For Ap­ple and oth­ers, tin sup­ply chain has ties to rebel-held Myan­mar mine United Wa State Army black­listed by US

Kuwait Times - - BUSINESS -

From a re­mote cor­ner of north­east­ern Myan­mar, an in­sur­gent army sells tin ore to sup­pli­ers of some of the world’s largest con­sumer com­pa­nies. More than 500 com­pa­nies, in­clud­ing lead­ing brands such as smart­phone maker Ap­ple, cof­fee gi­ant Star­bucks and lux­ury jew­eler Tif­fany & Co, list among their sup­pli­ers Chi­nese-con­trolled firms that in­di­rectly buy ore from the Man Maw mine near Myan­mar’s bor­der with China, a Reuters ex­am­i­na­tion of the sup­ply chain found.

The mine is con­trolled by the United Wa State Army (UWSA), which the United States placed un­der sanc­tions for al­leged nar­cotics traf­fick­ing in 2003. The seven com­pa­nies ex­tract­ing tin from the mine are all owned or con­trolled by Wa mil­i­tary and gov­ern­ment lead­ers, Wa of­fi­cials and peo­ple with close ties to UWSA lead­er­ship said. This po­ten­tially puts com­pa­nies, which also in­clude in­dus­trial con­glom­er­ate Gen­eral Elec­tric, at risk of vi­o­lat­ing sanc­tions that for­bid “di­rect or in­di­rect” deal­ings with black­listed groups, ac­cord­ing to a for­mer and a serv­ing US of­fi­cial and lawyers with ex­per­tise in sanc­tions en­force­ment.

Sev­eral sanc­tions ex­perts said the US gov­ern­ment was un­likely to fine com­pa­nies who un­wit­tingly used the Myan­mar tin. Still, it may force them to shift to new sup­pli­ers, they said. A Trea­sury De­part­ment spokes­woman said US sanc­tions “gen­er­ally pro­hibit US com­pa­nies from en­gag­ing in any di­rect or in­di­rect trans­ac­tions or deal­ings with in­di­vid­u­als or en­ti­ties” on a black­list, but de­clined fur­ther com­ment on spe­cific cir­cum­stances. The sit­u­a­tion il­lus­trates the dif­fi­cul­ties fac­ing multi­na­tion­als in mon­i­tor­ing sup­ply chains that have grown in­creas­ingly com­plex.

Fol­low­ing a 2012 US reg­u­la­tion, com­pa­nies have spent bil­lions of dol­lars scru­ti­niz­ing whether cer­tain min­er­als used in their prod­ucts come from mines con­trolled by armed groups in Cen­tral Africa. But the reg­u­la­tions do not re­quire them to as­sess the ori­gins of min­er­als from other con­flict zones. Ap­ple, Tif­fany and GE, and other com­pa­nies con­tacted by Reuters, said that to ful­fill those reg­u­la­tions they looked to an au­dit pro­gram de­signed by the in­dus­try group Con­flict Free Sourc­ing Ini­tia­tive (CFSI).

A CFSI pro­gram di­rec­tor said the group was “aware of tin ex­ports from Myan­mar to other coun­tries and of se­cu­rity and hu­man rights is­sues in Myan­mar”. The group said it was up­dat­ing its au­dit re­quire­ments to in­clude “a broader def­i­ni­tion of con­flict-af­fected and high-risk ar­eas”. Tin sup­ply chain ex­pert at mon­i­tor­ing group Global Wit­ness, Sophia Pickles, said com­pa­nies must not wholly out­source due dili­gence re­spon­si­bil­ity to a scheme that has ex­clu­sively fo­cused on cen­tral Africa. “Com­pa­nies, not schemes, bear the pri­mary re­spon­si­bil­ity for en­sur­ing that sup­ply chains are re­spon­si­ble,” she said.

Most of the tin mined glob­ally is used as sol­der in elec­tron­ics, for mak­ing bat­ter­ies and plating. The Man Maw mine roiled the global tin mar­ket when huge quan­ti­ties of high grade ore were dis­cov­ered around 2013. An­nual pro­duc­tion is now es­ti­mated at about 33,000 tons of tin con­cen­trate, more than a 10th of global out­put of the metal. The mine is con­trolled by the UWSA, the strong­est of the myr­iad armed groups that have kept Myan­mar in a state of near-per­pet­ual civil war for decades. Reuters vis­ited the re­mote mine last month, the first in­ter­na­tional me­dia or­ga­ni­za­tion to do so.

In­ter­views with of­fi­cials run­ning the mine, UWSA lead­ers and ex­ec­u­tives at Asian tin sup­pli­ers, to­gether with an ex­am­i­na­tion of pub­lic dis­clo­sures of sup­pli­ers made by com­pa­nies in reg­u­la­tory fil­ings, in­di­cate Wa tin likely ends up in an ar­ray of prod­ucts made by US and other in­ter­na­tional com­pa­nies. Tin from Man Maw pro­vides rev­enue crit­i­cal to the sur­vival of the self-pro­claimed Wa State and its rulers, who have re­fused to dis­arm or par­tic­i­pate in Myan­mar’s peace process. “There are dozens of trucks car­ry­ing tin ore to China ev­ery morn­ing,” the head of the Wa ter­ri­tory for­eign af­fairs of­fice, Zhao Guo An, told Reuters. “Tin min­ing is the pil­lar of our econ­omy. It’s the big­gest source of in­come.” —Reuters

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