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Myanmar’s gemstone wealth brings poverty and environmental destruction.

Myanmar’s gemstone wealth brings poverty and environmental destruction.

Jade and gemstone market in Mandalay.
  • Myanmar is blessed with many gems such as jade, rubies, and other gemstones. However, endemic corruption and poor regulation have limited the flow of wealth to the common people.
  • Hpakant, a jade-mining hotspot in Kachin state is a good example of the problem. Although there are no licensed mines in the region, jade extraction continues on a large scale.
  • These unregulated operations are a huge threat to the environment and people. Scavengers flocking to unstable dumpsites to search for jade left behind in machines’ excrements can cause massive environmental damage and even human casualties.

On Feb. 28, a landslide of earth and waste from mines in Myanmar’s Hpakant township engulfed dozens of miners and scavengers looking for jade in this remote, mountainous region. According to official sources, just two deathsThe landslide resulted in the following: However, residents and aid workers agreed to disagree.At least 23 people were killed, and 80 others were missing.

The deadly landslide that occurred earlier in the year is just one of a series in Hpakant where no mining has taken place legally since 2020. In December 2021, at least three people were killed in the landslide. A 2020 landslide claimed 162 and another in 2015, 113 lives.

Myanmar produces a wide variety of high-quality gems, precious stones, including jade, sapphire and spinel, as well as tourmaline, tourmaline and diamond. Despite the fact that many gems are produced in Myanmar, corruption and mismanagement in the industry mean that the country is still economically underdeveloped and has suffered from environmental and social deterioration.

Jade and gemstone market in Mandalay.
Mandalay’s jade and gemstone market. John Sai Luu.

Risky business

Most of the country’s gemstone-mining sites are located in conflict areas such as Kachin state’s Hpakant area and Khamti township in the Sagaing region, where ethnic minority groups are waging armed struggles against the Myanmar government.

Jade from Myanmar, which is highly sought-after by Chinese consumers and is famous on the international market, is primarily made in Hpakant, a mountainous area in the northernmost part Myanmar.

According to Hpakant’s local charity, more than 500 people have died in landslides in the past five years. This tragic series of deaths is the result of corruption, poor environment management, conflict, as well as economic desperation. People from all over Myanmar flock to Hpakant to find gems left behind by large-scale mining operations, as the country struggles with an economic downturn and rising unemployment.

Since the countrys economy is not functioning well, many people come to Hpakant, hoping to make riches from rags,” says Hpakant resident Ko Sai Han. “Dying during landslides becomes more common. I have to run for the safety of my life in case there is a land slide. People are betting on their own lives while they search for gemstones at the dumpsite. These problems will continue for as long as there are mining. The gemstone mines in Myanmar only benefit a handful of people but not the local people like us.”

According to the 2016 report by Myanmar Gems and Jewelry Enterprise there were 21,000 gem mines in Hpakant and Khamti. More than 500 companies are involved in heavy machinery mining in Hpakant.

Companies use heavy machinery at jade mining sites in Hpakant.
Heavy machinery is used at Hpakant jade mines. John Sai Luu.

Endmic corruption

Mining companies need to pay fees to the local authorities and the mining ministry in order to obtain a permit. The fees vary according to the size of the concession and the estimated gem reserves. However, these exact figures are secret and companies refuses to disclose the amount they have paid citing confidentiality agreements they must sign with authorities. Corruption is rampant at all levels of the process. Failure to pay kickbacks the ministry or local authorities can lead to unnecessary delays in obtaining a permit.

Myanmar’s Mining Law requires both authorities and miners to follow specific environmental conservation protocols, but enforcement is weak. All mining licenses issued by Hpakant to companies expired in 2019 & 2020. Officially, the ruling court has not granted mining licenses to companies since the February 2021 coup. However, mining continues.

Moreover, Hpakant’s mine sites are controlled by the Kachin Independence Army (KIA), an ethnic armed group. A jade mining company employee spoke on condition of anonymity to discuss the fact that companies must pay the KIA 10% for the total profit from the mining sites it controls. Resource extraction is also a cause of conflict between the Myanmar army, ethnic armed groups, and other countries due to deals like this.

Jade mining licenses have not been granted. But some people continue mining,” said another miner, also speaking on condition of anonymity. “Now, there are only Tatmadaw [Myanmar Armed Forces]KIA. Mining continues under informal agreement. This means that you can continue if there is an understanding between you and them. Illegal mining was not fully controlled before. Illegal mining has become more severe.

Companies have a limited time period in which they can mine, regardless of what their agreement says. They move fast, digging up mountainsides with heavy machinery, creating massive man-made valleys, and then disposing of the waste in huge piles. Companies’ speed and scale can cause environmental damage. However, high-quality gems might be lost, making these dumpsites attractive targets for scavengers.

Jade mining booms in Hpakant have brought with them a host of public and social health problems. Hpakant is a hub for illegal drugs like heroin, methamphetamines or opium. While some drug use is recreational, stimulants and analgesics allow miners and scavengers the ability to endure long, hard stints looking for gems. HIV transmission can also occur through intravenous drug abuse.

