Study: Almost 30% of Brazil’s gold exports may be illegal

RIO DE JANEIRO, BRAZIL – Almost 30% of the gold exported by Brazil between 2019 and 2020 – 48.9 tons – may have come from illegal mining areas, in a combination of inspection shortcomings, irregular actions by companies and false documents used to launder gold extracted from protected areas, shows a study conducted by the Federal Prosecutor’s Office and researchers from the Federal University of Minas Gerais (UFMG).

The cross-referencing of data presented in the study considered only the gold registered with federal agencies, with payment of the Financial Compensation for Exploitation of Mineral Resources (CFEM), the tax collected by the government for mineral exploration – that is, gold legally extracted and exported.

The researchers cross-referenced the declared data on the origin of the gold with high-definition satellite images. In 13% of cases – 6.3 tons of gold – the irregularity was clear: the declared location had no indication of mineral exploitation. The false tax declaration of origin is therefore considered solid evidence of attempts to launder gold extracted from illegal areas, such as conservation units or indigenous lands.

For the remaining 42.6 tons exported, the study classifies it as potentially illegal because there are strong indications that the gold did not leave the authorized mining site – typically areas bordering indigenous lands or conservation units.

The study with satellite images shows that the mining areas far exceed the area authorized by the National Mining Agency (ANM), penetrating indigenous lands or conservation areas. The amount of gold extracted and declared would also be incompatible with the size of the vein, according to the researchers.

“It’s a poorly done wash. There was an attempt to wash this gold, trying to conceal its real origin, but by cross-referencing images we see there is no way that gold could have come from the declared location,” explains Raoni Rajão, one of the study’s authors and coordinator of the Environmental Services Management Laboratory at UFMG.

The annual production and export data of gold from Brazil show that the country has been illegally selling several tons. According to federal foreign trade data, in 2020 Brazil exported 111 tons of gold. However, the country officially recorded production of only 92 tons, according to ANM figures.

“Unless everyone suddenly decided to sell their gold rings, the government lost control and the ability to inspect and collect tax,” Rajão said. “And we are talking about legally exported gold, not the gold that crosses the border concealed, which is a lot more.”

A cross-check performed by the Escolhas Institute – an NGO that addresses sustainability – with ANM data shows that some states, such as Minas Gerais and São Paulo, register a much higher amount of gold exported than its production. In parallel, there is no record of sufficient legal production in that quantity in Mato Grosso and Pará.

The cross-check matches the data collected by prosecutors and UFMG researchers, who see a continuous growth of extraction with illegal features in the Legal Amazon, particularly in the two cited states.

“Pará and Mato Grosso reached 26.9 and 19.5 tons of gold mined between 2019 and 2020, with 17.7 and 14.2 tons respectively being identified as illegal,” the study points out. Of the total production in both years, the researchers found that 85% of the confirmed illegal gold laundering, 5.4 tons, occurred in Pará, with the municipalities of Jacareacanga, Novo Progresso and Itaituba as the hub of illegal gold laundering.

The laundering of illegal gold is the result of a combination of deficient surveillance and potential collusion by authorities, as well as the active involvement of mining and export companies, the authors say.

The study shows that of the 6.3 tons of confirmed illegal gold, 61% comes from only 4 people and 2 cooperatives, whose names have not been disclosed.

In addition, only 3 operators were responsible for the purchase of 71% of the confirmed illegal gold: OuroMinas DTVM, D’Gold DTVM and Carol DTVM. All three are the target of a Federal Prosecutor’s Office lawsuit, accused of involvement in illegal trading.

On Monday, the Federal Prosecutor’s Office of Pará lodged a lawsuit to request the suspension of the three operators’ activities for having traded illegal gold.

“In addition to having their activities suspended specifically in this region, the companies may be ordered to pay a total of R$10.6 (US$2) billion for social and environmental damages,” the MPF said in a statement.

Sought, OuroMinas said that the “company in no way helps the export of ore of illegal origin” and that it invests in technology to filter registration information and supports sustainable mining.

“In addition, all company purchases are strictly made in accordance with the law that states that the seller is responsible for the gold’s origin and not the purchasing companies. The inspection of mines is the exclusive responsibility of public authorities rather than of private companies,” the statement said.

Carol DTVM’s owner Alberto Robles Filho said that the company had not been notified yet and had no access to the lawsuit, so he was unable to comment on the charges. “It is kind of strange that it first comes out in the media, before we hear about it. I can’t provide an answer because I don’t know the content of the lawsuit. Our legal department is trying to find out so that we can reply,” he said.

D’Gold’s legal department has not yet answered the request for comment.

INTERNATIONAL

The study shows that the lack of control happens in Brazil, but unlike other exports, such as timber and even soybeans, in which international buyers began to demand certificates proving they did not come from deforested areas, buyers of Brazilian gold do not ask for solid guarantees when purchasing the ore.

In 2019 and 2020, Canada, Switzerland and the United Kingdom bought 72% of Brazilian gold exports.

“These are countries with strict laws, with high standards of human rights protection. But these countries are not doing their homework,” Rajão alleged.

According to the study, illegal mining has led to the deforestation of 125 km² of the Amazon rainforest – a constant concern for Europeans – and socio-environmental damage worth US$1.7 billion in the region.