BRAZIL GOLD

Brazil Gold Mining and Environment (BRAGOLD Case)


          CASE NUMBER:    132 
          CASE MNEMONIC: BRAGOLD
          CASE NAME:     Brazil Gold Mining

A.        Identification

1.        The Issue

     Gold production has become a major source of income for
several countries of the Amazon region, especially Brazil which
has become the fourth largest producer in the world.  The primary
concern of the industry is mercury pollution that goes hand in
hand with current mining techniques.  Although the environmental
effects of the mercury are not currently serious, there are
significant dangers to the health of the human population of the
region.  Other factors involved in the case are human rights and
the level of discretion that the Indians are entitled to in the
use of the resources on their reservations.  Finally, there is
the sovereign right of Brazil to develop the Amazon as they wish. 
This is in direct opposition to the prevailing viewpoint of
international environmental organizations, which regard the
Amazon as a world resource.

2.        Description

     Gold mining of surface deposits began in the Amazon region
as early as the 16th century in the more easily accessible
locations near the coasts and major rivers.  However,
difficulties resulting from location, climate, and political
instability kept the region from full exploration of its
resources until recently.  In the late 1970s, gold was discovered
along the Brazilian border with Venezuela.  This sparked off the
largest single gold rush in history, which is still going on
today.

     The richest deposits of gold bearing rock are in the area
called the Guiana Shield, a huge belt of greenstone beginning in
Venezuela and extending eastward through parts of Guyana,
Suriname, French Guiana, and south into Brazil and the Amazon
heartland.  The shield covers a total area of 415,000 square
kilometers of jungle and savanna.  This shield is half of the
corresponding gold rich area in Africa; in fact, the two were
once formed a single outcropping when the two continents were
connected roughly 115 million years ago.  The outcropping in
Africa is largely responsible for the gold and platinum wealth of
South Africa and other countries in sub-Saharan Africa.

     Currently, Brazil is the world▀s fourth largest producer of
gold and the other countries of the region have begun to increase
their investment in discovering and utilizing gold resources.  In
Guyana, mining firms have been increasing their investments and
expanding current facilities.  Venezuela hopes to increase
production to over three times the current rate and Suriname and
French Guiana have also had sharp increases in the level of
mining investment.  These increases are also occurring on the
private front as many companies, such as Golden Star Resources,
have been increasing regional investment as much as 100 percent
in recent years.  Investment has included revamping mining
operations to maximize production and expanding bids on mining
rights in the Amazon region.  This is a clear indication of the
potential profitability of the region.

     This expansion of development into the Amazon region has met
considerable criticism from environmentalists throughout the
world, who regard the Amazon as a world resource that needs to be
preserved.  This preservation is regarded as vital because the
Amazon is believed to contain over half of the world▀s plant and
animal species and fully one third of the worlds trees. 
Additionally, 20 percent of the fresh water entering the oceans
comes from the Amazon.  Two thirds of the 2.7 million square mile
extent of the Amazon basin is within Brazil▀s borders, making
actions in Brazil of paramount importance to the status and
future of the region.

     The actual dispute is over the effects of the gold mining
process on the Amazon, specifically the mercury used to isolate
the gold from the surrounding sediment.  The amount of mercury
entering the environment from gold mining activities is estimated
to be 200 tons last year alone.  Mercury enters the environment
during each of the two steps involved in acquiring the gold. 
First, the sediments are taken from river bottoms and land mining
sites and forced through a number of sieves.  The sieves are
coated with mercury, which bonds with the gold in the sediment
separating it from the rest of the material.  Obviously,
considerable amounts of mercury are left in the gold depleted
soil and enters the environment when this material is discarded. 
Second, the gold-mercury amalgam is heated to purify the gold by
vaporizing the mercury.  If the heating is done in an unsealed
container, it enters the environment in gaseous form.  This is
particularly dangerous to the miner or smelter purifying the
gold, as the person invariably inhales the mercury through
breathing.  Experts say that for every pound of gold produced
a corresponding two pounds of mercury enters the environment.

     The environmental contamination and resulting threat to
human health is at the center of the concern over this method of
mining.  Peripherally, if levels of mercury continue to rise, it
could also pose a threat to the health of the environment in the
Amazon.  The effects of the mercury poisoning are wide-spread,
more so than anyone realizes according to Dr. Fernando Branches,
an expert in mercury poisoning.

