Myanmar’s Ruby Trade

Before he became a well-heeled gems trader, Maung Gyi toiled in the ruby mines of Myanmar’s Mogok valley for twenty years. He risked landslides and falling rocks as he sifted through the earth in search of the valley’s famed pigeon blood-coloured gems, considered the world’s finest. But it wasn’t until a chance encounter with a prospector one beer-fuelled evening about five years ago that he struck it rich.

The prospector, an acquaintance, charged into the simple bar where he had been drinking with friends and declared he had found an unexplored patch of land that looked rich in deposits. He was assembling a group to go digging that very night, he said: who wanted in?

Maung Gyi offered to invest 100,000 kyats (about USD100) in tools and other essentials for the ragtag enterprise. Others agreed to dig in exchange for a cut of any profits. Even the lady who owned the bar chipped in a little money, the equivalent of a couple rounds of drinks.

The group arrived at the prospect around midnight and began digging a vertical shaft mine. This unlicensed, off-the-cuff operation was illegal, and even though a black market thrived thanks to corrupt local officials, it was best to work under cover of darkness. The crew, intoxicated off the thrill of the gamble they were taking, worked through the night.

The next morning, their gamble paid off in spectacular fashion; shortly after sunrise they struck a 113-carat stone. It was so valuable that the bar owner recouped thousands of dollars. The gem made the crew more than USD800,000 and Maung Gyi’s cut of the profits was worth about USD100,000, he said.

“Things got a lot better for me after that,” says the 43-year-old as we sip masala tea at a restaurant in downtown Yangon, where he now enjoys a comfortable life buying and selling precious stones. On a tree-lined street nearby, gem traders perch on the curb bartering over trinkets. One man peers through a loupe as he inspects a small lump of jade before bursting into laughter, apparently unimpressed by its quality.

Vast wealth sits below the earth while extreme poverty blights those living on top of it

Those in Myanmar’s precious gems market navigate a realm of extremes that would be familiar to many in resource-rich yet economically dysfunctional nations. Vast wealth sits below the earth while extreme poverty blights those living on top of it.

Laksmann shows off his ring, a sapphire he bought in Mogok. Credit: Joshua Carroll

“In Mogok, a man can struggle to feed his family in the morning and be rich in the evening,” says Lakshmann Neopane, another gems trader who spent much of his youth grinding away in Mogok’s mines before becoming a businessman. He wears a large blue sapphire on his right ring finger; he bought it in the town, a couple hundred kilometres north of Mandalay, Myanmar’s second city.

A controversial trade

Few miners get as lucky as Maung Gyi and Neopane. The majority continue to toil in harsh, dangerous conditions for low pay while the Burmese military and its cronies enjoy the bulk of the profits, maintaining a tight grip on the industry despite economic reforms that began in 2011.

Myanmar reportedly produces more than 80% of the world’s rubies, but thanks to decades of isolation under the former junta and restrictions on access for foreigners to mining areas like Mogok, the trade remains opaque and mired in controversy. A decision by the US to lift sanctions on Myanmar’s jade and rubies in late 2016 drew criticism from rights campaigners, but industry figures argued it was an opportunity for new buyers to push up standards.

There might be some validity to the calls for reinstating sanctions. For traders like Neopane, the arrival of new foreign buyers has so far had minimal impact. He has dealt with a small number of American buyers since the end of sanctions, but overall, he says, medium-sized businesses weren’t affected by the US ban because military figures and cronies, as well as buyers from China and India, continued to buy gems from Mogok as a way to store their wealth off-the-books. But the ban did make it more difficult for top elites to sell their gems onwards, he says.

If this assessment holds true, it strengthens the calls of boycott campaigners. “US sanctions didn’t hit Mogok people,” says Neopane, “but they did hit the cronies.”

Gemstones on sale at a market in Mogok. Credit: Mongkolchon Akesin

Myanmar’s new government, led by Aung San Suu Kyi, has been vocal about its desire to reform the sector. After a landslide in the jade mining area of Hpakant in Kachin state that killed well over a hundred people in late 2015, her newly-elected administration vowed to tighten safety standards. The following year, officials announced a freeze on all new mining licenses until reforms were in place. They also kicked off a public consultation on mining, with meetings held recently in Myitkyina, Kachin’s capital, and Mogok.

