State Takes Aim At Illegal, Lucrative Amber Business

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.

Kyiv Post staff writer Olena Gordiienko

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.

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

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

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.

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.

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.

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. 

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.