OFAC Burma: Myanmar Mining Enterprise No. 1 and No. 2 Designated as SDNs

Mechanism

Both enterprises are designated as political subdivisions, agencies, or instrumentalities of the Government of Burma under the authority of Executive Order 14014 (February 10, 2021, "Blocking Property With Respect to the Situation in Burma") and Section 1(a)(iii) of the order. As SDN-listed entities, all property and property interests of Mining Enterprise No. 1 and Mining Enterprise No. 2 subject to U.S. jurisdiction are blocked, and U.S. persons (and non-U.S. persons exposed to secondary sanctions risk) are prohibited from transacting with them.

Mining Enterprise No. 1 is headquartered in Monywa, Sagaing Region — the same area as the Letpadaung copper mine, one of the largest copper deposits in Southeast Asia (operated jointly with Wanbao Mining, whose affiliates were already Entity Listed by BIS in July 2021). ME No. 1 administers state licensing for copper and polymetallic mining across central Burma's Sagaing, Mandalay, and Magway regions.

Mining Enterprise No. 2 is headquartered in Myitkyina, the capital of Kachin State. Kachin State hosts Burma's primary jade and gemstone production (Hpakant jade mines), significant deposits of heavy rare earth elements including dysprosium, terbium, and yttrium (Moegoke/Namtu belt), and some tungsten and tin mineralisation. ME No. 2 administers formal mining-licence issuance for the Kachin zone — making it the gatekeeper authority for the REE production areas that sit upstream of China's dominant REE separation and processing supply chain.

The January 31, 2023 OFAC action was a combined package: the ME No. 1/2 designations were issued alongside OFAC's announcement of the Directive 1 financial-services prohibition targeting the Myanma Oil and Gas Enterprise (MOGE), signalling a coordinated intensification of the EO 14014 resource-sector pressure campaign at the two-year mark of the SAC coup.

Downstream implications

• U.S. and U.S.-nexus buyers of Burmese copper, jade, rare earth concentrates, and

polymetallic ores face heightened OFAC exposure if supply chains include ME No. 1 or ME No. 2 licensed output — even through Chinese intermediary processors.

• Kachin State REE production (heavy rare earths) is primarily exported across the

border to Yunnan, China for separation. Chinese processors working with ME No. 2 licensed material face secondary sanctions exposure under EO 14014, reinforcing the US-China critical-minerals tension axis.

• The Letpadaung copper mine (ME No. 1 area, operated via Wanbao — already BIS Entity

Listed July 2021) now faces a compounded sanctions layer: BIS EAR prohibition (export-control) + OFAC SDN prohibition (asset-blocking + financial services) on the licensing counterpart.

• The pairing of the ME designations with MOGE Directive 1 in a single action day

signals that Treasury was moving to complete systematic SDN coverage of all Burmese state-owned resource enterprises, not just the military-financial conglomerates.

Open questions

• Whether any existing US-person offtake contracts for Burmese copper or REE products

— routed through third-country trading entities — implicitly involve ME No. 1 or ME No. 2 licensed output and thus trigger OFAC 50% Rule exposure.

• Whether the Kachin REE supply-chain OFAC pressure has had measurable volume effect

on Chinese heavy REE separation feedstock versus Myanmar's broader civil-conflict disruptions to mining operations.

• Scope of ME No. 2's licensing authority over informal artisanal jade miners in

Hpakant — a significant portion of jade production bypasses formal licensing entirely, limiting the practical reach of the SDN designation.