Following a chaotic boom period, conflict has left Myanmar’s ruby mines in limbo, due to displacement, road closures and the disappearance of Chinese buyers.
By RAJU GAUTAM, EMILY FISHBEIN and HPAN JA BRANG | FRONTIER
While the 200-kilometre journey from Mogok to Mandalay typically takes around five hours, for Ko Than Htoo and his family it was a gruelling 15-day journey. The main road was impassable due to heavy armed clashes, so they took an alternate route by minivan, sleeping at roadside monasteries along the way.
They had joined a caravan of thousands fleeing Mogok in the last week of June, after the Ta’ang National Liberation Army launched an offensive to seize Myanmar’s ruby capital.
“We faced a lot of difficulties on the way,” said Than Htoo. “There were times when I felt as if I wouldn’t see the next day.”
Although he is now safe, he has another problem – Than Htoo is unable to sustain his gemstone trading business due to the conflict. “Everything came to a halt during the operation, so we are just using up our savings,” he said. Like other gemstone traders interviewed, he is going by a pseudonym.
He and three other traders from Mogok said the 2021 military coup brought some challenges, but they found ways to adapt. As the post-coup conflict broadened, however, they have struggled to keep their businesses afloat.
Mogok, a hill town in northern Mandalay Region bordering Shan State, came under attack during the second phase of Operation 1027, named for the day in October 2023 on which it was first launched. The TNLA and its partners in the Three Brotherhood Alliance, with the support of forces formed in response to the coup, have since seized much of northern Shan and Rakhine states and parts of Mandalay Region, and they are increasingly taking the war to urban centres.
These battlefield victories have left forces opposing the military in control of unprecedented swathes of territory including Mogok, which the TNLA seized on July 25. If managed well, Mogok is a prize jewel because its multi-million dollar gemstone industry has the potential to help fund the fight against the junta and to underwrite nascent parallel public services like healthcare and education.
But the conflict has brought mining shuddering to a halt, with most civilians having fled the town. It has also slowed the trade of already-mined stones, as the Mandalay-Muse highway remains closed, the military blocks telecommunications access across Mogok and demand from Chinese buyers slows.
It’s also not yet entirely clear who will benefit from the newly seized riches.
He who controls the mines
The TNLA announced in August that it planned to roll out its own administration in towns it had captured during Operation 1027. The same week, its spokesperson Lway Yay Oo told Mizzima News that it had suspended all large-scale mining operations in Mogok, and was developing plans to ensure the livelihoods of local people who depended on mining for an income. So far, however, it has not released a resource governance policy or formal plans regarding Mogok’s mines.
Its takeover of Mogok raises questions regarding the role of the National Unity Government, a parallel civilian government appointed by elected lawmakers deposed in the coup. In January last year, it ambitiously announced that it was selling the rights to 45 mining plots in Mogok to raise money. The NUG’s finance minister U Tin Tun Naing said at the time that investors would operate the mines through a public-private partnership after the anticipated fall of the military.
Tin Tun Naing told Frontier that the NUG sold only two mining blocks of approximately five acres each in Mogok, raising US$250,000 in total. The NUG, he said, planned to “fully guarantee the rights sold to investors” according to the shareholder arrangement agreed upon at the time of sales, with the investors holding 49 percent of mining rights and the regional government holding the remaining 51pc after the ousting of the military.
Although the TNLA has a close military alliance with the NUG-aligned Mandalay People’s Defence Force and Mogok PDF, which participated in the battle for Mogok, it has no formal political alliance with the NUG.
Tin Tun Naing added that the NUG plans to jointly administer Mogok with the TNLA starting in 2025, but Frontier was unable to confirm this information with the TNLA, whose spokesperson acknowledged the receipt of questions but did not respond by the time of publication. While the TNLA appointed a Mogok PDF member to its 13-member administration committee, it has not yet indicated whether it will share power with the NUG.
In a report published in December 2021, environmental watchdog Global Witness said Myanmar’s ruby industry generated around $400 million annually at full production.
Around 90pc of Myanmar’s rubies and other gemstones (not including jade) come from Mogok. The town of about 90,000 people produces some of the world’s most valuable rubies, sapphires and spinels.
