- When commodity prices decrease, the exploitation of those commodities tends to intensify in order to make up for the loss in profits.
- A World Bank report estimates that around 400,000 miners work in Brazil’s Amazon basin alone.
- With the fall in the price of gold, some experts believe that gold exploitation will be intensified and conflicts with the indigenous communities will, as well.
The drop in commodity prices —for products sold by the weight like oil, and minerals, for example— has had a serious impact on the Brazilian economy. The South American country will have negative growth in 2015, estimated at around 3%, according to specialists.
The fall in prices for iron ore, crude oil, and agricultural crops such as palm oil, corn, and soy beans will likely reduce the expansion of the agricultural frontier in South America’s economic powerhouse, Brazil, and will slow the exploration for new resources.
But beyond the decrease in income and productivity, the lower value of these raw materials is said to also have had a more immediate negative impact on the environment and the people who depend on it.
This isn’t what most people would expect, but here’s how it works: when commodity prices decrease, the exploitation of those commodities tends to intensify in order to make up for the loss in profits. According to economist Ademar Ramos from the State University of Campinas (Unicamp), because we’re talking about the extraction of raw materials, such intensified activity also causes greater damage to the environment.
“The big problem worldwide is oil exploration, which is highly risky,” says Ramos. “With the fall in the price of the oil barrel, the use of of this energy intensifies, as well as production. Here in Brazil, I highlight the exploitation of iron, a commodity that also has its price at the lowest level in history. The exploration of this metal has promoted a real environmental disaster in Minas Gerais.”
The expert is referring to the recent disaster in the city of Mariana, in the state of Minas Gerais. A dam owned by Samarco mining company broke there late last year and let out toxic mud that traveled down river, killing more than ten people, and destroying the marine life of Rio Doce, one of the state’s principal water sources.
The World Bank forecasts that the price of iron ore in 2016 will stand at an average of $42 per ton, 25 percent lower than it was last year. According to the institution, this shift is due to the drop in demand from China. But this follows an ongoing downward trend: in 2015 alone, iron ore demand had fallen by 39 percent compared to the year before.
Ademar explains that as companies try to offset the falling price of the resources they extract, exploitation is often expected to increase. The main mining companies operating in the country, Vale, Rio Tinto and BHP, have already announced an increase in production to meet their shortfall.
“Ore exploitation takes place in an area called Campos Rupestres ferruginous, which has one of the most unique vegetations in the world, harboring various plant species in close to extinction. To find the ore there, all vegetation is removed, causing the destruction of existing biodiversity,” says Ademar.
And according to the environmental preservation organization Bio Diversitas, at least four species threatened by ore extraction in Minas Gerais are listed in the vulnerable category on the IUCN Red List of species.
Conflicts between gold miners and indigenous peoples
The fall in the price of gold also has significant social impacts.
In December of 2015, the commodity was traded at $1,072.35 an ounce, its lowest level in five years. As in the case of the price of iron ore, the drop was driven by China’s shifting demand, as it increased its reserves by 60 percent.
In Brazil, the precious metal is extracted by seasonal nomadic explorers, who have no labor security over their mining activities and work on a small scale. Ramos describes how the search for gold plays out in much of Brazil, where these workers often go looking for the precious metal on indigenous lands, typically in the Amazon region, where gold exploitation is prohibited.
In 2012, more than 200 indigenous leaders from 41 communities presented a document to the Federal Public Ministry in Brasilia, asking the authorities to withdraw the miners from their lands. The investigation continues, but there have been no practical results so far.
A World Bank report estimates that around 400,000 miners work in Brazil’s Amazon basin alone. In small scale or so-called artisanal mining, mercury leaks to the soil and water are an irrevocable result of inadequate technologies and practices used to extract the mineral.
An estimated 200 tons of mercury are released into the environment due to gold mining in Latin America every year, leading to land degradation, deforestation, disruption of waterways, and siltation of river beds.
“Mercury not only is toxic for humans, but it causes a kind of contamination that destroys the environment, with the pollution and toxic contamination in waters and consequently marine life in oceans and rivers,” says biologist Natália Martins.
With the fall in the price of gold, some experts believe that gold exploitation will be intensified and conflicts with the indigenous communities will, as well.
“The working conditions in the mining industries are terrible. There are hundreds, sometimes thousands of poor people who come to these lands to find gold and then sell it,” explains Martins. “This is usually done in a very rudimentary way, sifting the earth to find the metal. And these indigenous communities are often decimated by violence, alcoholism and disease [due to illegal gold mining in their territories.]”
Diamond extraction leading to cultural genocide
Right on the Roosevelt Indigenous Lands –Sierra Morena, Aripuanã Park and Aripuanã– between the states of Rondônia and Mato Grosso, hides one of the five largest deposits of diamonds in the world. The precious stones began to attract illegal miners to the region between 1999 and 2000.
Miners working there and the indigenous peoples who live on those lands estimate even larger area: more than 1,000 hectares solely dedicated to mineral exploration. As opposed to other indigenous tribes in Brazil, the Cinta Larga community wants the exploitation in their territory to be legalized and to be done by them, alone. Over the past decade, conflicts with outside miners have led to violence, corruption and a true “cultural and social genocide”, according to local prosecutor, Reginaldo Trindade.
“It’s a community on the brink of extinction, if not physically, at least ethnically and culturally. Too bad that the federal government does not see –or do not want to see– the gravity of the situation,”, adds Trindade in a interview to Amazonia Legal.
There are visible environmental impacts of diamond exploitation. The indigenous territory is now marked by rampant deforestation in the area, approximately six miles long by one mile wide. According to a study by Melissa Volpato Curi from Unicamp, among the environmental impacts are the destruction of riparian vegetation and of the Lajes river –a tributary of the Roosevelt River, located approximately 22 miles downstream from diamond mining area.
The low value of commodities in general, but especially minerals, is causing social and environmental consequences that are hard to repair, but are even harder to estimate, says Martins.
According to Ademar, if commodity prices continue to fall even lower, the exploitation of these materials will simply become unprofitable, even for the smallest producers.
“But we shouldn’t count on that,” he warns. “To get to this point, prices would have to be so low, that it could harm other areas in the economy. We should invest now in clean forms of energy. Depending on these raw materials, which are finite, is the worse way to deal with the situation.”
