China Mineral Extraction Makes Life Worse in Shan State

Antonio Graceffo

Eastern Shan State is rich in mineral resources and contains numerous mining sites controlled by competing actors, including Myanmar’s military junta, the United Wa State Army (UWSA), Shan armed groups, and local militias. Chinese companies have become the dominant outside force in extraction operations, working through two distinct arrangements: one directly with the UWSA, bypassing the junta entirely, and one in areas of joint UWSA-junta control requiring permission from both.

In UWSA-controlled territory, satellite imagery shows that rare-earth mining sites in the Mong Bawk area increased from three in 2015 to 26 by February 2025. Chinese companies operate there without Naypyidaw’s approval, with minerals exported directly across the border into China. In Mong Jawd Village Tract, a separate Chinese project began tungsten production in February 2026, transporting ore to China in cooperation with the UWSA. The site employs approximately 100 Chinese staff, mostly managers and technicians, and around 250 Myanmar workers.

The operator behind the most significant Chinese operation in jointly controlled territory has been identified. China Investment Mining Company runs both the rare-earth mines and the main gold-mining operation along the Kok River in Mong Yawn, Mong Hsat Township. It is 90% owned by Shanghai Chijin Xiawu Metal Resources Co. Ltd., a joint venture formed in September 2022 between China’s state-backed Xiamen Tungsten Corporation and Chifeng Gold, the largest non-state-owned gold producer in China. Because Mong Yawn is jointly controlled by the UWSA and the junta, the company requires authorization from both to operate.

The human costs are adding to the suffering of local people. In 2025, villagers near the Mong Jawd tungsten site suffered skin infections from contact with water in the Pak Goot stream, contaminated by mining waste, and rice fields were damaged. The SHRF documented that trafficked Burmese workers from Chinese-run scam compounds in Tachileik were moved to rare-earth mines in Mong Yawn in April 2025, the first confirmed instance of human trafficking from scam centers to mining operations.

The negative environmental impact can be felt in Thailand as well. Thai authorities have been monitoring Kok River water quality every two weeks since April 2025, with tests repeatedly showing arsenic and lead levels exceeding safety standards. Local residents report logging along the Salween River, with timber transported to China.

The scale of the trade is substantial. In the first nine months of 2025, Myanmar exported more than 28,000 tonnes of rare earths to China, valued at USD 624 million, representing 53 percent of China’s total rare-earth imports during that period. Expansion is continuing. In the Mong La region under the National Democratic Alliance Army, at least 19 new rare-earth mines were observed operating in 2025, up from only three in 2021.

Local sources say that authorities and armed groups have granted Chinese companies access to mining projects in areas such as Mong Ton Township, which borders Thailand’s Chiang Mai Province. One of the best-known mining sites is located at Loi Khileik, the highest peak in eastern Shan State at 1,970 meters, and is associated with tungsten and wolfram extraction. A Chinese company began production on the mountain’s southern slopes in February 2026, transporting ore by convoy through Tachileik to the Chinese border. Local residents report that these Chinese companies work in partnership with the Wa authorities.

Residents living near mining areas describe significant environmental concerns. They report that streams used for irrigation and farming have become polluted, raising fears about the safety of water supplies and the health of livestock exposed to mining-related chemicals. The SHRF confirmed that the Pak Goot stream, which runs through farmland downstream of the Loi Khileik site, was contaminated by mining waste in 2025, causing skin infections among villagers.

A 25-year-old Shan worker employed at a tungsten mine in Mong Ton Township said he earns 250 baht per day for basic labor. Machine operators reportedly earn around 400 baht per day, while skilled mechanics receive approximately 550 baht per day. According to the worker, Chinese managers oversee many aspects of the operation, while local residents provide most of the labor.

In Pang Kaeng village, also located in Mong Ton Township and reportedly under the control of a Lahu militia group, residents say mining activities focus on minerals identified by the chemical symbols Sb (antimony) and Sn (tin). According to local sources, these minerals are exported to China, with some shipments transported through routes connected to the Mekong River.

Sai Luang, a 46-year-old resident of Mong Lein Township, described the expansion of mining activities across several townships.

“Mining operations have opened in many places, including Ta Lur, Mong Lein, Tachileik, Mong Sat, Mong Yong, and Mong Yu,” he said. “Many local streams have become polluted, and some water sources can no longer be used. Mining companies do not properly manage toxic chemicals and pay little attention to the environmental impact. I own farmland in Mong Lein Township, but I can no longer use water from nearby streams for agriculture.”

Another resident, Sai Bee, a 25-year-old from Mong Ton Township, said he worked as a broker trading antimony ore.

“I have been doing this work for about one year,” he said. “I buy raw materials from local mining sites and sell them to Chinese buyers in Tachileik. One ton sells for about 130,000 baht. After purchasing the material, covering transportation costs, and paying fees at checkpoints, my profit is around 10,000 baht per ton. Recently, however, Chinese buyers stopped purchasing the material.”

Local sources allege that logging and gold mining are taking place along the Salween River in areas controlled by Shan armed groups, with timber sold to buyers in China. Armed organizations collect taxes from companies operating within their territories, financing their military activities through natural resource extraction and by providing security for mining and logging operations.

The UWSA is widely regarded as one of the most powerful armed groups in Myanmar and maintains significant economic influence. Chinese investment in UWSA-controlled areas extends beyond mining to include infrastructure such as hospitals, schools, markets, and commercial buildings. Major Sai Lam, 36, a UWSA officer who also owns businesses including a karaoke venue, said that wealth generated through illegal activities has over time been invested in legitimate sectors such as agriculture, hospitality, and transportation.

Speaking on condition of anonymity, local residents said they did not believe armed groups in Shan State were interested in bringing about democratic change, arguing that most organizations prioritize territorial control and economic interests over political reform. They also raised concerns about conscription, claiming young people are recruited with promises of protecting local communities but end up working for illicit enterprises that enrich senior commanders, Chinese businessmen, or Burmese business interests. Recruits, they said, receive limited pay while leaders and their families profit from natural resource extraction.

Meanwhile, for most of the population, economic hardship continues to worsen. As employment opportunities remain limited and environmental conditions deteriorate, some families have chosen to migrate to Thailand in search of work and stability. Consequently, this area, and Burma in general, is facing not only a brain drain, with the brightest and smartest leaving, but also the loss of young, able-bodied workers who may find the prospect of working as undocumented day laborers in Thailand more appealing than remaining in Shan State under the thumb of ethnic armed groups and their Chinese business partners.

Antonio Graceffo is an economist and China expert who has reported extensively on Burma.