What can the rich countries of the world do to help preserve the Amazon? The European Parliament in April passed a law that would require companies selling commodities such as soy, beef, cocoa and coffee in the EU to verify that they were not grown on land deforested after 2020. The EU is also trying to attach new environmental conditions to ratify an agreement with South American trade bloc MERCOSUR.
Neither of these initiatives have proved particularly popular among the leaders of the eight Amazonian nations gathered this week the Brazilian city of Belem in the Amazonian state of Para for a summit to discuss strategies to stop the degradation and destruction of the world’s largest rainforest. If there is a commodity the rich world should ban, identified unanimously by indigenous leaders and environmental activists in Belem as one of the most destructive products to come out of the region, it is illegally mined gold.
Brazil exported 104 tons of the precious metal in 2021, government data showed, with buyers in G7 countries purchasing more than half of it. Almost 33 tons went to Canada. Switzerland took another 25. What neither the Canadians nor the Swiss are likely to brag about is that much of it likely originated in illegal mines torn into the rainforest.
According to the Instituto Escolhas, an organization pushing for new strategies to preserve the Brazilian rainforest, 47 percent of the 500 tons of gold commercialized in Brazil from 2015 to 2020 is suspicious. This means from land overlapping indigenous territories or otherwise protected areas, with paperwork claiming origins in “mines” where there is no evidence of activity or are in areas outside designated mining zones.
“All of Brazil’s gold production is exported,” said Sergio Leitao, who runs Escolhas. “This international trade is polluted by extremely serious traces of illegality.”
This is not an exclusively Brazilian story. Gold mining is the biggest driver of deforestation in Venezuela and one of the largest in Bolivia. Peru, the largest producer in Latin America, churns out about 150 tonnes of “artisanal” gold every year, data from the Artisan Gold Council showed, much of which is illegally produced.
There are 4,472 localities where illegal mining is happening in the Amazon region, data from the Amazon Network of Georeferenced Socio-Environmental Information showed. Half are in Brazil and about one-third are in Venezuela. They affect more than 17 percent of protected natural areas in Amazonia and 10 percent of indigenous territories.
It is big business. So-called “artisanal” mines, known in Brazil as “garimpos,” commonly evoke the stunning images of miners swarming enormous mud pits in the Serra Pelada mines, captured by Brazilian photographer Sebastiao Salgado in the 1980s. They project a sense of grit: impoverished workers with few alternatives chewing a livelihood from the earth.
However, while not all garimpos are illegal, the wildcatting imagery is misleading. Many of these mines are large operations, using mechanized equipment to dredge rivers and tear through the earth in forested areas. Left behind are lakes infused with mercury, which is used to separate gold ore from other sediment, that flows into the rivers and through the food chain, and poisons communities hundreds of kilometers downstream. One study found that 61 percent of Brazilian gold deemed illegally mined in 2019 and 2020 came from mines controlled by six proprietors; 71 percent was purchased by three financial institutions.
And it is spreading fast, encouraged by a doubling in the price of gold since 2015 to a record of about US$2,000 an ounce. More than 10,000 hectares were cleared for illegal mining in Brazil in 2020 compared with about 5,300 hectares in 2017, a faster pace than that of land clearing for legal mines. More than 11,400 hectares were cleared in 2021. In land occupied by Brazil’s Yanomami people in Roraima along the border with Venezuela, the area destroyed by garimpos increased by 54percetn last year for a total of more than 5,000 hectares, data from Brazil’s Socio-Environmental Institute showed, up from just over 2,000 hectares at the end of 2018.
Organized crime is taking over, bringing heavy weaponry into the business. O Primeiro Comando da Capital, one of Brazil’s largest criminal groups, which originated in the prisons of Sao Paulo, has moved into gold mining in Roraima, running protection rackets and extortion, controlling pits and making partnerships with gangs in Venezuela.
Illegal gold mining has become an integral part of growing ecosystems of criminal enterprises, which include the harvesting and sale of precious wood, drug trafficking and deforestation to seize land.
Swayed by its promise of riches — and by the mining lobby — governments have been slow to respond to illegal mining’s threat to the rainforest.
Former Brazilian president Jair Bolsonaro passed a decree to encourage garimpos and tried to open indigenous territories to mining, arguing that the war between Russia and Ukraine would deprive the agribusiness industry of potassium.
And yet evidence of the environmental damage is starting to change the conversation. After taking power in January, Brazilian President Luiz Inacio Lula da Silva stopped both of Bolsonaro’s initiatives. And he sent the army to clear garimpeiros out of Yanomami territory.
The government is now putting pressure on DTVMs — the financial institutions allowed to buy gold from artisanal mines, de facto entry points to the legal market — to ensure the legal origin of the precious metal. In March, tax authorities started requiring that all paperwork for gold transactions from artisanal miners be recorded online, to make the metal easier to trace and make it difficult to launder it by simply fibbing about its origin on a paper-based sales receipt.
Following a decision by the Brazilian Supreme Court, the Brazilian Central Bank last month announced it would no longer presume that gold traded by financial institutions had legal origins, nor that the purchaser acted in good faith. And DTVMs are no longer allowed to own garimpos.
Much more needs to be done. Leitao of the Escolhas Institute, which lobbied for the new central bank stance, said that a good next step would be to establish a monitoring system for Amazon gold similar to that deployed to stem the trade of blood diamonds used to finance war in Africa.
After all, Amazonian mining is getting bloody too, he said.
Among a long list of aspirations, the eight Amazonian leaders gathered in Belem highlighted how destination countries should lend a hand to squelch illegal trafficking of Amazonian products, including gold.
This might not satisfy the European farm lobby, so concerned about the environmental damage wrought by South America’s beef and soy, but it might sway the Canadians and the British, not to say the Swiss, to stop buying the gold that finances much of the Amazon’s destruction.
Eduardo Porter is a Bloomberg Opinion columnist covering Latin America, US economic policy and immigration.
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