     The effects of chronic exposure to mercury poisoning are
readily apparent as it usually occurs through inhalation and
causes violent coughing, chest pains, and leads to serious lung
infections and disease in addition to causing serious damage to
the central nervous system.  It is more difficult to detect
exposure in less than acute levels.  This leads to two problems. 
First, local doctors are unfamiliar with the symptoms of mercury
poisoning and often fail to detect it.  Secondly, the symptoms of
mercury poisoning (heart palpitations, tremors, weakness, memory
loss, and psychological changes) are very similar to the symptoms
of other tropical diseases, especially malaria.  Malaria is so
common to the region that most people purchase the medicine at
local pharmacies and treat themselves rather than spending scarce
money on a visit to the doctor, in which case the poisoning goes
completely undetected.  Exposure to elemental mercury is largely
restricted to those who work directly with the metal or to those
who live in the area of a place where gold is being purified
through the vaporization of mercury, but the exposure to
methylmercury is much more pervasive.  Methylmercury is created
when mercury is metabolized by animals into an organic compound,
in Brazil this primarily occurs in the fish of the Amazon.  

     Exposure to methylmercury is much more dangerous than
exposure to elemental mercury because the human body can absorb
it readily, increasing the chances for severe poisoning.  High
levels of methylmercury have been detected in fish caught over
200 miles away from primary mercury exposure sites, which is
particularly distressing in light of the fact that fish is the
primary staple of the poor in the Amazon.

     This danger to its citizens highlights one of the human
rights issues involved in the gold mining/mercury poisoning
dispute.  To what level is a government responsible to its
citizens to protect them from harm?  This issue involves the laws
passed by the government restricting the actions of some of its
citizens with the intention of protecting other citizens. 
Unfortunately, in Brazil the philosophical ramifications of this
situation are rendered somewhat moot by the fact that actual
enforcement of laws in the Amazon is almost totally beyond the
control of the government.  The government tried to get the
miners to use closed retorts but was unable to enforce the ruling
because the miners are largely beyond the detection and presence
of the law in the jungle.  The government has almost no
influence.  The attempt to restrict access to mercury by the
miners was totally undermined by a black-market of smuggled
mercury that sprang up overnight.  The government was unable to
stop shipments or sales; therefore, the law was repealed.  The
lack of enforcement in the huge region by the small enforcement
division of the environmental ministries led Stephen Schwartzman
of the Environmental Defense Fund to say, "Nobody has been
observing these laws.  There is no enforcement whatsoever."

     The second human rights issue deals with the reservations
created for the different tribes native to the Amazon.  Bowing to
world wide pressure from human rights groups and the United
Nations, Brazil created huge reservations covering over 10
percent of the countries land surface.  This has caused a great
deal of resentment among the general population (only 29 percent
of the Brazilian Congress is in favor of maintaining the current
size of the reservations and the legal situation as it is), who
have always regarded the Amazon as the promised land of endless
opportunity and fortune.

     This feeling of resentment is compounded by the fact that
the recipients of these huge tracks of land make up only 0.3
percent of the total population.  These reservations cover vast
amounts natural resources, which are forbidden to anyone who is
not a member of the tribe given the land.  Inevitably, this
restriction has caused friction between the miners and the
Indians, which has resulted in periodic violence.  Some of the
Indian tribes have contracted harvesting rights to trees and
resources in return for monetary compensation.  This has met with
criticism from both sides of the Amazon development issue. 
Environmentalists want to see the Amazon preserved and
essentially untouched, while the native Brazilians want to have
an open forum in pursuing the potential profit of harvesting the
resources located within the reservations.

     The Kayapo are an excellent example of this practice of
selling harvesting rights.  They claim that since the Brazilian
government has cut off their subsidies the only thing that is
keeping them from starving is the sale of resources.  The Kayapo
claim that his business-like attitude has also kept them from
being victims of the violence racking other Indian tribes, "You
never hear of a Kayapo being killed by gold miners or loggers,
everyone accepts their contracts."  Brazil is struggling with
the question of just how much autonomy the Indians have over the
use of their land.

     Brazil has a belief that the rest of the world ▀covets▀ the
Amazon and would do anything to gain control of it.  This
attitude has fostered an almost desperate drive to develop and
inhabit the Amazon, effectively demonstrating their ownership and
control of the area.  Brazil perceives the efforts of
environmental groups and western countries as intrusion on its
position as a sovereign state.

