White-collar miners: who is devastating the Amazon?

Written on 01 November 2023. Posted in News

BY LUIS SALAS RODRÍGUEZ FOR DEBATES INDÍGENAS

While miners are blamed for the destruction of the forests, this gold fever would not exist without the lavish consumption of sheikhs, influencers, rappers, footballers, brokers, Hollywood actors and famous singers. Following the rise in the price of gold during Covid-19, Central Banks and speculators have further boosted this demand. In Brazil and Venezuela, the land area affected by mining is increasing rapidly and the presence of gold miners threatens the indigenous communities living near the deposits.

When we think of the illegal and legal gold mining that is bleeding the Amazon, the culprits are obvious. On the one hand, the gold miner is the prototype of the predatory villain, mostly men, almost always young and invariably poor, who, driven by greed or necessity, go deep into the jungle destroying everything in their path in search of this most precious of metals.

Following them we have the irregular armed groups: guerrillas, paramilitaries or just plain mafiosos. In parallel to environmental crimes, these gangs commit murders, engage in sex and human traffic, in addition to drugs, food and fuel traffic. Thirdly, there are corrupt officials, politicians, military or police officers who allow themselves to be seduced by these mafias, placing their individual interests above their public duties. Last but not least, there are the unscrupulous businessmen who benefit from the corruption of officials and, in many cases, are their front men.

The unseen people behind the gold rush

When we think of gold mining, no one thinks of the elegant lady or the young influencer strolling through the luxurious stores of Milan, Sao Paulo, New York or Beijing. Nor do they think of sheikhs devoted to pleasing their multiple wives or sugar daddies who dazzle their conquests. Even less in rappers, football players, Hollywood actors or famous singers. Few are the people who think about Wall Street brokers, financiers in tax havens like the Seychelles or financial coaches who give investment advice. And even fewer think of Central Bank bureaucrats.

However, all these people are even more responsible than the gold miners and the corrupt authorities for the devastation the new gold fever is producing in the Amazon. And they are responsible not because they are directly involved in these activities, being owners of the mines or the extractive machines. Their responsibility comes from being the spearhead of a growing demand for gold that is driving up prices. All these people have generated the current gold rush that is destroying the Amazon and its biological and cultural diversity.

To put it simply, the gold market does not function according to Saysian principles, i.e., demand is not defined by production. This means that it is not the miner (the "supplying producer") who creates the demand for their good. It is the other way around: it is the greedy, ambitious, luxurious and speculative demand of privileged sectors of planetary society that makes possible and explains the existence of the miner. The goldminers only do the dirty work, but they are the scapegoats of a system of destruction in which several players participate.

Gold as a stored value

In 1912, banker John Pierpont Morgan made a statement that would later become mythical: "Only gold is money, everything else is debt". The phrase was expressed in the context of his appearance before the United States Congress, which was investigating him for industrial and financial monopoly. Faced with inquisitive questions, the businessman dismissed the argument according to which the power over money came from the control over credit exercised by the banks. Annoyed, Morgan denied it: "Credit is an evidence of the banking, but it is not money itself: only gold is money. Everything else is credit.” History has proved him right time and again.

In the mid-1970s, the rise in the price of gold, together with the pressures on the US dollar, triggered the end of the gold standard, and the gold market entered a kind of stagnation with a downward trend during the last two decades of the 20th century. The rise of the dollar as the main international trade and world reserve currency largely explains this behavior.

In the 21st century, the outlook began to change. The commodity boom, leveraged by Chinese demand, explains to a large extent this change in trend. This fever tended to subside after the 2008 financial crisis hurricane. But that was not the case for gold. On the contrary, gold's price soared because investors and speculators sought gold as a safe haven. They followed Morgan's advice: stocks may collapse, fiat money may lose all value and savings may vanish, but gold alone remains the ultimate currency of all that has market value.

The new gold rush

After the great lock-down brought about by the fight against Covid-19 and the virtual paralysis of production and global trade, gold began an escalation that has not yet come to a halt. At this stage, the price rise is mainly driven by two players in addition to the luxury consumers: Central Banks and financial speculators seeking a safe haven for their investments.

