Here's some info gleaned by doing a search for "carving amber"
Carving amber bears more resemblance to scraping than to cutting. Amber is brittle and will crack or fracture if subjected to too much pressure. Carve or scrape away only tiny shavings on each cut to avoid cracks and breakage. When you are satisfied with your carving, put it in hot water to soften the glue and peel away the glue from the amber.
When working amber, think of it as a hard but brittle plastic.
Any tool that would work for wood or bone, horn or plastic works.
I find better results with hand work for anything beyond rough
cuts, it tends to gum up power tools _very_ easily.
Amber is suitable for fairly compact carvings; I wouldn't use it for very extended things due to its inherent fragility. It is sensitive to heat buildup, but the weirdest thing it does is collect static electricity. (This property was noticed by the ancient Greeks noticed, and is how we got the word "electricity"- from the Greek "electrum", meaning amber.) Unfortunately, this can cause carvings to crack or even fly apart during polishing, so one must stop frequently and put the piece down. This also helps avoid the build-up of heat, and lets you rest your eyes.
Although amber has been carved since ancient times by other methods, the easiest way to to remove material is with a sharp carbide bur (use a new one, not one previously used for metal) held in a flexible shaft tool like a Foredom (or a Dremel if you're a cheapskate). It can also be carved with the coarse riffler files made for metal removal. Drilling amber is very touchy, for some reason, so if you are piercing it to make beads or similar items go slow, and use lubrication.
Especially with valuable specimens, like insect-included ones, the extra time spent initially in removing material by hand with files and sandpaper is made up for by the increased control of the surface and not having to start sanding all over again to remove heat-scars. The hard part with this stuff is to avoid removing too much too quickly. I've had good luck sanding with silicon carbide paper, but any sandpaper will probably work. Start with a coarse grade like 180, then go to 220, 320, and 600 grit, making sure to remove all traces of coarser compound before proceeding to a finer one. Doing the sanding wet will save sandpaper (you have to use the "wet-or-dry" type for this) since it will load up less, especially in the finer grits.
Polish with tripoli compound on a clean muslin buff, going slowly, or just rub it with a piece of cloth or thin leather charged with compound- this is safer. To get into crevices, use an appropriately shaped stick behind the cloth. For the highest polish, white rouge or most proprietary compounds used for plastic will work. (some people use cigarette ashes for the final polish, but I haven't tried this.)
Amber erodes cleanly until it gets hot, (although it can have a tendency to chip out) then it starts gumming up and turning opaque. The only thing to do then is remove the burned area and go slower next time. If it seems to be gummy before it gets hot, you might be dealing with copal instead of real amber. There are a few ways to tell the difference: one is by immersing a few chips in denatured alcohol. If they get sticky or dissolve, then it is copal. Another test involves burning a small sample. Amber will burn rather steadily; copal flares and spurts. If your "amber" came from Colombia, it is copal. It can be carved and polished, but it is more difficult, and will be more fragile when it's done (and of course less valuable). If it smells like burning plastic when you carve it, then it is plastic, which is often sold as amber by unscrupulous or ignorant vendors.
thanks Guys 