MAC: Mines and Communities

Gemstone Cowboys

Published by MAC on 2006-10-11


Gemstone Cowboys

By Yeni, The Irrawaddy

11th October 2006

Despite official efforts to raise income from gem fairs, most of Burma's precious stones are being smuggled abroad

Burma's gems sales are officially held several times a year in Rangoon, but traders like Win Aung from the country's famous ruby mining district know that the most lucrative precious stones business is going on every day across the border in Thailand at Mae Sot and Chanthaburi.

Daily from 11 am to 2 pm, the main street of the border town of Mae Sot bustles with traders, brokers and retailers. They huddle in cramped shop fronts, or stroll along the sidewalks touting for custom.

Gems from as far away as Africa exchange hands here, but mostly the stones are from Burma-much to the anger of the junta generals who have tried to monopolize their country's supposedly fifth-biggest export.

Officially, exports of ruby, jade, emerald, topaz, pearl, sapphire, coral and a variety of garnet nets the regime about US $30 million a year. But commodities analysts in Bangkok say the backdoor exports, via Thailand and China in particular, are most likely valued at around $300 million a year.

Win Aung, 50, from the northern town Mogok-noted worldwide for its rubies and sapphires- admits that his secret trade in Mae Sot is perhaps selling his own country short. "We know we are selling our country's heritage illegally," he said, "But I feel the price offered here is fairer than the price inside Burma."

Perhaps in an effort to curb this illegal trade, the authorities have recently begun increasing the frequency of its Rangoon gems sales fairs and raising production demands on miners. The government has held two fairs within the last three months and is planning another during October.

Jade has become the main feature of the fairs. The official media said in August that mining companies might be punished by having their licenses restricted in future if they failed to provide adequate quantities of stones-seen by observers as an attempt to curtail gems finding their way out of the country illegally.

Precious stones are mined in the Mogok area, where Win Aung is based, and around Mongshu in Shan State and Hpakant in Kachin State.

Officially, all mined precious stones have to be declared and many mines are run by companies controlled by the army, such as the Union of Myanmar Economic Holdings Limited and Northern Star Company, others are operated by friends of the military or, increasingly, Chinese companies working via Burmese fronts. The gold mines of Kachin State are dominated by the Chinese, according to the Pan Kachin Development Society, an NGO based in Thailand.

For Win Aung and other residents in Mogok-known as the "gem city in the cloud"-government policies do not favor them. For instance, in addition to various mining permit costs, the regime collects a 20 percent tax on all declared finds. They say that's why they trade illegally across the border in Thailand. "Illegal mining and smuggling is part of the daily business survival of ordinary people like me," Win Aung said.

When the military regime reached peace agreements with several rebel groups in gemstone mining regions, the flow of gems-both legal and illegal-greatly increased, say analysts, notably from Kachin State where rebel groups used to control most of the jade mines.

But peace deals have also allowed drug money to be laundered more easily into precious stones mining. In January this year, US Department of Justice named eight members of the United Wa State Army as laundering heroin trafficking profits into gems-linked businesses, including Hong Pang Gems and Jewelry Ltd. Some sources said former opium warlord Khun Sa also is allegedly involved in ruby mining at Mongshu in Shan State.

As a result of intensive exploration, several new gemstone fields have been found in northern Burma. The Pyinlon and the Namsa deposits at the Nawarat Stone Tract were discovered near the Chinese border with Shan State in 1990, and now produce rubies and sapphires. Since then, more rubies have been discovered near Mongshu in the eastern part of the country and fine quality jadeite also was discovered near Khamti, beside the Chindwin river in northwestern Burma.

Some Rangoon and Thailand-based observers believe many precious stones still reach the official gem auctions. Others disagree. "Almost all of the stones go underground and are smuggled outside the country, especially across the Thai and Chinese borders," a China border-based trader told The Irrawaddy.

The clandestine movement of gems out of Burma takes different forms, ranging from theft at the mines by individual workers during mining or sorting, or later by collusion between mine owners and individual military officers.

But there have been instances when the Burmese generals have taken ruthless action to recover gems.

The Nawata ruby, a 496-carat golf ball-sized uncut ruby, which is now on display in Rangoon's Gems Museum, was originally smuggled into Thailand when it was unearthed in 1990. It found its way to Chiang Mai where a major local dealer rejected an offer to buy it and instead informed the Rangoon authorities.

The story goes that a team of agents was sent to Chiang Mai and seized the stone and its smugglers, who were reportedly murdered. High-ranking Burmese officials who were involved in the smuggling were jailed.

Critics of the Burmese military regime say it has failed to develop what could be a highly beneficial industry for the country. Although Burma is one of the world's leading sources of raw gemstones, it has no refining and polishing capacity.

The pressure to mine more gem stones is leading to the destruction of landscapes and pollution and silting of rivers and lakes, warn environmentalists. "Companies have completely disregarded the environment," said a Rangoon-based editor who is concerned with environmental issues. "There are no restrictions on mining practices which damage the environment."

A report on gold mining practices by the Chiang Mai-based Pan Kachin Development Society quoted one source as estimating that there were about 2,000 dredges operating on the Chindwin river. The report cites some evidence of cyanide being used as a means of leaching gold traces out of the ground. Mercury is also used. These poisons are said to be getting into the human food chain.

Ruby mining in northern Burma has a history going back at least 800 years, and possibly as long ago as the 6th century AD, but its recent international image has become mired in politics and skullduggery.
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