Drugs are easy to find in Hpakant, just as jade is,” said a Hpakant resident, who also requested anonymity. “Many people got addicted while using drugs for fun. Local organizations against drug abuse used to be able to take action against drug abuse. With political instability and pandemic, they are unable to do much. As long as there are gemmines, drug problems will continue.

Excessive mining of jade has caused occasional landfalls and sinkholes in Hpakant.
Hpakant has seen occasional landfalls or sinkholes as a result of excessive mining of jade. John Sai Luu.

Conflict and resource

Our area produces jade, but local people dont benefit from jade mining,” said Hpakant resident Ko Naw Aung. “Local people made their living scavenging jade in the land dumpsite. Because jade mining is only beneficial to a few people, the area is not being developed. Revenue from resource extraction can fund many development projects. Although many years have passed, the lives and livelihoods of local residents have not changed.

The same observation applies to the entire country. Myanmar, despite its rich resources is in trouble due to both environmental degradation and economic problems. This scenario is often called the resource curse. The promise of wealth from gems and other natural resources has driven a cycle of conflict and instability, rather than providing employment and funding investments that could improve citizens’ quality of life.

Myanmar’s government stands to derive significant revenue from jade mining. Apart from the share of profits that a company gets when it is granted a mining concession the government also imposes taxes at 15-20% on jade or gems sold in emporiums. According to the Myanmar Extractive Industries Transparency Initiative(MEITI), 708 billion Kyat ($578 millions) was received by the government from jade and gemstones companies during the 2015-16 financial year.

This is likely to only be a small fraction of the true value of jade sale. High taxes encourage companies to underreport their production or undervalue it. Many companies make covert payments to regulators to avoid paying taxes.

The industry’s profits are primarily used to enrich a few individuals and not contribute to national economic growth. It is not secret that large amounts of revenue from jade mining, and other forms of resource extraction, go into the pockets of corrupt officials and their close aides, as well as the Myanmar military and other armed non-state entities.

Legislators made efforts to bring the sector under control and ensure that the revenue from mining was included in the public budget during the period of civilian rule, which ran from 2011 to 2021. In 2016, officials from the customs and commerce ministry were fired by the Thein Sein government for allowing illegally imported mining vehicles to Hpakant, China, in 2016. Even these small efforts have been abandoned by the junta.

See Also

Manual mining sites Myanmars ruby heartland of Mogok.
Mogok, Myanmar’s ruby heartland, is home to manual mining sites. John Sai Luu.

COVID-19, political turmoil after the 2021 coup and a decrease in production of jade are two reasons why jade and gemstone production is in decline. As a consequence, there are fewer international gems and jade shops.

The jade and gems business is slow in Myanmar,” said jade and gems merchant U Win Maung. “The major buyer is China. Chinese buyers are lowering prices to take advantage the political situation in Myanmar. We don’t have many choices, so we must sell at what they offer.

Jade that isn’t sold at emporiums generally ends up being smuggled into China. But while mining companies evade government taxes, it doesn’t mean they arent paying fees for their extraction and export. Because mines are located in contested territories and areas controlled or manned by the Kachin Independence Army they must pay fees to the KIA, the government-backed militias controlling the smuggling routes and the KIA. This widespread corruption ring also includes the Myanmar military and border guard.

China is attracted to Myanmar’s inability to produce finished products from the raw jade. For decades, Myanmar has relied on China for its political, economic, and other needs. Because of this, Myanmar’s jade and gems market will continue to be a buyers market in China for many years to come.

Among other resources, jade and gemstones generate most of the revenue,” one anonymous gemstone expert said. “Our country is a resource-producing country. We need to move beyond producing raw materials and produce finished products. We must ensure that the community-extraction industry is a benefit to them. Gemstone markets must be created to benefit local residents. Everyone must work together to achieve this. The weak mechanism means that local communities don’t benefit from the resource extraction industry. It is crucial to establish accountability, transparency, and accountability in the industry.

Ruby mining

Myanmars rubies are also among the world’s most prized gems. Mogok in Mandalay and Mongshu, Shan states are the main places to find rubies. Mogok, in particular, is famed for having some of the world’s best-quality rubies, but the industry there is also struggling.

The business is slow because of COVID-19 and political instability,” one miner said. “Illegal mining has increased as a result of political instability. At the moment, there is very little demand for gems. It will take time before the market picks back up.

Despite the fact that Mogok has a lot of rubies, locals have not seen much benefit from illegal mining, taxation, and widespread corruption. Myanmar lacks the technology and production facilities to produce value-added products. It must therefore export its gems raw. This means that it is less profitable than countries that purchase raw gems from Myanmar and then process them into finished products.

Banner image A jade mining site in Myanmar’s Kachin state. Image by Yin_Min_Tun via Wikimedia Commons (CC BY -SA3.0).

This investigation is part a series about environmental crime in Asia. This investigation was supported by the Global Initiative Against Transnational Organized Crime (Global Initiative Against Transnational Organized Crime), the Henry Nxumalo Foundation, and Oxpeckers Investigative Environmental Journalism. Mongabay maintained full editorial control while editing this article.

Crime, Deforestation of Degraded Lands and Disasters, Environment. Governance, Illegal Mining.

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