State Takes Aim At Illegal, Lu­cra­tive Am­ber Busi­ness

Kyiv Post - - Front Page - BY OLENA GORDIIENKO AND MARK RACHKEVYCH [email protected], [email protected]

ZHY­TO­MYR, Ukraine – Act­ing on or­ders from Ukrainian Pres­i­dent Petro Poroshenko to crack down on the illegal $500 mil­lion am­ber min­ing busi­ness, an In­te­rior Min­istry task force on Aug. 4 seized 2.6 tons of the gem­stone in Rivne Oblast that was said to be headed for the black mar­ket.

Pre­lim­i­nar­ily val­ued at $3 mil­lion, ac­cord­ing to In­te­rior Min­is­ter Arsen Avakov, the stash was the largest cap­tured since the pres­i­dent on July 3 gave the author­i­ties two weeks to clamp down on the illegal prac­tice, which spans more than 620 hectares of pine forest­land in Zhy­to­myr, Rivne and Volyn oblasts.

“This (bust was) only the tip of the cor­rupt ban­dit ice­berg lo­cated on the ter­ri­tory of sev­eral oblasts,” Prime Min­is­ter Arseniy Yat­senyuk said at a brief­ing in Rivne in front of the bus that was car­ry­ing the al­legedly il­le­gally-mined am­ber.

He said at an Aug. 5 gov­ern­ment meet­ing that lo­cal author­i­ties, in col­lu­sion with lo­cal se­cu­rity ser­vice and in­te­rior min­istry of­fi­cers, as well as pros­e­cu­tors and lo­cal gov­ern­ment of­fi­cials, com­prise an “or­ga­nized crime group” that runs the il­licit lu­cra­tive busi­ness. He said a “state com­pany” was op­er­at­ing with other firms to bring il­le­gally ex­tracted am­ber onto the mar­ket.

State-run Ukr­bur­shtyn, which has a li­cense to ex­plore for am­ber on 1,000 hectares of land, and ex­tract 10 per­cent of proven am­ber re­serves, has laid claim to the con­fis­cated gem­stones. Com­pany of­fi­cials say that the am­ber was be­ing trans­ported from the field to the cen­tral of­fice of Ukr­bur­shtyn for ex­am­i­na­tion.

At a news con­fer­ence in Kyiv on Aug. 5, Ukr­bur­shtyn ex­ec­u­tive di­rec­tor Oleh Yaroshyk said that the com­pany had pro­vided the author­i­ties with all the req­ui­site doc­u­men­ta­tion, in­clud­ing li­censes, ex­plo­ration maps and rights to ex­tract.

Main­tain­ing the le­gal­ity of the op­er­a­tion, Yaroshyk said the com­pany was go­ing through bank­ruptcy pro­ceed­ings and was plan­ning to pay off

part an Hr 8.5 mil­lion debt with the sale of the am­ber, which he said was val­ued closer to Hr 3.5 mil­lion ($160,000).

Re­fer­ring only to a “state-owned” en­ter­prise, Yat­senyuk said at the gov­ern­ment meet­ing that com­pany of­fi­cials were deal­ing am­ber on the side il­le­gally through other firms, and that they were try­ing to “le­gal­ize” the op­er­a­tion by “back­dat­ing” doc­u­ments.

Illegal am­ber ex­trac­tion has gone on for more than a decade in the for­est range known as Polis­sya that spans north­ern Kyiv, Zhy­to­myr, Rivne and Volyn oblasts, ac­cord­ing to Deputy En­vi­ron­men­tal Min­is­ter Svit­lana Kolomi­iets. Some 150-300 tons of am­ber are ex­tracted yearly, whereas only 3-4 tons is mined legally.

Illegal min­ers first clear wooded ar­eas, caus­ing un­re­cov­er­able de­for­esta­tion, and then use high-pres­sure wa­ter pumps to liq­uefy the ground, with the gem­stone float­ing to the sur­face. Be­cause am­ber in Ukraine oc­curs at a shal­low depth of 3-10 me­ters, spades are also used.

The en­vi­ron­men­tal min­istry has yet to as­sess the dam­age to the re­gion. How­ever, “we can phys­i­cally see part of the con­se­quences – for­est dev­as­ta­tion, un­doubted soil dam­age, in­evitably in­flu­enc­ing flora and fauna,” Kolomi­iets said. “There are a lot of things go­ing on be­yond our sight, like the bal­ance and level of sub­soil wa­ters (be­ing changed).”

As a re­sult, the lo­cal cli­mate and eco-sys­tem is be­ing al­tered, Ana­toliy Pavelko, an en­vi­ron­men­tal ex­pert with the World Wildlife Fund, told the Kyiv Post. Ar­eas where wa­ter is be­ing pumped are be­com­ing deserts, while the ex­trac­tion sites where the wa­ter is be­ing di­rected are turn­ing into wet­lands.

There are in­di­ca­tions that illegal min­ing has in­creased re­cently, and in some ar­eas to an in­dus­trial scale.

Min­ing near the vil­lage of Olevsk in Zhy­to­myr Oblast, for ex­am­ple, in­ten­si­fied in March-April 2014, ac­cord­ing to lo­cal ac­tivist Olek­sandr Niko­lay­chuk. Be­fore, lo­cals would only ex­tract the stones to use as fuel. A day ear­lier in the same area, the State Se­cu­rity Ser­vice searched 10 lo­cal res­i­dents and found 40 kilo­grams of am­ber, along with ex­trac­tion equip­ment. A week ear­lier, the author­i­ties seized al­most 80 kilo­grams, two wa­ter pumps, 165 wa­ter hoses, an off-the-book fi­nan­cial scheme and a stone pro­cess­ing ma­chine.