Civil society groups and watchdogs say these moves are encouraging, and until recently the debate over the lifted sanctions had fizzled out. But the brutal crackdown against Rohingya Muslims in Rakhine state since last August has reignited anger at those in the precious gems industry helping to line the military’s pockets.

Profit and responsibility

Luxury jeweller Cartier announced last month that it would stop buying gems from Myanmar after it was targeted in a campaign accusing it of profiting from “genocide gems”. The US-based International Campaign for the Rohingya is now pushing for the same from Bulgari, which sells necklaces and earrings that include sapphires, rubies and jade from Myanmar.

Meanwhile, tucked away in a small, brightly-lit store next to an artisan restaurant in Yangon’s downtown, one start-up jewellery business is aiming to prove that more good can come from engaging with the gems industry than shunning it.

The gems on sale at Mia Ruby, which opened a year ago, are “responsibly sourced,” says Amber Cernov, the store’s Australian co-founder. That means the business aims to avoid doing any deals that might lead to money ending up in military pockets, she explains. The rubies glistening in glass cabinets here are all sourced from a family-run mine in Mogok that, as far as she can tell, has no ties to the generals.

“I don’t say we’re ethical, I say we’re responsible”

Cernov says she has made it clear to this supplier that her business has a policy of not trading with any military mines, “and they know that that is absolutely my standard”. The family enterprise operates under a joint venture with the Ministry of Natural Resources, which was formed when the new civilian government merged the mining and environment ministries after coming to power in 2015.

But it is impossible to be certain that the military doesn’t benefit somewhere along the supply chain. “As with everything in the gems trade, it is really about trusting the commitments made by the family that we buy off,” says Cernov. Her supplier’s conduct so far looks promising, she adds. “In some instances… we cannot source the gems that we need, as the family will say they can only find that size, quality or quantity from military-linked sources.”

Jewellery made with rubies from Mogok at Mia Ruby. Credit: Joshua Carroll

Merely avoiding military enterprises, though, is not enough to bring the industry up to an acceptable standard. “I don’t say we’re ethical,” Cernov adds. “I say we’re responsible, in that we’re trying to operate the best we can within the restraints of the current environment.”

For example, the miners working for her supplier are “from what I can tell… actually paid relatively well in terms of their contribution, but whether that fully complies with the labour law is still questionable.”

Cernov argues that being in the industry and pushing suppliers to up standards will help things improve faster. Mia Ruby regularly raises the issue of “workplace health and safety standards” with its supplier, she says. “However, this is not something that we have the capacity as a small new business to police ourselves.”

She adds, “I think there are still a lot of issues there in terms of working conditions. Occupational health and safety… is not a culture that has been embraced here in Myanmar full stop, so that’s certainly an issue.”

Paul Donowitz  campaign leader for Myanmar at natural resource watchdog Global Witness, says: “Companies interested in sourcing rubies in a high-risk context such as Myanmar should be taking steps to ensure that they are engaging in responsible trade. This means putting in place measures to assess potential risks to human rights and other harmful impacts in the ruby supply chain.”

Dangerous conditions

Maung Gyi is keenly aware of the treacherous conditions mine workers face in Mogok. When he was in his early twenties, his younger brother was killed while operating a hand-powered pulley to lift an enormous lump of rock out of a quarry. “People even blamed him and said ‘he should have been more careful, he knew that it was risky’,” Maung Gyi says.

“Every worker has to risk their life,” adds Neopane. He plucks a deep-fried onion pakora ball from the table and holds it between his thumb and forefinger. “If a rock just this size falls down a mine shaft and hits you, it can kill you,” he says.

Sometimes shaft mines are dug too close to one another, he adds, and the earth between them gives way and collapses. In deeper mines, where there isn’t enough oxygen, some have suffocated. He estimates that between 10 and 20 people die every year in Mogok in such accidents.

For things to change, “Myanmar’s ruby industry needs to open up and bring in strong checks against corruption and abuse,” says Donowitz. “This is essential to assure responsible companies that they can engage in the trade without contributing to harms.”

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