From Jade Land to a Wasteland

By Saw Yan Naing 21 February 2014

HPAKANT, Kachin State — “They eat up the hills like they’re devouring cakes. Hills three or four hundred feet high are completely flattened, or even turned into holes 300 feet deep. Where there used to be mountains, now there are lakes,” said U Cho, a resident of Hpakant, a town in Kachin State famed for its jade mines.

Like many others in the area, U Cho is a jade dealer. But even he struggles to comprehend the scale of the destruction wrought by the jade mines here.

“They use dynamite to blast away whole mountains. The mountains collapse just like the World Trade Center on 9/11. With modern technology, a mountain can be reduced to flat land within one month,” he said.

Located about 220 miles (350 km) north of Mandalay, Myanmar’s second-largest city, Hpakant is the source of the world’s highest-quality jade. Surrounded by hills and mountains that produce jade and gold, the area is so rich in mineral wealth that residents say they used to be able to find jade even when they were building house foundations or digging wells.

But the extraction of the region’s earth-bound riches has utterly transformed the landscape, leaving devastation in its wake. Around the villages of Lonekin, Ma Mot and Sai Taung, for instance, the mountains have been replaced with massive tailings piles, and effluent from a muddy artificial lake pollutes the U Ru stream that runs right through the heart of Hpakant town.

“In the past, you could see the rocks at the bottom of the U Ru stream, it was so clean. Now the water is murky and toxic because of the jade mining. It is dying,” said U Maung Than, another Hpakant resident.

Mung Myit, another local jade merchant, also jumped into the conversation. “When we were young, our grandparents told us that the hill and mountains here were full of big trees,” he said. “They even heard tigers at night, and the air was so cool that you had to use a blanket when you went to bed, even in the hot season.”

The wages of peace

Although those days are long past, things didn’t really begin to heat up in Hpakant until 20 years ago, when the Kachin Independence Organization (KIO), an ethnic armed group, signed a ceasefire agreement with the then ruling military junta, opening up the region to large-scale exploitation.

Since then, at least 500 companies have registered to mine in Hpakant. In addition to a combined workforce in the hundreds of thousands, the new operators brought heavy machines with them to make the job of tearing down mountains that much easier.

One of the biggest players in this enormous enterprise is the Union of Myanmar Economic Holdings Ltd (UMEHL), a military-run conglomerate that dominates many sectors of the country’s economy. Some generals or their families are also believed to be privately involved; for instance, locals say that Daw Kyaing Kyaing, wife of ex-dictator Snr-Gen Than Shwe, has a company here. But Chinese businessmen, working though local proxy companies or in partnership with state-owned businesses, are widely seen as the ones in control of the jade trade.

That should come as no surprise: China has been importing jadeite, or hard jade, from Myanmar since the 13th century. Today, about 90 percent of the world’s jadeite is mined in the Hpakant area, and most of it is sold to China, Hong Kong and Taiwan. As a symbol of virtue and excellence, it was much in demand for use in products commemorating the 2008 Beijing Olympics.

Despite its enormous value, however, only a fraction of the money spent on Myanmar’s jade ever gets recorded. In September of last year, Reuters reported that the country produced more than 43 million kilograms of jade in the 2011/12 fiscal year, but generated only US$34 million through official exports—a far cry from the $8 billion that it was worth, according to a report by the Harvard Ash Center cited by Reuters.

Fueling the fire

Under the terms of the 1994 ceasefire agreement, the government and the KIO shared control of Hpakant equally—an arrangement that paved the way for a full-scale assault on the region’s mineral wealth, but did little to lay the groundwork for a lasting peace.

At a time when many now engaged in peacemaking efforts are arguing that increased investment in ethnic minority areas will help to ease tensions, it is interesting to note that since 1988, an estimated 65 percent of all foreign direct investment (FDI) in Myanmar have been poured into three of the country’s most conflict-ridden states. According to a report published by the Netherlands-based think tank Transnational Institute in February 2013, Kachin State ranked first, receiving $8.3 billion, or 25 percent, of the FDI in Myanmar over this 25-year period, followed by Rakhine State ($7.5 billion) and Shan State ($6.6 billion).

In the case of Kachin State, the impact of this investment has been largely detrimental, not only to the environment, but also to the prospects for a lasting peace.

“There are many reasons for going to war, and we can say that business interests are one of them,” said Gen Gun Maw, deputy chief of staff of the KIO’s armed wing, the Kachin Independence Army (KIA), explaining what led to the collapse of the Kachin ceasefire in June 2011.