     Brazil has received a $17 million grant from Germany for the
purpose of studying the problem of mercury poisoning and possible
solutions.  Also, Brazil has invested heavily in the development
and production of the closed retort, the tool used by the miners
to separate the gold from the mercury.  Even though this problem
is potentially very great there is little likelihood of rapid
action towards its resolution as there are vested interests in
the gold mining operations which are actively opposed to change
and the people being affected by the mercury contamination have
little political pull.  Finally, as demonstrated by the attempt
to limit the access to mercury, even if Brazil does muster the
political will to pass legislation, there is no vehicle for
enforcement of the laws due to lack of funding.

3.        Related Cases

     BOLGOLD case
     VENGOLD case
     YELLOW case
     BENIN case

     Keyword Clusters

     (1): Trade Product            = GOLD
     (2): Bio-geography            = TROPical
     (3): Environmental Problem    = HABITat Loss

4.        Draft Author:  Brett D. Schaefer

B.        LEGAL Clusters

5.        Discourse and Status:  DISagreement and INPROGress

6.        Forum and Scope:  BRAZIL and UNILateral

     The decisions on how to use the resources within Brazil's
borders is a strictly internal decision.  Violators of these
discrete laws are held accountable within the country.    

7.        Decision Breadth:  1 (Brazil)

     The decision of how to use domestic resources is an internal
one but the Amazon is unique as a world resource.  There are over
219 groups organized to save the Amazon who use the media and the
United Nations to strong arm policy concessions from Amazon
countries, particularly Brazil.  This interference by outsiders
has created a suspicious reaction in Brazil to any foreign action
to preserve the Amazon.  This interference is interpreted by the
Brazilians as opposition to any development in the region.  The
government believes that, unless they expand development and
place the Amazon firmly under its control through settlement,
some other country will take control of the area.  Presidential
candidate Frotas summed up this attitude when he said, "The world
covets the Amazon."

8.        Legal Standing:  LAW

     In 1989, a law was passed restricting the access to legal
gold extraction using mercury.  Authorization could only be
granted by state environmental organizations.  This decree was
undermined and eventually withdrawn due to a dramatic increase in
the illegal importation of mercury and its sale on the black
market.

C.        GEOGRAPHIC Clusters

9.        Geographic Locations

     a.   Geographic Domain   :  South America [SAMER]
     b.   Geographic Site     :  AMAZON
     c.   Geographic Impact   :  BRAZIL

10.       Sub-National Factors:  NO

11.       Type of Habitat:  TROPical

D.        TRADE Clusters

12.       Type of Measure:  Product Standards and LICENsing 

     There is a product standard on laboratory retorts, which are
used to burn the mercury from the gold.  Brazil is trying to get
all of the miners to use a closed container retort, which
drastically reduces the toxic vapors from escaping into the air,
by recycling 96 percent of the mercury.  The Brazilian
government also tried to restrict the access to mercury by
centralizing sales from government approved merchants.  This
measure resulted sharp increases in smuggling and black market
sales.

13.       Direct vs. Indirect Impacts:  DIRect

14.       Relation of Measure to Environmental Impact

     a.   Directly Related    :  YES GOLD
     b.   Indirectly Related  :  NO
     c.   Not Related         :  NO
     d.   Process Related     :  YES HABITAT Loss

     The restrictions imposed on the gold mining are on an
unrelated product, the mercury, access to which was restricted to
licensed merchants by a legislative act in 1989.  The actions by
the Brazilian government over the process is a two-fold
situation.  First the government is encouraging the miners to use
a fully contained retort in their mercury burning process to
curtail the emissions of mercury vapor into the environment by
recycling up to 96 percent of the mercury used in the procedure
of isolating the gold from the silt.  The second process related
to the restriction of gold mining is the establishment of Indian
reservations equaling 10 percent of Brazil▀s land area. 
Development and exploitation of the reservation land is strictly
forbidden by anyone except the Indians.  Unfortunately, the lack
of money restricts the efforts of the authorities to enforce this
law. 

15.       Trade Product Identification:  GOLD 

16.       Economic Data

     Gold is an important resource for all of the 8 countries
(Bolivia, Brazil, Colombia, French Guiana, Guyana, Peru, Surinam,
and Venezuela) included in the Amazon watershed, at least
potentially.  Experts have called the Amazon region home to  the
largest untapped reserve of gold in the world. 

