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Jade mine collapses in Myanmar, exposing a lucrative industry with a deadly record

Most jade gets made into decorative items for Chinese buyers Most jade gets made into decorative items for Chinese buyers
07 Sep
2020
The recent collapse of a jade mine in Myanmar has shone a light on a deadly industry

On Thursday 2 July 2020, at a mine in Hpakant, a remote area 950 kilometres north of Myanmar’s biggest city, Yangon, onlookers took out their phones and began to fi lm as the earth moved. A vast swath of mud and mining waste began to shift and plunge inexorably downwards, causing huge waves to crash into the lake below. The incident crushed at least 172 workers, the worst disaster to strike Myanmar’s jade mines in living memory. Most of the victims were freelance miners – unauthorised workers, often from minority ethnic groups, who scavenge for pieces of jade within the earth excavated by big mining companies. The accident, while large, was not a huge surprise. Miners die every year in landslides and other accidents in Myanmar’s jade mines, with most unnoticed by the outside world. About 100 people were killed in a 2015 collapse, another 50 died in 2019. Th e situation has been exacerbated by companies mining ever-faster and more prolifi cally, while dumping waste in areas where it is fairly easily accessed. 

Jade is important to Myanmar. A 2015 investigation by Global Witness revealed an industry worth up to US$31 billion in 2014 alone – equivalent to nearly half the GDP for the whole country. The country produces 70-90 per cent of the world’s jade, with almost all exported to China – its value derived from the stone’s key place in Chinese history and culture. Prized as a decorative status symbol, the highest quality jade can fetch $13,000 per kilogram. 

Very little of the wealth generated by this revered stone makes its way back to ordinary people in Myanmar. In a statement made after the Hpakant disaster, Global Witness accused the industry of being ‘dominated by powerful military-linked companies, armed groups and cronies that have been allowed to operate without effective social and environmental controls for years’. Although no longer officially in charge of the country, following the end of military rule in 2011, the military (Tatmadaw) owns two large conglomerates – Myanmar Economic Holdings Limited and Myanmar Economic Corporation – that have extensive operations in a wide range of businesses, including jade. It also has a strong presence in Kachin State, the location of the country’s mines, where fighting with rebel groups has resulted in a protracted and bloody conflict. The industry generates funds for both sides in a war that has claimed thousands of lives and seen 100,000 people displaced since it reignited in 2011. 

Raw Jade MyanmarA 2015 investigation revealed an industry worth up to US$31 billion in 2014 – nearly half of Myanmar's GDP

‘Particularly in the gemstone and the jade sector, the military is the largest holder of jade licences in the country,’ says Paul Donowitz, Myanmar campaign leader at Global Witness. ‘And at the regulator, Myanmar Gems Enterprise, all the senior officials are ex-military. The armed groups are also very active in controlling access to the sites and smuggling routes. So often the military and the ethnic armed groups will be fighting 20 kilometres away, but in Hpakant they’ll be cooperating and working together because everybody’s making money. I think fundamentally, that’s the biggest issue here – all the complex stakeholders are profiting from jade.’ 

The military-backed companies generate enormous profits and reportedly pay little tax. A 2019 report by the Natural Resource Governance Institute (NRGI) found that the government selectively overtaxes the small portion of jade and gemstones passing through official channels, while companies avoid most payments by underreporting and undervaluing their production. It is estimated that around 59–74 per cent of jade by volume is unregistered. This results in weak oversight of operations and, for the 300,000 unregistered miners who come from all over the country to hunt for jade, it exacerbates deadly conditions. 

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The government has made some overtures to addressing the problem. Following the disaster, President U Win Myint immediately formed an investigation body that visited the site of the incident in Hpakant and met with local people. The state government has received about 579,900,000 kyats (about US$423,900) in donations from the Kachin State government, the Tatmadaw, mining companies and individual donors. According to a Kachin-based journalist writing under a pseudonym for e Irrawaddy, a news site founded in 1990 by Burmese exiles living in Thailand, some of the money appears to have been delivered to the victims’ families. 

Nevertheless, the once-revered Nobel Prize winner Aung Sang Suu Kyi, Myanmar’s state counselor (equivalent to a prime minister), has come under fire. Global Witness notes that her party, the National League for Democracy (NLD), has yet to implement desperately needed reforms, allowing deadly mining practices to continue. Although the government joined the Extractive Industries Transparency Initiative (EITI) as a candidate country in 2014, membership of which requires both companies and national governments to publicly disclose their revenues from extracted resources, according to the NRGI, disclosures have been extremely limited in scope and accuracy. Similarly, the Myanmar Gem Stones Law, amended twice in 2016 and 2019, is said to be weakly enforced. 

‘When Aung Sang Suu Kyi came into power in 2016, she made gemstone mining one of the key areas for reform,’ says Donowitz. ‘The NLD government set up a very innovative multi-stakeholder group to develop a gemstone policy with civil society and industry, with the US government supporting the process. But I think it sat on the shelf. It’s like they do these things and then when it comes time to actually make hard decisions that would actually change things, there are too many entrenched interests.’ 

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U Win Myo Thu, co-founder and director of EcoDev, Myanmar’s leading environmental organisation, agrees. He was part of the group set up to investigate the industry and was involved in scrutinising the EITI reports, in which the revenue fi gures for jade quoted by the government ($2 billion) were vastly lower than the $31 billion reported by Global Witness. ‘The government also has some responsibility, because we requested that the government allow us to select an auditor from London, to reconcile the diff erent revenue figures,’ says Thu. ‘We arranged for this international auditor to go to the mine sites because we were curious to look at the inventory data of each company. But the mining companies were so clever. They asked the local military in charge and the military said that it wasn’t suitable for the auditor to come due to security issues. The EITI initiative is backed by the president but because of some regional and military people, even the president can’t go forward!’ 

This situation is indicative of wider problems in the country. The government simply doesn’t have control of large, economically important areas where the military and armed groups hold sway. ‘The NLD government has not tried to take on those entrenched interests. What they’ve done is committed to a development and policy and legal framework, and all that is fine, but fundamentally, it doesn’t matter if within the mining areas, they exercise zero control,’ says Donowitz. ‘I have hope for some of these things working, but the answer may ultimately be that nothing is going to change until all the jade has run out. I hope that’s not the case, but it’s been pretty intractable.’ 

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