July 8 (Reuters) - The global supply of heavy rare earths hinges in part on the outcome of a months-long battle between a rebel army and the Chinese-backed military junta in the hills of northern Myanmar.

The Kachin Independence Army since December has been battling the junta over the town of Bhamo, less than 100 km (62 miles) from the Chinese border, as part of the civil war that erupted after the military's 2021 coup.

Nearly half the world's supply of heavy rare earths is extracted from mines in Kachin state, including those north of Bhamo, a strategically-vital garrison town. They are then shipped to China for processing into magnets that power electronic vehicles and wind turbines.

China, which has a near-monopoly over the processing of heavy rare earths, has threatened to halt buying the minerals mined in KIA-controlled territory unless the militia stops trying to seize full control of Bhamo, according to three people familiar with the matter.

One of the people, a KIA official, said the Chinese demand was made in May, without detailing where the discussions took place. Another person, a KIA commander, said Beijing was represented by foreign ministry officials at the talks.