How India Can Still Secure a Strategic Position in Laos’s Emerging Rare Earth Sector

India’s ambitions in electric vehicles, wind energy and defence manufacturing all run through the same narrow bottleneck: heavy rare earth elements such as dysprosium, terbium and yttrium, the materials that make permanent magnets work under heat and stress. Almost all of them are refined in China.

As New Delhi looks to reduce that dependence, two of the most consequential upstream sources of these minerals sit not in Australia or Africa, but close to home — in Myanmar and Laos.

A quiet buildout next door

Myanmar’s Kachin State has supplied China with more than half the value of its heavy rare earth imports in several recent years, according to an analysis of Chinese customs data by Global Witness, cited in CNBC reporting that quotes CSIS critical minerals researcher Gracelin Baskaran. Trade continued even through mine seizures and a brief 2024 Chinese border closure, resuming under a negotiated royalty regime.

Laos has followed a comparable trajectory. Satellite mapping by the Stimson Center identified dozens of new mining sites opened since 2022 in Xieng Khouang and Houaphanh provinces, with a December 2025 mapping exercise expanding the count further. A 2022 study by geologists Lv Liang and colleagues, published in the Bulletin of Geological Science and Technology, put the combined resource base of the two provinces at roughly 600,000 tonnes of rare earth oxides — a figure that should be read as a geological estimate rather than a proven reserve.

China did not need to own these deposits outright. It needed reliable offtake and the patience to work with concession holders and provincial administrations in politically complex terrain.

Why Indian capital stayed away — and why that was not simply a failure

It is tempting to frame this as India “missing” an opportunity. The reality is more layered. Indian institutions weighed real risks that Chinese state-linked buyers were more willing to absorb.

Myanmar’s civil conflict, and the presence of a non-state armed group controlling key extraction zones, placed much of that country’s rare earth trade outside any framework Indian public-sector enterprises could responsibly enter. Laos’s own mining regulations have been in flux, with the government only ordering a national rare earth strategy in October 2023.

Ion-adsorption clay mining also carries a documented environmental record: a 2022 Caixin investigation found toxic water and soil contamination at former sites in southern China, and 2024 reports flagged river contamination in Houaphanh province itself. For institutions bound by ESG commitments, that record made underwriting new projects genuinely harder, not merely bureaucratically slower.

Layered on top of this were structural gaps: Khanij Bidesh India Limited (KABIL), India’s overseas critical-minerals vehicle, was incorporated only in 2019 and has focused chiefly on lithium and cobalt in Argentina, Australia and Chile. India also lacks domestic rare earth separation capacity at scale — a gap the government’s own critical minerals mission has begun to acknowledge — which limited the commercial case for early upstream investment.

Commercially driven Chinese buyers, facing lower governance thresholds, moved faster to secure the concessions this caution left open.

What caution has cost

The cost is not simply a handful of missed mining stakes. Analysts including CSIS’s Baskaran have noted that China’s own heavy rare earth grades are declining, making it more reliant on external feedstock from Myanmar and, increasingly, Laos.

A modest, well-governed Indian foothold acquired earlier would today offer real optionality: a partial hedge against the export restrictions Beijing placed on several heavy rare earths in 2025, and an alternative for host governments wary of single-buyer dependence. Instead, China holds both ends of a widening pipeline — expanding feedstock access in these two countries, and retaining the overwhelming share of global separation and processing capacity, per USGS and IEA assessments.

What is different about Laos

The calculus in Laos is not identical to Myanmar’s. Laos retains a functioning central government that has formally committed to a national rare earth strategy and continues to issue exploration permits through official channels, even if provincial-level enforcement capacity remains limited. Recent remote-sensing studies have identified prospective zones in Houaphanh beyond the concessions already under development, suggesting meaningful undeveloped potential.

That does not make the opportunity risk-free. Governance capacity, environmental oversight and regulatory continuity all remain open questions that any Indian entrant would need to weigh carefully, not assume away.

A more disciplined path forward

Three shifts would matter most for India. First, pair any upstream acquisition with a credible commitment to separation capacity, rather than treating mining stakes as standalone investments. Second, build institutional capacity — public and private — that can sustain the multi-year, relationship-intensive engagement this sector requires, working alongside partners such as Japanese trading houses already present in the region. Third, compete explicitly on environmental governance, given the sector’s documented record, rather than replicating the lighter-touch model that has defined Chinese-linked projects so far.

India’s critical minerals strategy has begun to recognise that upstream acquisition without midstream processing delivers limited value. That lesson applies directly here. Laos is smaller, less developed, and still deciding how its rare earth wealth will be governed and by whom. Whether India secures a meaningful, responsibly built position in that outcome will depend less on stated intent and more on whether Indian institutions can match the pace, and accept the risk, that this narrow window still demands.

By Veerapathran K.S.

The author is a critical minerals investment adviser working across Indian, Japanese and Lao state enterprise partnerships.