Since fighting resumed in the state, the KIO has lost much of its influence in Hpakant, where large-scale mining has been suspended as a result of the ongoing conflict. However, local residents say the town is still full of both KIA and government spies and is regarded as a “brown zone,” where clashes between the two sides could break out at any time.

Casualties of investment

While the government and the KIO were dividing the spoils of a lucrative industry that both profited from through concession fees and taxes, local people lost far more than they gained. As with elsewhere in the country, many were forced off their land to make way for big companies, often with little or no compensation.

“Many inhabitants of this area have very painful feelings, but they can’t do anything about it because the companies coming in all have permission from the government,” said Sutdu Yup Zau Hkawng, head of the Jade Land Company, one of the leading mining companies in Hpakant.

Despite the fact that companies operating here are required to pay three types of tax (10 percent of a winning bid on a concession; 10 percent of the value of any jade discovered; and 10 percent of earnings from sales at government jade emporiums), little if any of this government revenue is ever used to improve the lives of people living in the region.

Located about 48 miles (77 km) from the state capital of Myitkyina and accessible only by four-wheel drive vehicles during the rainy season, Hpakant looks more like a small, isolated village than the center of a multi-billion dollar industry. Even the phone lines here don’t work much of the time.

“Hpakant is a place where people go to make money and bring it elsewhere. Not even the local authorities are interested in developing the place,” said veteran journalist Bertil Lintner, author of many books on Myanmar, including “Land of Jade: A Journey from India through Northern Burma to China.”

According to economist Sean Turnell, a long-time observer of Myanmar’s economy, jade was the country’s largest source of foreign earnings two years ago and likely remains a close second to natural gas now that the Shwe gas fields have come on line via a newly built pipeline to China’s Yunnan Province. He noted, however, that the nature of jade as a resource made the jade-mining industry even less transparent than Myanmar’s notoriously opaque energy sector.

“Jade is an important asset via which wealth can be effectively stored and transferred across borders. Along the way, tax is easily avoided. In a sense, it is an underground financial market, which exists largely because [Myanmar] still lacks a more formal and effective one,” he said.

A crime- and drug-fueled town

Ironically, the collapse of the ceasefire and the suspension of full-scale mining operations have given local prospectors and other small-time operators a chance to profit from an industry that under normal circumstances excludes them. Using primitive hand tools, they scour mountains stripped bare by heavy machines, searching for the precious green stones.

But this kind of mining isn’t just difficult, dangerous work; it is also illegal and subject to regular crackdowns. Like everything else in this lawless town, however, that doesn’t prevent anyone from doing it.

“When the government soldiers come, we just flee,” said Khaing Maung Doe, an ethnic Rakhine jade prospector. “They usually come twice a day, so we just stop what we’re doing and run. If we don’t we’ll be arrested and charged.”

Those unlucky enough to get caught aren’t long getting back into the game, however. All they have to do is pay a “fine” of about 50,000 to 100,000 kyat ($50 to $100)—usually directly to the arresting guard—and they’re back in business.

Even in a country where corruption is pretty much the norm, Hpakant stands out for the sheer amount of graft that goes on here. Crime—from theft, prostitution and gambling to drug trafficking and murder—is rampant, but even when reported, the local authorities rarely if ever take action.

Massage parlors and gambling dens line the main road of Ma Mot, a village just west of Hpakant, while in Sai Taung, located on the other side of the U Ru, there’s a place where heroin addicts can openly shoot up.

“Hpakant is the second Hong Kong,” said U Win Htun Htun, a local jade dealer. “You can get everything you want here—girls, methamphetamines, heroin. Half the people here are drug addicts.”

U Shwe Thein, the chairman of a local branch of the opposition National League for Democracy, said he had made proposals for tackling Hpakant’s drug problem, but they fell on deaf ears.

“I proposed a campaign to eliminate drugs, but the authorities said they could only try to reduce drug use,” he said. “Even though heroin and other drugs are sold by individuals, I feel the authorities are behind the sale, as they are the ones running the town.”

He added that this situation has left local people feeling completely powerless. “They are like children without parents. They don’t know who to turn to when they are abused.”

Worst of all, he said, the rest of the country seems oblivious to what’s happening in Hpakant.

“It’s worse here than in Letpadaung,” he said, referring to the site of a controversial Chinese-backed copper-mining project in Sagaing Region that has attracted nationwide attention. “We’ve lost our mountains one by one, but nobody seems to care.”

This article first appeared in the February 2014 print issue of The Irrawaddy magazine.