of its multibillion-dollar investment in Scale AI, CNBC confirmed Monday.

Runway is best known for its AI video-generation tools and earned a spot on CNBC’s Disruptor 50 list earlier this month.

The deal talks between Meta and Runway did not progress far and dissolved, according to a person familiar with the matter who asked not to be named due to the confidential nature of the discussions.

Bloomberg earlier reported the talks. Meta declined to comment.

Meta CEO Mark Zuckerberg has been aggressively pushing to bolster his company’s AI efforts in recent months. The social media giant invested $14.3 billion into Scale AI in June, and it has also approached the startups Safe Superintelligence and Perplexity AI about potential acquisitions this year.

Meta agreed to a 49% stake in Scale AI and hired away founder Alexandr Wang along with a few other employees from the company.

While Meta was unsuccessful in its efforts to buy Superintelligence outright, Daniel Gross, the company’s CEO, and former GitHub CEO Nat Friedman are joining Meta’s AI efforts, where they will work on products under Wang.