Another multi-task force seized 23 kilo­grams of il­le­gally-mined am­ber worth $ 230,000 near Olevsk on Aug. 3, ar­rest­ing six min­ers with a wa­ter pump.

Niko­lay­chuk at­tributes the rise in ex­trac­tion to a power vac­uum left be­hind when ex-Pres­i­dent Vik­tor Yanukovych aban­doned of­fice, with many of­fi­cials in his ad­min­is­tra­tion also flee­ing the coun­try. This led to a “re­dis­tri­bu­tion of power among lo­cals and law en­force­ment,” the ac­tivist said. Another rea­son is that many ru­ral res­i­dents have stopped go­ing to Rus­sia for mi­grant work be­cause of hos­til­i­ties be­tween the two na­tions.

“There is no of­fi­cial data on that, but unof­fi­cial data sug­gests that ex­trac­tion has been grad­u­ally in­creas­ing,” Kolomi­iets said.

The whole­sale mar­ket has also felt the ef­fect of more Ukrainian am­ber en­ter­ing the mar­ket.

Am­ber.com, a Pol­ish news por­tal de­voted to the gem­stone, wrote in April that whole­salers are in a buyer’s mar­ket. “It’s re­sulted from a num­ber fac­tors, among the most sig­nif­i­cant ones has un­doubt­edly been the emer­gence of large quan­ti­ties of Ukrainian am­ber on the Pol­ish, Lithua­nian and Chi­nese mar­kets,” read the re­port.

Re­tail prices for raw Ukrainian am­ber range from $ 250 to $7,500 per kilo­gram, depend­ing on the stone frac­tion or weight, ac­cord­ing to Am­ber Europe, a com­pany that sells the gem­stone on Chi­nese online auc­tion house Alibaba, which has a Ukrainian tele­phone con­tact num­ber.

Liv­ing in eco­nom­i­cally de­pressed ru­ral ar­eas where lo­cal economies hardly ex­ist, of­fend­ers are rarely de­terred from min­ing the lu­cra­tive gem­stones. Ukraine’s pe­nal code doesn’t pun­ish peo­ple for pos­sess­ing, trans­port­ing and selling am­ber.

Min­ers can be pros­e­cuted if they are found caus­ing dam­age to the en­vi­ron­ment, but only if they are caught on the scene with min­ing equip­ment and am­ber, Inna Bere­zovska, spokes­woman for the Rivne Oblast po­lice, told the Kyiv Post by phone.

Penal­ties are light, deputy en­vi­ron­men­tal min­is­ter Kolomi­iets said.

Fines for break­ing the law are Hr 5,100-10,200, or two years in prison for “sim­ple ex­trac­tion, and up to five years if the per­pe­tra­tor is found to have caused dam­age to the public’s health. Eight years is given for min­ing ac­tions that lead to hu­man deaths.

Of­fi­cials, in­clud­ing Yat­senyuk and Avakov, as well as ac­tivists, have called on law­mak­ers to pass a reg­u­la­tion that would cre­ate an am­ber mar­ket where com­pa­nies and in­di­vid­u­als could legally mine and sell am­ber.

State cof­fers cur­rently miss out on ap­prox­i­mately $10 mil­lion in lost rev­enues from the illegal am­ber busi­ness, ac­cord­ing to Pol­ish news por­tal am­ber.com. Ukraine could re­ceive Hr 1 bil­lion ($46 mil­lion) a year from the sale of li­censes, Yat­senyuk said at the brief­ing in Rivne.

He is also push­ing for the cre­ation of state-run am­ber

mo­nop­oly. The en­vi­ron­men­tal min­istry’s Kolomi­iets told the Kyiv Post that she is most con­cerned about hold­ing trans­par­ent auc­tions for li­censes and that am­ber be mined in a sus­tain­able way that does min­i­mal dam­age to the en­vi­ron­ment.

It took seven years for Sony­achne Re­myslo, a pri­vately-owned am­ber com­pany, to get all the per­mits to start ex­trac­tion, com­pany founder Volodymyr Sokolovksy told the Kyiv Post. Only four com­pa­nies, two of which are state owned, have li­censes to ei­ther ex­tract or ex­plore for am­ber.

Should cur­rent trends con­tinue, ac­cord­ing to the en­vi­ron­men­tal min­istry, ru­ral res­i­dents will de­plete am­ber re­sources in 3-5 years, and will lose another source of in­come – the mush­rooms and berries that they pick in the for­est.

Au­thor­i­ties seized 2.6 tons of am­ber on Aug. 4 that al­legedly was il­le­gally ex­tracted in Rivne Oblast and trans­ported to Kyiv for test­ing. (An­drew Kravchenko)

Ukrainian am­ber is one of the most val­ued in the world with 25 per­cent of mined stones hav­ing jew­elry value. This mu­seum ex­po­si­tion in Kyiv on June 5 shows some pre­cious adorn­ments made of the gem­stone. (UNIAN)

Ram­pant tree clear­ing and pump­ing of wa­ter to mine am­ber trans­forms forest­land into wet­lands. A miner walks in an area that un­der­went the en­vi­ron­men­tally-dam­ag­ing process in Zhytomyr Oblast on June 19 car­ry­ing a net that ex­trac­tors use to scoop up...

Some 150-300 tons of am­ber gets mined in Ukraine each year, most of which is lo­cated in the Polis­sya pine for­est range in north-north­west­ern Ukraine.

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