The Ta'ang National Liberation Army (TNLA) launched attacks on junta troops this week in the Mandalay region and neighbouring Shan state, shattering a ceasefire brokered by China in January.
Its fighters were inside Mogok, a town surrounded by hills rich with rubies, sapphires, spinel, aquamarine and other semi-precious stones, General Tar Bhone Kyaw told AFP, without giving details.
"We are having fighting in Mogok town," junta spokesman Zaw Min Tun told AFP.
"Security forces have been working to get control of the region," he said.
Mogok residents told AFP the town had been hit by artillery shelling and air strikes by military planes since fighting in the area started on Tuesday.
"As far as I know, four people including two women were killed yesterday because of artillery shelling," one 57-year-old Mogok resident, who did not want to give his name, told AFP.
He said he and his family were sheltering elsewhere after the roof of their home had been damaged in an air strike.
"We have no experience like this. It's the first-ever serious fighting in Mogok town."
Myanmar produces much of the world's rubies, and top-quality stones from Mogok -- known as "pigeon's blood" for their deep red colour -- can fetch more per carat than diamonds.
The industry is notoriously opaque, with high-value rubies often smuggled over the border into Thailand or China to be sold directly to private buyers or made into jewellery.
Myanmar's junta and its opponents have taxed local miners as a source of income for decades.
There was also fighting in Kyaukme town in neighbouring Shan state, a local rescue worker told AFP on Friday.
At least 10 civilians had been killed and more than 20 wounded since clashes there broke out on Tuesday, he said.
Zaw Min Tun confirmed the fighting in Kyaukme, and said there had been "some civilian casualties", without giving further details.
The fighting has breached the China-brokered ceasefire that ended weeks of fighting in Shan state between the military and the TNLA and two other allied ethnic armed groups.
The alliance seized swaths of territory and several lucrative trade crossings with China in a surprise October offensive, dealing the junta its biggest blow since it seized power in 2021.
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