Over-Extraction, Chinese Slowdown Blamed for Jade Price Slump

By Kyaw Hsu Mon 13 June 2016

RANGOON — With the government’s biannual gem emporium looming at the end of this month, prices for Burmese jade have continued to slide against weakening demand.

Industry insiders have blamed an economic slowdown in China, over-extraction in jade mines, and market uncertainty linked to the transition of power to a democratically elected government in Burma.

“Here, the economy is cooling along with China. The market for jade is stagnant. There are many jade stones, with lots heaping up unsold,” said Tun Hla Aung, joint secretary of Myanmar Gems Traders Association.

Kyaw Kyaw Oo, executive committee member of the Myanmar Gems Traders Association, highlighted over-extraction—far outstripping current demand—for the slide in prices and what he considered the poor state of the jade market.

“If the government can control such over-mining, things should return back to normal,” Kyaw Kyaw Oo said.

“Prices have been cut to cover production costs [in the short term], but jade prices keep falling,” he said, without specifying by how much.

“Our main customers are from China. Recently, their banks have not been giving loans to gems and jade traders, due to new economic policies from the Chinese government,” he explained.

However, Kyaw Kyaw Oo said that recent disputes and accusations—to which he was party—within the Myanmar Gems Traders Association had not affected the market.

On June 2, 81 members of the association held a press conference in Rangoon, calling on the Ministry of Resources and Environmental Conservation to address the so-far unexplained loss of over US$100 million from the association’s coffers—a scandal in which the former President Thein Sein has been implicated.

“Some people thought this dispute might affect jade and gems trading. Actually, it has not,” Kyaw Kyaw Oo said.

The Myanmar Gems Enterprise, which operates under the Ministry of Resources and Environmental Conservation, will stage the biannual Gem Emporium for local and foreign traders in Naypyidaw from June 24-27.

The process is tightly regulated. Only those holding mining, trading and company licenses, and members of the Myanmar Gems Traders Association, are eligible to take part. Buyers must give a deposit amounting to 5 percent of their expected expenditure.

From June 13, an administrative committee in the Myanmar Gems Enterprise’s head office in Naypyidaw will register local and foreign dealers for the emporium.

“Around 6000 jade lots will be displayed, fewer than last year,” Min Thu, assistant director of the Myanmar Gems Enterprise, told the Irrawaddy. “Although the market is broadly cool, I hope local traders will still be interested in attending.”

Jade mining in Burma is concentrated around the town of Hpakant in Kachin State, northern Burma. Mining there was suspended between 2012 and 2014, due to the resumed war between the Burma Army and the Kachin Independence Army, which has yet to be resolved. In 2014, the (now defunct) Ministry of Mines began reissuing licenses.

More than 850 licenses have been issued to firms at over 8,000 sites since private companies were given permission to mine in 2007. Conditions for local workers are hazardous: The Hpakant area has been plagued by a string of landslides since late last year, including a collapse on November 21 that killed more than 100 people.

International advocacy group Global Witness released a report in 2015 that estimated the value of Burma’s jade production for 2014 at US$31 billion. The greater part of such huge sums are said to be derived from illegal trade with Chinese buyers, from which a shadowy network of military-linked companies and non-state armed groups profit.