The landslide is inevitable. It is a risk, we all know,” said Aye Yi, a 33-year-old who has been working in Myanmar’s jade mines since she was 14. “We don’t know when it will happen. But we know it definitely will at some point.”
Myanmar’s deadliest mining accident in living memory killed at least 175 people near Hpakant town on 2 July. Informal jade miners were digging through a mound of tailings – earth discarded by digger trucks – when the pile, already weakened by heavy rain, collapsed. The landslide swept dozens of people away as the hillside crashed into the lake below.
The environment minister, Ohn Win, blamed the miners, who are often desperate, impoverished internal migrants, for the disaster that he said was caused by their “greed”. Others pointed out that the civilian government has failed to regulate the jade industry effectively during its five years in power. Doing so would mean tackling the military’s deep involvement in the jade trade.
The government’s inability or unwillingness to control the industry includes a failure to introduce and enforce environmental regulations. In 2017, it commissioned a new environmental management plan to rein in the mining sector, but that still hasn’t been implemented.
Satellite imagery shows major deforestation and scarring of the landscape in Hpakant and the surrounding area, as excavators rip mountains apart, digging ever deeper in search of a dwindling supply of jade.
“When I first came here, Hpakant looked totally different” Aye Yi said. “The mountains we used to look up at are now replaced by giant piles of dumped soil. Some mountains have become cliffs.”
The careless disposal of wastewater has also had devastating effects, increasing the frequency and intensity of floods while contaminating local water sources.
Powerful vested interests
Demand from China fuels Myanmar’s jade industry, which takes the form of a murky web of illegal Chinese-funded companies whose exports are facilitated by corrupt links to Myanmar’s military and its adversaries in the Kachin Independence Army.
The military, ethnic armed groups and the quasi-official border guard are all heavily involved with jade traders and often move stones through borders they control, explained Keel Dietz, policy advisor at Global Witness, an NGO that campaigns against corruption and environmental degradation. Dietz said rival combatants even occasionally work together to transport jade to China.
Desperation
Hpakant, in the northern state of Kachin, is Myanmar’s main jade-mining area. Like many miners there, 28-year-old Ko Htay usually works for a company, but switches to working for himself during the rainy season from June to October. He hopes to hit the jackpot by digging out overlooked stones to sell through illicit channels.
“Working in the jade mine, it all depends on pure luck,” he said. “You can get a good stone and get rich on your first day, or you may never get that fortune at all for decades.”
“During the off season, we dig in the mine using handheld drills,” he said. “Even though things are really difficult, I continue to live here to chase my dream. I want to make my family, my son, rich. I cannot even care about dying.”
Aye Yi felt differently: “To be honest, I really want to leave this place.” She recalled how her father once found a valuable jade stone but didn’t realise its worth. He sold it for 2,000 kyat (US$1.50), only to learn it had been resold for 80,000 kyat (US$62). “My father could not eat and sleep for three days,” she said.
Smuggling to China
Jade is often transported at night, one mining company employee who drives a truck inside the mines told China Dialogue. “Most of the stones go to China,” he said, speaking on condition of anonymity.
Like many, he works for a Chinese–Myanmar joint venture, and said most companies have the same arrangement. Foreign ownership is officially outlawed, yet it is widely believed most companies are illicit joint ventures backed by Chinese investors. A 2015 Global Witness report titled “Jade: Myanmar’s Big State Secret” confirmed such arrangements are widespread.
“If we get about 30 good quality stones, only a couple of them go to the state. The stones that are worth tens of billions or millions [of kyat] are sent to China,” the driver explained. He said the company usually sends jade to China once a week. But if a particularly valuable stone is found, it is sent right away.
Once extracted, the jade almost always ends up in China, by one of three main routes: it is sold at official emporiums in the capital Naypyidaw, at formal and informal markets in Mandalay or driven straight to the border.
“Moving jade across the border is not particularly difficult,” said Dietz.
Myanmar produces 90 per cent of the world’s jade, most of which is directly exported, though even legal sales involve systematic tax fraud as values are routinely under-declared, according to a 2019 report from the Natural Resource Governance Institute, cited in The Diplomat magazine.
