Broken systems and endangered people: illegal gold in the Brazilian Amazon

T

he Brazilian Amazon is home to the most isolated indigenous groups in the world, with more than 120 groups living isolated from modern society. These groups’ rights to self-determination were established in 1987 by one of the most robust sets of policies in Latin America, aimed at protecting them from encroachment by government and non-government bodies.

However, in a recent report prepared by the Associated Press, it was revealed that illegal gold prospecting on Indigenous lands skyrocketed over recent years. President Jair Bolsonaro has added fuel to the fire in his pro-mining rhetoric and a recently proposed bill that would permit the mining of mineral and hydrocarbon resources on indigenous lands.

So far, researchers have documented tens of thousands of small-scale miners and more than 320 illegal mines, with the actual total expected to be much higher.

The situation has been exacerbated by a faltering international certification system and the inability of authorities to trace the origin of gold used by manufacturers, leading to indigenous lands becoming increasingly targeted by illegal miners.

Indigenous lands were designed to defend the rights of both isolated and non-isolated indigenous peoples and cover 23% of Brazil’s rainforest. Under Brazilian law, the mining of indigenous lands is not officially permitted.

However, since the election of President Bolsonaro in January 2019, there has been a spike in illegal mining, accelerated by the loosening of mining constraints and the incentivising of exploration.

As a result, the National Mineral Agency has been inundated with mining requests across indigenous lands. One-third of the indigenous lands in the Brazilian Amazon have a registered interest for mining, and the region is one of the world’s largest potential suppliers of minerals.

A prevalent issue in this system is the lack of an international certification program that manufacturers use to show they aren’t using minerals that come from indigenous lands.

“There is no real traceability as long as the industry relies on self-regulation,” Mark Pieth, a professor of criminal law at the University of Basel, Switzerland, told The Associated Press. “People know where the gold comes from, but they don’t bother to go very far back into the supply chain because they know they will come into contact with all kinds of criminal activity.”

Legally and illegally mined areas have expanded sixfold across Brazil between 1985 and 2020 – from 31,000 to 206,000 hectares.

Indigenous lands have become increasingly targeted; between 2010 and 2020, mined areas within indigenous zones have increased by almost 500%, while mining in conservation unit areas increased by over 300%.

The illegal trade has subsequently boomed, with illegal wildcat miners setting up small scale gold mining camps across the Amazon, fuelling widespread deforestation, mercury contamination, and the sedimentation of vital rivers. Indigenous rights groups in Roraima state estimate that some 20,000 illegal miners are present on the reserve, an area roughly the same size as Portugal.

The scale of illegal mining has been exacerbated further by the rise in gold prices worldwide. The value of an ounce of gold has risen from $400 in 2000 to over $1800 in 2021. Despite a renewed effort from law enforcement to identify illegal mines and the aircraft used to support them, there has been limited success on the ground.

At the centre of the gold supply chain in Brazil are the distribuidora de títulos e valores mobiliários (DTVM) – translating basically as security distributors, these are financial companies authorised to purchase gold. The DTVMs act as the first official trading point for extracted gold and the primary point where taxes on small-scale gold mining are collected.

Therefore, the DTVMs are central in the process of illegal gold entering the legal market. The reason for this is wilful blindness within the gold industry itself. A notable case of how DTVMs facilitated the purchase of illegal gold was revealed in an exclusive report by Repórter Brasil that exposed BP Trading, one of Brazil’s top gold exporters.

An analysis of BP Trading’s financial statements showed that the company’s main supplier of gold included two DTVMs accused by the Federal Prosecution Service of trading illegal gold extracted in Pará state. The two DTVMs, F.D’Gold and Carol DTVM, are the primary buyers of illegal gold in the state, accounting for more than 70% of all illegal or potentially illegal products, according to a recent study by the Federal University of Minas Gerais.

This case demonstrates the lack of oversight within the gold supply chain, with the majority of DTVMs not undertaking any due diligence or oversight on the gold provided by sellers, who under the law are expected to provide the exact name and geographic coordinates of mining sites.

The persistent tolerance of illegal practices has only exacerbated these issues across the mining sector. F.D’Gold recently came under investigation for dumping illegal gold in foreign markets and was charged with fraudulently purchasing an estimated 1,370kg of gold that supposedly originated from 37 sites in Para.

Despite numerous positive steps open to mining companies, such as setting up alerts to monitor illegal operations, certifying gold on the Agência Nacional de Mineração website, deploying tools to conduct due diligence, monitoring the use of heavy machinery, and actively tracing suspicious activities, the current system is not fit for service.

The spread of mining in the Amazon has had drastic social and environmental impacts. Invasions of indigenous lands by wild cat miners have fueled deforestation and displacement of local communities. In 2019, deforestation caused by illegal miners in the Amazon rose 23% to a record 10,500 hectares.

In addition to deforestation, the use of elemental mercury to extract gold from ore as an amalgam is highly damaging to the surrounding environment. Mercury release from tailings and vaporised mercury exceed 1,000 tonnes every year from wildcat mines.

The mercury release is dire, impacting both the miners, who suffer from neurological damage and other health issues, and the local indigenous populace, who are affected by mercury contamination of water and soil and subsequent accumulation in food staples.

For instance, the damages generated by F.D’Gold on the Amazon amounts to over 9,000 hectares of deforestation and mercury dumping is alleged to generate damages of upward R$1.7bn ($3m). Testing conducted in 2019 by the federally funded biomedical institute Fiocruz, found that more than half of the several hundred people tested showed unsafe mercury levels in their bodies, including children.