     This gold is being mined by both large scale industry and
individual wildcat miners called "garimpeiros."  Most of the
garimpo mining, which is the least regulated and most mercury
polluting component of the gold mining sector, occurs in Brazil. 
To understand the difficulty of the addressing the pollution
resulting from the independent miners, the economic consequences
of restricting the activity of the garimpeiros in gold mining
must be made clear.  An estimated 650,000 garimpeiros were
actively working throughout the Amazon in 1992 and mined nearly
48% of the 76,044 metric tons of gold produced in Brazil in
1992.  Additionally, the miners are mostly unemployed men from
the cities, many of whom would not be earning a living or
contributing to the economy if forced out of the gold prospecting
business.  Though production percentages by 'garimpeiros▀ has
been declining in recent years as surface deposits are worked
out, they continue to contribute more than 30 percent of total
production.    

17.       Impact of Measure on Trade Competitiveness:  LOW

     The trade restriction of mercury has had little effect as
the black market has continued to supply the garimpeiros with the
mercury that they required.  The measure to force the miner usage
of recycling retort has also had little effect due to the
resistance of the miners towards adopting the new retorts. 
Restricting the miners from reservation territory would have a
significant impact, as some of the richest gold deposits are
located there, but enforcement of the mining restrictions is
minimal at best. 

18.       Industrial Sector:  MINING, METAL       

19.       Exporter and Importers: BRAZIL and MANY

     In 1992, Brazil ranked fourth in the world in total gold
production.

E.        ENVIRONMENT Clusters

20.       Environmental Problem Type:  Pollution Land [POLL]

     The mercury pollutes the air through the separation of the
gold and the mercury, during which, the mercury is boiled off as
a toxic vapor.  The water pollution is caused by the addition of
mercury to gold laden silt, the mercury bonds with the gold
making extraction easier, but the process also contaminates large
amounts of water when the processed silt is returned to the
water.  This is particularly harmful in the tributaries which
experience a more difficult time disposing of the mercury build
up.  Additionally, the miners dredge the river bottoms in their
search for gold rich silt, disrupting the river bottom ecology
and making it more difficult for the fish to breath due to the
sediment suspended in the water.  This has resulted in a decline
in the Amazon river fish population.

21.       Name, Type, and Diversity of Species

     Name:          Many
     Type:          Many
     Diversity:     6,607 higher plants per 10,000 km/sq (Brazil)

22.       Resource Impact and Effect: LOW and SCALE

     Currently, the levels of mercury are dangerous only in
isolated hot spots and to those whose primary diet consists of
river fish (which, when contaminated, have high levels of
methylmercury), but if the contamination continues to increase
the damage could become devastating to the environment.  Randua
Marques, a Brazilian environmental journalist, has judged the
current problem and its potential as "a tragedy without precedent
in the history of our country."

     There are two threats from mercury exposure: absorption of
elemental mercury and absorption of organic mercury.  Elemental
mercury is poorly absorbed through ingestion, but is readily
absorbed into the blood stream through inhalation.  This is
particularly likely in the mining and smelting occupations,
because the gold-mercury compound is heated to vaporize the
mercury and purify the gold.  Few precautions are taken to
protect the workers from exposure to the gaseous mercury.  The
second method of exposure is through the indirect means of
ingesting food contaminated with mercury.  This primarily
consists of the fish in the Amazon, which metabolize the mercury
into methylmercury, this exposure causes the victim to succumb to
Minamata disease.  Minamata disease is named after a bayside
village in Japan which suffered hundreds of deaths resulting from
a nearby plant dumping mercury into the bay.

     Mercury poisoning is difficult to detect because the
symptoms (tremors, heart palpitations, weakness, and loss of
coordination) are similar to those of malaria and other common
tropical diseases, for which most local residents treat
themselves rather than going to a doctor for treatment.  This
coincidence of symptoms has led Dr. Branches, an expert on
mercury poisoning, to suspect that the number of mercury
poisoning cases is much greater than the medical records
indicate.  The poisoning potential is greater for methylmercury
exposure because the human body more readily metabolizes mercury
in this form than in an elemental state.  The primary exposure to
methylmercury in the Amazon is through eating fish, which are
able to metabolize mercury fairly easily.  High levels of
methylmercury have been found in fish hundreds of miles from
primary sources of mercury pollution.  This is particularly
distressing to human rights activists because the diets of the
poorer residents of the area consist mainly of fish.  The region
in danger of poisoning is thus much larger than principal areas
of contamination. 