In both cases, the motivation is the same, although they respond to different rationales. Central Banks go after gold because given the turbulent times (war in Europe, possible war in Taiwan, monetary instability or global inflation), nothing works better. Once again Morgan's thesis is confirmed that only gold is real money and having it gives guarantees. Consequently, speculators are riding on this price wave to safeguard their idle money or, better yet, to profit from it by reselling it.

To better visualize the situation, it is worth adding that the annual demand for gold increased by 18% during 2022 to reach 4,741 tons. At the time of writing, the price per ounce is around US$ 1900 and is expected to be above US$ 2000 by the end of the year.

The case of Brazil

The World Gold Council (WGC) estimates that 46% of the gold mined in the world is transformed into jewelry. Of the remainder, more than 20% is used as investment, 17% is held by Central Banks as reserves and 15% is used for other purposes. But regardless of the use, the result for the Amazon is the same: more legal and illegal mining, more environmental destruction and more threats to the communities living around the deposits.

According to data from various organizations, including the Amazonian Network of Geo- referenced Socio-environmental Information (RAISG - Red Amazónica de Información Socioambiental Georreferenciada), it is estimated that during 2020 the gold rush destroyed some 114 square kilometers of the Brazilian Amazon, the equivalent of 10,000 soccer fields. This represents the largest annual area since records have been kept. The bulk of this destruction occurs in indigenous reserves, where the gold miners install their mines and heavy machinery, they attack villages, transmit diseases, contaminate water and devastate communities whose knowledge and respect for nature are essential.

The Brazilian government estimates that some 4,000 illegal miners are currently operating in indigenous territories located in the Amazon. However, this figure appears to be an underestimate. For environmental organizations and Indigenous leaders, the figure is actually around 20,000. Recent studies determined that between 2019 and 2020, 100 tons of mercury were used, which translates into poisoning of the Amazon biome, including communities where they already suffer neurological damage.

Brazil is the seventh largest gold producer in the world and the second country in the region with the largest amount of gold reserves accumulated in its Central Bank (the first is Venezuela). During 2022, it extracted 107 tons, and it is estimated that only one third of this production has documented legal origin because the current legislation allows sellers to guarantee it only by signing a piece of paper. By authorizing the opening of Indigenous Lands to mining, the legacy of Jair Bolsonaro's government has been nefarious.

History repeats itself in Venezuela

In the Caribbean country, the global gold rush coincides with a crisis that combines an economic-financial blockade and a historic drop in oil production. Thus, everything seems to be conspiring to make illegal mining take a quantum leap. Wataniba estimates that the land area affected by gold mining has been growing rapidly since 2016: by 2019 it had reached some 33,900 hectares and by 2021, some 133,700 hectares, i.e., a growth of 294%. The worsening of the national crisis fueled by the pandemic played a leading role in this growth.

Through the Army, the National Government has been carrying out Operation Autana aimed at eradicating illegal camps in Yapacana National Park. An estimated 15,000 people directly or indirectly dedicated to mining "live" in this protected area, making it the second largest agglomeration in the state of Amazonas, behind its capital, Puerto Ayacucho. From July 1 to September 6, 2023, Operation Autana counted 11,345 illegal miners evicted from the National Park.

This figure indicates that in just one mining camp (of the several located in the State of Amazonas) there were five times the number of gold miners concentrated than the Brazilian government recognizes in the entire Brazilian Amazon. At best, 50% of the illegal miners estimated by Indigenous leaders and representatives of Brazilian civil society. This situation is repeated, to a greater or lesser degree, in all the countries that make up the Amazon Biome.

According to U.S. Geological Survey estimates, some 50,000 tons of gold remain to be extracted, a significant portion of which is in the Amazon. At the current rate, that translates into about 20 years of gold extraction, with an even more predatory level of plundering because it will gradually become a scarce commodity. This dynamic will only feed the thirst of speculators and white-collar goldminers. This is not good news: are we truly prepared for what is coming?

Luis Salas Rodríguez is the Executive Director of Wataniba.

Cover photo: Forests devastated by illegal mining in Canaima National Park. Photo: Javier Mesa

Tags: Indigenous Debates