Gold Mining and Policy Making
September 23, 2005

Yaw Na/ Kachin Environmental Organization

Over hundreds years ago, the Kachin people used to search jade and gold by using traditional methods in mining areas such as Nam Byu, Shwe Gu, Indaw Gyi and Uru River in Kachin State of northern Burma.

During this period, there were no professional or corporate mining operations, but only some small enterprises were running mining business near the area of Indaw Gyi Lake in central Kachin State. It was only the local people who were running on gold mining business to provide for their own families. At that time, gold mining was not popular as a business venture.

Around 60s to 80s, the Kachin Independence Organization, KIO, and the ruling Burmese military government had no interest in gold mining, instead of focusing on the jade mines. In 1984 the KIO established a Taxation Committee to collect taxes from local jade mining. At the same time, the SPDC was aware that the KIO was benefiting from the Hpa Kant jade mining area, and unsuccessfully developed a strategy to take control of the jade mining area from the KIO.

In 1986, KIO leaders established economic concessions with the central Chinese government in jade and gold mining. The KIO allowed Chinese businessmen to come to Kachin state and invest in jade and gold mining operations, and built roads from Nahpaw to Pa Jau to the Chinese border. Chinese investors were allowed to come freely under the KIO's control. The trade and investment was encouraged by the central governor of Yunnan province.

After reaching the cease-fire agreement between the Burmese military government and KIO in 1994, opportunities for Chinese investment, and mining concessions had inched up, as the wealthy Chinese businessmen were able to make the appropriate payments to reach agreements with military government. Since then, jade and gold mining has increased considerably, and has brought great economic and political benefit to both the Chinese and the military government which receives significant payment in exchange for mining concessions.

The military government also began cooperating with the Northern Star Corporation to increase investment relations. Northern Star is the first enterprise which operates and monopolizes mining concessions in Kachin State. Any big and small companies, which interest to invest in mining concession in Kachin State, have to request permission from Northern Star first and then apply to Burma’s Army northern command.

In Kachin state, the cost of a gold mining permit for a one kilometer tract is 500 million Kyat (US $420,000) for three years. Previously, the contract started at just five million Kyat. In certain places, however, the cost of corruption and bribes has driven the price up to a billion Kyat. A standard permit allows a company to set up two ships for mining in the River, and one for prospecting, but with the payment of bribes, many business people are able to set up 10 to 20 ships for mining in the River and 40 to 50 for prospecting.

The mining ships, which cost 30,000 Yuan in China, cost 150,200 Kyat in Kachin state. Chinese owners are able to smuggle the machines into Kachin state, where they can set up individual or co-operative mining operations. Because of this, there are far more opportunities for Chinese businessmen to get profits from mining than local business one. Hundreds of Chinese made gold mining ships are anchoring along the Irrawaddy River.

Companies from mainland China, Hong Kong and Taiwan own eighty percent of mining concessions in Kachin State. The mining is focused along the Mali Hka, Nam Hka, Danai, Nambyu and U Ru River as well as Nam Yun, Indaw Gyi, Shwe Gu, Man Maw and Putao. The mines produce an average 2,000 to 2,800 kilograms of gold, however, the profits from those gold mines do not filter down to local Kachin communities.

In 2002, Lahpa gold mines alone produced 1,000 kilograms of gold. Annually, up to US $60 million in revenues is generated from the gold mines; US $600 million are pumped out from jade mine. The majority of jade markets are controlled by companies based in Yunnan province, Shanghai, Guangdung, Hong Kong, Taiwan and Singapore.

Local Kachin businessmen are too hard to get a permit to invest in gold and jade mining due to the huge amount of capitals from Chinese investors who afford to pay or bribe local Burma Army officials to get mining permit. Majority of the gold mining are controlled directly or indirectly by the Burmese military government and a few numbers of gold mines are under controlled of KIO and NDA-K. Chinese mining companies have created many social problems for local Kachin communities. Gold Mining has also caused environmental damages such as climate change and deforestation.

The Chinese companies investing in gold mining are also engaging in logging in Kachin state. The Chinese mining companies have also sought logging concessions from the military government, to increase their own profits. The Chinese business people also have relationships with loggers in Kachin state, who have furniture factories in Guangdong and Shanghai provinces in China. The wood is logged and treated in Kachin state, and then exported to the factories in China. The Chinese investors receive an average of 1 billion dollars in annual income from exporting lumber to the factories in Guangdong and Shanghai. The estimated income of two Kachin ceasefire groups, the Kachin Independence Organization and the New Democratic Army-Kachin, is not more than US $100 million per annum.

On the other hand, China’s Central Bank (People’s Bank of China) indirectly supports the Chinese businessmen to invest in Kachin state. The Burmese military government also encourages the Chinese to invest there. The Burmese junta benefits greatly from Chinese investment as gold mines in Kachin State contaminate The Irrawaddy River and destabilize the socio-economic situation of local people.

The junta has used the ceasefire negotiations to gain control in Kachin state, and to manipulate the agenda of the ceasefire groups. The KIO leaders do understand that the strategy of the military government, however, they are impossible to stay away from their own financial trap. There is clear that Burmese junta’s policy is to divide and conquer ethnic groups in Burma. Burmese junta likes to create dissent and disunity amongst the Kachin armed groups by allowing different levels of business concessions.

Doing business in Kachin State by these small and controlled privileges has created conflict between the ceasefire groups’ leaders, who are now focused on maximizing their own profits, rather than cooperating with its rivals for its own national interest and democracy in the name of revolution.

Yaw Na is the director of the Kachin Environmental Organization based in Thailand. The organization is doing research and documentation on environmental devastation in Kachin State. The opinions express here are the author’s own.