Wa Tin Mining Boom May Have Peaked

By Seamus Martov 6 September 2016

The massive tin mining boom underway in territory controlled by Burma’s largest ethnic armed group, the United Wa State Army (UWSA), may be set for a decline, concludes a recent update from the International Tin Research Institute (ITRI), a not-for-profit organization closely connected to the international mining industry.

The autonomous section of northern Shan State located along the Chinese border officially known as Shan State Special Region 2, but more commonly referred to as Wa State, is estimated by ITRI to currently account for 95 percent of Burma’s tin production, “peaking at some 50,000 tpy [tons per year].” Almost all of it is exported to China.

A paper published last December in the journal Resources Policy concluded that Wa tin production had in just a few short years boosted Burma from being a small player in the global tin trade “to the status of the world’s third largest tin producing country.”

According to figures provided by ITRI between 2009 and 2014, Burma’s overall tin production shot up 4900.00 percent thanks almost entirely to output from the Wa territory, a dramatic shift that appears to have caught the global tin mining industry completely by surprise.

ITRI reports that the mining operations at Man Maw—some 90 kilometers from Panghsang, the UWSA’s de facto capital—have changed considerably over the past few years.

Citing information from an ITRI staff person in China who recently visited the UWSA territory, ITRI says that mining in Man Maw, which as recently as 2014 was dominated by open pit mines, has shifted as these sites have depleted. According to ITRI, “today most mining is underground, with higher operating costs and lower ore grades.”

Another change cited by ITRI is that many of the smaller mining outfits operating in the area have disappeared and have been replaced by larger firms that are “better organized and well financed”—operations that are more mechanized and use “expanded ore processing facilities.”

According to ITRI, in 2014, tin mining operations at Man Maw commonly dealt with grades of 10 percent tin. These have been largely depleted: “most ore mined now grades between 2-3 percent tin.”

Although the ITRI update concludes that, in the short-term, tin output from Wa territory “seems stable,” ITRI notes that the longer-term outlook for production in Wa territory “mainly depends on whether there are new resource discoveries in the next few years. Otherwise, production may peak in 2015-2017 and then decline.”

ITRI has estimated tin production in Wa territory by analyzing China’s official import figures for tin ore and concentrate. According to the update, “ITRI believes that the big increase in imports reported by China in the first half of 2016—up 88 percent year-on-year in gross weight terms—is based on a depletion of above-ground stocks of ore and concentrate accumulated over the last few years. This masks an underlying decline in mining activity and depletion of readily accessible higher grade ore resources.”

If the forecasted peak in the Wa mining boom takes place, global tin prices will likely rise. Currently tin is trading at U$18,770 a metric ton—an 18-month high, but still considerably lower than the height reached during the most recent commodities boom. Much of the world’s tin production ends up in solder, used in electronic circuits.

The leadership of the UWSA and its similarly named political wing the United Wa State Party—most of whom were mid-ranking members of the Communist Party of Burma (CPB) when the group imploded in 1989—are known to be reclusive and rarely grant access to their territory to foreign journalists or other outside visitors.

Much of this appears to stem from a series of indictments filed by US authorities against the UWSA leadership, including Chairman Bao Youxiang, for their alleged involvement in the global drug trade. The UWSA has long denied these claims, which it maintains are part of a smear campaign.

“We, the UWSA, are wholeheartedly engaged in the fight against drug-dealing,” the group’s spokesperson, Aung Myint, told The Irrawaddy in a 2013 interview. “For seven years since 2005, there have been no poppy fields and no poppy plants in our region. This has finished. That’s why the world should recognize us.”

The UWSA has longstanding ties with China, carried over from the days when Beijing was the main backer of the CPB and its armed insurrection against Ne Win, who in the parlance of the Cultural Revolution was a “counter-revolutionary, fascist, and reactionary.”

More than a quarter century after the almost exclusively Burman CPB politburo was toppled by their ethnic comrades, the UWSA remains on good terms with their Chinese neighbors—a relationship no doubt shaped by the vast amounts of tin being shipped across the border to feed China’s giant manufacturing sector.

Though this may not be the kind of recognition that Aung Myint and his colleagues had in mind, the Wa territory’s significant role in the global tin trade—accounting for nearly 10 percent of global tin output by recent estimates—has certainly put the group on the global mining map.

Several international tin mining firms have cited Man Maw’s mammoth tin production and its effect on global tin prices as an issue of concern in the market outlook section of their annual reports. In a similar vein, metals analyst Andy Home described in a recent write-up for Reuters how plans to restart a long dormant tin mine in southwestern England depend on how much tin is left in the UWSA’s mines.

“Man Maw is the hard reality that looms large over Cornwall’s dreams of reviving its historic tin sector,” he wrote.

Despite their size and importance to the global tin trade, the UWSA’s tin mines did not make an appearance in Burma’s first ever Extractive Industries Transparency Initiative (EITI) report published last year. The report disclosed royalty payments paid by firms operating in Burma’s resource sector as well as royalty payments received by the government.

Burma joined the global pact, which aims to bring about greater transparency in the oil, gas and mineral resources sector in developing countries, under President Thein Sein—a move heralded by some, including the World Bank, as a “transparency breakthrough.” If the figures from ITRI are to be believed, 95 percent of Burma’s tin production remains unaccounted for in the EITI report.

Given their current trajectory, it appears unlikely that the UWSA—who, since signing a ceasefire with the then ruling military regime in 1989, have run their special region on the Chinese border with almost complete autonomy from the central government—would cooperate with efforts like the EITI in future.

The UWSA are much less inclined than many of their fellow ethnic armed groups in Burma to cooperate with the central government, if such cooperation doesn’t directly suit their interests: the preservation of a degree of sovereignty unparalleled among their ethnic militia peers, none of whose forces are anything near as large or well-equipped.

The group’s representatives stormed out of the 21st Century Panglong peace conference in Naypyidaw last week, over a perceived slight related to their being given “observer” nametags at the outset—casting doubt on their seriousness as participants in Burma’s peace process.

What kind of royalties the UWSA leadership is charging mining firms operating in their territory is unclear, but it certainly appears that the massive windfall from tin mining is helping the UWSA maintain its powerful militia—by some estimates numbering between 20,000 and 25,000 soldiers, larger than the standing armies of several European nations.

Given the central role tin production appears to be playing in the Wa economy, it is very likely that tin mining analysts are not the only ones interested in just how much tin is left in Man Maw’s mines.