‘Most of the jade industry is run illegally’
Steven Naw Awng, with the Kachin Development Network Group, said even legal companies “are also still smuggling jade across the border,” claiming that “most of the jade industry is run illegally”.
“Military officials and jade mining companies have agreements with local officials and take jade to the Chinese across the border,” he said, adding that Muse township, a large official border post in Shan State, is a particularly popular crossing point for smuggling jade into China’s Yunnan province.
“The civilian government has been ineffective at reducing smuggling or regulating the industry more broadly over the past five years,” said Dietz, adding that once the illegally smuggled jade leaves Myanmar it “acquires a legal status in China”.
Tax evasion
Naypyidaw is the main hub of Myanmar’s legal jade industry, where predominantly Chinese customers bid on jade via closed tenders or open auctions. Dietz estimates that hundreds of millions of dollars of jade is sold in the Naypyidaw emporiums every year. But that is just a fraction of the total wealth in the industry, which Global Witness estimated at US$31 billion in 2014.
Even legitimate jade dealings in Naypyidaw are tainted by illicit activities. In its 2015 report, Global Witness found that around 60 per cent of all jade emporium sales involved vendors buying their own product as a form of tax evasion. Sellers also intentionally cut their stones to look less valuable than they really are to pay lower taxes. The stones’ true value is revealed once they get to China.
As the official Naypyidaw emporium was cancelled due to Covid-19, Dietz believes even more jade may be smuggled this year.
Some jade is sold in Mandalay’s many tourist markets. However, Dietz said there are also illegal markets in Mandalay serving as a “major facilitation point for jade smuggling”.
“Chinese buyers attend private markets – in person or virtually – fly home and then wait for their jade to arrive,” he explained.
The finished product
Di Lar is an ethnic Kachin businessman and jade trader who lives in China’s Yunnan province, the arrival point for jade imports. Di regularly crosses the border to maintain his small-scale jade business in Hpakant, where he has 20 miners working for him on an official licence.
Di said it was hard to estimate how many companies are fronts for Chinese businesses as most are identified only by numbers. One industry insider cited in Global Witness’s 2015 report estimated that 70 per cent of the financing for major jade companies comes from China.
Among smaller businesses like his own, Di believes between 10 per cent and 20 per cent have Chinese backers. He said Chinese businesses evade the ban on foreigners entering Hpakant by using fake Myanmar ID cards.
Despite illicit Chinese involvement in the industry, Di also said jade going into China in recent years has come through legal channels, transported to Kachin border towns like Lweje and Kanpitetee, declared to customs, and then sent to dealers in jade markets in Yunnan’s three major trading towns: Ruili, Tenchong and Yingjiang. Covid-19 restrictions have not stopped the flow of jade as individual miners continue to look for stones.
Adding value
Myanmar lacks a jade-processing industry capable of turning rough-cut stones into gems. “Myanmar’s role in the jade supply chain does not extend much beyond initial extraction,” said Dietz, who believes that if the country were to develop its own finishing industry there would be less smuggling and tax evasion.
Naw Awng said Myanmar should take the dramatic step of suspending all large-scale mining until a political solution can be found that ensures the local Kachin community benefits from its natural resources.
“People are thinking: ‘Oh the Myanmar government is changing democratically.’ But the jade industry remains under military control. I don’t think this is economic development. We have no political solution,” he said, adding the Chinese government shows little interest in the problem.
Dietz said the Chinese government could take “smuggling, border control and anti-money laundering more seriously,” including by ensuring that “digital payments systems like WeChat Wallet and AliPay are not used by jade smugglers”.
“China’s immediate proximity and sheer economic size also allows Chinese companies to capitalise on economic activity, both legal and illicit, along the border, with other nations’ companies largely shut-out of the area.” Dietz said China should use its influence in Myanmar’s peace process to encourage resource-sharing agreements that would see local Kachin communities benefit from the jade industry.
Ko Htay, the miner, said the sad reality of the situation is that, for all its value, the jade industry hasn’t helped Myanmar develop. “Even though jade is the resource of our country, and we have been working very hard, nothing has changed much,” he said. “Rich people, generals, and China are getting the benefits.”
This article was originally published on China Dialogue under a Creative Commons licence.