23.       Urgency and Lifetime:  MEDium

     The immediate problem is not great, but the situation seems
to be getting worse.  The contamination is greater in the
tributaries where the mercury tends to get trapped, therefore,
the time required to reverse the damage is likely to be
considerable.

24.       Substitutes:  NONE

     There is no current economical substitute for gold.  The
question of substitutes must therefore focus on the use of
mercury in the mining process and on the methods used in
purifying the gold.  Mercury is very expensive to purchase, but
it is also the most economical method of isolating the gold from
the silt for the miner.  However, there is an alternative.  The
retort most commonly used by the garimpeiros is open to the air
and allows the mercury to escape into the environment, but there
exists another type of retort that is enclosed.  Additionally,
this devise allows for the recycling of 96 percent of the
valuable mercury.  Unfortunately, the miners are resisting this
innovation and continue to prefer the old polluting retort.

F.        OTHER Factors

25.       Culture:  YES

     Brazilians believe that other countries, particularly
western countries, covet the Amazon.  Also, the action by the
Brazilian government (bowing to international pressure) of
setting aside 10% of the country▀s land area into Indian
reservations for .3% of the population is very unpopular among
the population at large.  The country▀s poor have always looked
to the Amazon as their opportunity to improve their lot in life,
consequently, they feel that they have been cheated out of their
rights by being forbidden access to part of their country.

     This attitude directly conflicts with the traditional role
Latin American countries have played in the world economy,
supplying raw resources and primary products.  The way to wealth
in the region has been through the exploitation of the
environment, which most of the population regards as its greatest
chance to succeed in life.  This belief has contributed
significantly to the rapid deforestation and development of the
Amazon. 

26.       Trans-Boundary:  YES

     Eight countries include part of the Amazon within their 
borders, though the majority is contained within Brazil▀s
borders.  There is also the aspect of the Amazon being a world
resource, which no one country should be able to control.  

27.       Human Rights:  YES

     Brazil has a responsibility to its citizens to protect them
from mercury poisoning that can currently result from drinking
water or eating fish from the Amazon.  Indian rights are also an
issue.  As minerals are discovered on Indian land, some miners
conclude that if there were no more Indians than the land would
be free to develop, consequently there have been attacks on
Indians living near mineral sites.  An example is the massacre in
August 1993 of 16 Yanomami Indians, a primitive group of
indigenous people with little familiarity with the outside world,
by a number of gold miners.

28.       Relevant Literature

"Battle Over Rich Brazilian Lands: Indians Accused of Being 
     'Jungle Maharajahs▀," San Francisco Chronicle.  December 29,
     1993.
"Brazil Project Seeks to End Mercury Pollution in Amazon,"
     Reuters.  September 26, 1991.
"Brazil Seeks Help to Tackle Amazon Mercury Pollution."  The 
     Reuter Library Report.  July 20, 1990.
"Dragging its Feet on Mercury Poisoning,"  American Political 
     Network, Inc.  Greenwire.  September 27, 1991.
"Efforts to Save the Rain Forest Raise Suspicions in Brazil; 
     Outsider▀s Campaigns Find Little Support."  The Washington
     Post.  October 11, 1993.
"Gold Rush Brings Mercury Poisoning to Amazon."  The Washington
     Post.  February 17, 1992.
"The Guiana Shield."  The Mining Journal, Ltd.  March, 1995.
"Jungle Gold Market in Brazil," Mining Annual Review. July.
     1994.
"Mercury:  Environmental Legislation, Recycling to Limit Demand,"
     Engineering and Mining Journal.  July, 1990.
"Mercury Poisoning Confirmed Among Amazon Villagers,"
     New Scientist.  November 9, 1991.
"Mercury Poisoning Erupts in Brazil," American Metals Market.  
     99/147 (August 2, 1991), 4.
"The Price of Gold:  Mercury Exposure in the Amazon Rain Forest,"
     The Journal of Toxicology: Clinical Toxicology 31/2
     (June, 1993), 295.
"Rift Turns Brazil▀s Ecology Movement into an Endangered
Species,"
     Los Angeles Times.  April 24, 1994.
"Scientists Urge Brazil to Act Against Amazon Mercury,"
     Reuter Library Report.  June 4, 1991.

                          

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