Global Witness found that before the expiration of the last mining licences in 2020, the mines in Mogok were heavily dominated by the military and its affiliates, like the Pa’O National Army. But other armed groups had mining enterprises too, including the United Wa State Army, Myanmar’s most powerful ethnic armed group, which has remained largely neutral in the post-coup conflict. The TNLA has long received weapons and other support from the UWSA, which is reportedly under increasing pressure from China to cut ties.
These varied interests raise thorny questions about revenue sharing.
With power also comes responsibility, and many will be closely watching the TNLA’s resource governance and environmental policies.
Nora, a resource governance specialist from Myanmar with a decade of experience, who requested to go by a nickname, told Frontier that the TNLA must be accountable and transparent when managing Mogok’s mines.
“For resource governance, territorial control is important,” she said. “The one who controls Mogok is the main group [responsible] for natural resource governance.”
But she cautioned that establishing effective governance over Mogok’s mines would take significant work. “Taking control of an area might just take days or a month of fighting, but installing a public administration can’t happen in a month. It’s a long process,” she said.
A mining free-for-all
The elected National League for Democracy government had taken some steps toward cleaning up the gemstone sector in accordance with standards set by the Extractive Industries Transparency Initiative, a global body. In 2016, the year it took power, the NLD announced a moratorium on issuing or extending mining licences pending further reforms, and in 2018, it rolled out a new gemstone law. But the law was heavily criticised by advocacy groups for failing to address key problems in the industry, leaving space for environmentally destructive mining practices to continue.
The coup then triggered a collapse of the country’s formal economy and the rule of law, while military-linked business entities, including those involved in the gem industry, were hit with Western sanctions. In February of this year, the EITI delisted Myanmar following a decade of membership, citing political instability, stalled implementation of industry reforms, and deteriorating conditions for stakeholder engagement.
In its December 2021 report, Global Witness found that tens of thousands of informal miners had flocked to Mogok to fill the void left when the last official mining licences expired in 2020, but faced extortion and exploitation at the hands of the military and other armed actors.
Gemstone traders interviewed by Frontier described a free-for-all in Mogok after larger companies left. “There were almost no restrictions as long as you paid the right amount of money to the right people, so there was even more mining activity,” said Than Htoo.
Kul Bahadur, a seasoned ruby trader, said the end of large-scale mining in 2020 opened up opportunities for miners who had previously been squeezed out. Miners now had a say in evaluating a stone’s worth, and the option of finding their own buyers rather than leaving the process to the head miner – known locally as a twin saya – and boss, known as a paw lan. According to Kul Bahadur, miners could earn income based on the quality and quantity of the stones they mined.
“It’s better for miners compared to the phat sat era,” he said, using a colloquial term for military-linked joint ventures. “Before, miners would only get paid a fixed salary, and wouldn’t even get 1pc of a gemstone’s worth, but nowadays, they can earn as much as they work.”
He and other traders said small teams of around six or seven people, including the miners, twin saya and paw lan, rented out shaft mines through shareholder agreements on land formerly occupied by large companies. “According to Mogok customs, the landowners get one share out of three, the investor gets another, and the remaining share is divided up between the miners and the twin saya,” said Ko Phyo Win, a second-generation ruby and sapphire trader.
Alongside new opportunities to earn money, however, those involved in the trade faced new risks. The military, said traders, used the lack of a licensing framework as a premise to extort money and arrest people at mining sites as well as local gemstone markets and roadside pop-up markets known as htar pwes.
“Small-scale mines were frequently disrupted. Those operating these mines secretly to make ends meet were arrested,” said Phyo Win. “The main htar pwe paused operations because [the military] started demanding excessive taxes. We also didn’t feel secure in other htar pwes. We were constantly worried about the authorities coming to arrest people.”
Ko Maung Hla, a small-scale gemstone trader, added that the military would sometimes seize miners’ motorcycles and charge exorbitant fees for their return, or demand bribes from bosses for the release of arrested miners. “Some well-connected bosses could pay for their release, while others could not. As a result, many miners faced significant difficulties,” he said.
