HPAKANT, Myanmar (Reuters) - Using heavy earth-excavators and explosives, miners have been tearing into Myanmar’s northern hills in recent months, in a rush to excavate more jade from the world’s richest deposits of the gemstone before a new government takes office next year.
Acres of forest have been felled, leaving behind craters, barren cliffs and a web of dirt tracks in the once-picturesque Kachin hills as the Chinese firms that dominate the jade business step up mining and aggressively seek new concessions.
They are anticipating the multi-billion dollar industry could change once Aung San Suu Kyi’s election-winning National League for Democracy (NLD) party takes office with a promise of clean governance, those in the trade say.
The NLD has said it will bring in rules and competition and crack down on rampant smuggling that deprives the government of hundreds of millions of dollars in tax revenue, but skeptics doubt it will be able to do much in the remote, rebel-infested region.
Nay Win Tun, a flamboyant lawmaker and heavyweight in the jade trade with close links to the Myanmar military, says the Chinese have been flooding the trade with cash and equipment, ramping up production and taking over local miners.
“Right now, the market is being ruined by China,” he said in a rare interview at one of his mines near Hpakant, dressed in an orange shirt, sunglasses and a cowboy hat, and surrounded by a uniformed entourage.
“Chinese companies tried to do a joint venture with my company,” added Nay Win Tun. As he spoke, one of his attendants stooped down and tied his shoe-laces.
“I didn’t accept because they’re asking for a share of profit that’s too much.”
About 600 jade mining firms operate on 20,000 acres around the town of Hpakant, but activity is dominated by about 10 firms, among them mostly Chinese-led ventures, according to Ye Htut, the deputy head of Myanmar Gems Enterprise, a department of the Ministry of Mines.
“We are worried about the political changes in the coming months,” said Eik Yin, a site manager for Triple One Company, a China-Myanmar joint venture in Hpakant. But he declined to comment whether this was leading to ramped up production.
Because of the stepped-up extractions, thousands of ethnic villagers are being forced off their land. Scavengers, or “handpickers” who in their thousands scour mountains of loose earth and rubble for nuggets of jade, are sometimes buried alive, including 114 killed in a landslide last month.
Many of the scavengers are addicted to narcotics.
Aung Ko Oo, director of the locally-owned Thukha Yadana mining company, said mainland Chinese firms had stepped up activity since the start of the year.
“Mostly they came in by joint venture with local (ethnic) Chinese companies,” he said. “Our firms have already sold two six-acres sites to the Chinese. We need money.”
Myanmar miners say they cannot stand up to Chinese tycoons who buy influence and invest in modern heavy machinery like Caterpillar (CAT.N) and Komatsu (6301.T) earth-excavators. Processions of giant trucks, with eight-foot high wheels, are a common sight in the area and all belong to Chinese firms.
These firms have successfully cornered the market, selling directly to visiting Chinese buyers they are already familiar with, according to traders who spoke to Reuters.
A Myanmar Gems Enterprise official said Chinese firms had co-opted local army commanders to secure mining concessions on their behalf, knowing they were too powerful for the local government to refuse them.
“The military officers already have deals with the Chinese companies to transfer the sites to them,” said the official, who spoke on condition of anonymity.
“They don’t change the name of ownership sometimes. No one dares to touch (these) sites.”
Military officials were not immediately available for comment, and Zaw Htay, a senior official in the president’s office, declined comment.
Much of the jade is being smuggled into China each year, locals say. Jade is a status symbol in China widely believed to bring fortune, wealth and longevity.
According to official data, China - the world’s biggest jade market - imported only about $540 million of Myanmar jade in the first nine months of this year. Global Witness, a non-governmental organization, estimated the value of Myanmar’s jade production at $31 billion in 2014.
China’s Foreign Ministry spokeswoman Hua Chunying said she was unaware of any allegations of Chinese companies’ involvement in jade smuggling, but added the country was opposed to such illegal activities.
A regional police official in Hpakant said hundreds of trucks were concealed in the Kachin jungles, a few of which operated each night to transport undeclared jade rocks from Hpakant toward the China border.
“At night, there are nine or 10 trucks moving,” the officer said, speaking on condition of anonymity. “Since it’s an army dominated area, the Chinese work together with the army to move trucks to Hpakant.”
In its election manifesto, the NLD led by Nobel laureate Aung San Suu Kyi pledged closer scrutiny of investments when it replaces the current government early next year. But given the military’s political power and vast network of business and influence, it may be impossible to police the jade industry.
“Even this government can’t control this region because of the military’s domination,” said Eik Yin, the manager for Triple One.
“Until now, Aung San Suu Kyi hasn’t been able to influence the military, so I don’t think an NLD government can either.”
Additional reporting by Simon Webb in Bangkok and Adam Rose and Ben Blanchard in Beijing; Writing by Martin Petty, Editing by Raju Gopalakrishnan