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