Traders also faced challenges when travelling out of Mogok to sell at larger markets in Mandalay and Yangon or meet buyers in Bangkok. “The gems in our possession were at risk of being confiscated any time,” said Phyo Win. “If you were found with gemstones at checkpoints, you would definitely have to pay an extortion fee.” As a result, he said he sometimes sold gemstones below market prices in Mogok rather than risk travelling to other areas for a better rate.
After the coup, traders also faced a currency crunch. The plummeting value of the kyat caused domestic demand to increase for hard assets like gold and gemstones, but traders said that market prices had not kept up with general inflation. “Gemstones don’t have a [fixed] market price like gold… It’s very subjective,” said Phyo Win. “If we compare gemstone prices with gold prices during inflation… even though gemstone prices have risen, they haven’t gone up as much as they should.”
While some of these losses might have been mitigated by using US dollars, the military has increasingly restricted their use in an attempt to stabilise the kyat and make up for its own shortage of foreign currency. “After the coup, we didn’t dare to trade in dollars anymore,” said Phyo Win. “We have had to stomach lower offers than we wanted just to keep our businesses going.”
Left in limbo
Kul Bahadur said the gemstone market worsened after the TNLA’s ally, the Myanmar National Democratic Alliance Army, attacked Laukkai in November last year, during the first phase of Operation 1027.
The town, which sits on the border with China’s Yunnan province, had become a hotspot for lucrative online scams run by Chinese criminal syndicates, but the MNDAA’s offensive drove them out.
Kul Bahadur said that after that, many Chinese buyers – known locally as WeChat buyers because they used the Chinese application to negotiate and buy stones – stopped coming to Mogok. Many of the buyers had been based in Laukkai, while increased fighting disrupted routes from other gem trade hubs like Muse.
The assault on Laukkai also dented prices.
“Because of the Laukkai incident, the price of rubies went down by about 20pc, especially for the quality kind bought by the Chinese,” said Kul Bahadur, who hinted that prices were artificially inflated because some of these buyers had been using gemstones to launder funds generated from the cyber scam industry.
“They had been able to pay about 20pc more than buyers from other international markets such as India, because they were using black money,” he added. Frontier was unable to verify his claim.
As tensions began to build between the TNLA and military in mid-2024, the situation in Mogok worsened, due to increased harassment by regime authorities and then the chaos of urban warfare. Gunfights erupted in the town as the military shut down telecommunications networks and then resorted to punishing airstrikes.
“Because people in Mogok were in a state of panic, some sold their gemstones at whatever price they could fetch, and ended up selling for cheap,” said Phyo Win. “They had no way of knowing about prices elsewhere in the country, so there was also a discrepancy in prices.”
Although the trade has since resumed in Mandalay and Yangon, Phyo Win said people are mostly buying and selling gems mined before the fighting. With the road in and out of Mogok still blocked, few newly mined gemstones are entering the market.
Maung Hla, who previously bought rough stones directly from miners, before cutting and polishing them and reselling them in Mandalay and Yangon, is now struggling to adapt from his new base in Bangkok. “I’ve been trying to trade the rubies and gems that I saved by working within my network, but it’s not as effective as before,” he said. He is also using WeChat and Facebook to try to reach new buyers, but without much success.
According to Kul Bahadur, who is now in Yangon, upmarket sales have also slowed. “Good quality stones are not sold these days because people prefer to keep them,” rather than the volatile kyat, he said.
Traders told Frontier that with the TNLA now in control, they would like to see it establish just and equitable protocols governing Mogok’s mines. “We hope for opportunities where mining is accessible for locals from all walks of life,” said Phyo Win.
Maung Hla added that the TNLA must avoid conflicts of interest when issuing mining permits, encourage small-scale mining, and promote environmentally sound practices. “As long as Mogok exists, trading and mining will continue,” he said. “I believe that it can be sustainable if we allow proper mining in designated areas. I hope the situation improves and that there is better management of mining resources in the future.”
For the time being, however, smaller traders like Than Htoo are mostly worried about their safety and survival. “I worry about how long [the crisis] is going to last and what things will look like in the long term,” he said. “The future is very uncertain in this trade.”
