- Coordinated raids on mining company Gana Gold have revealed how gold mined illegally in Indigenous territories and other protected areas in the Brazilian Amazon makes its way into the legitimate trade.
- The company only has a permit to prospect, but is alleged to have doctored other licenses and sourced gold from illegal mines, before laundering it into the legitimate supply chain.
- The raids also uncovered strong links between drug traffickers and illegal miners, who were found to use the same trafficking routes to get their respective illicit commodities out of the forest and into the rest of the world.
- Experts say that given that the vast majority of Brazilian gold is exported, there’s an onus on overseas buyers to establish chain of custody controls to ensure they’re not buying illegally mined gold.
Coordinated raids by police in Brazil have shed new light on the workings of the illegal mining industry in the Amazon.
Federal police carried out three simultaneous raids against the mining company Gana Gold in July on suspicion that it operated a criminal scheme to “launder” gold mined from protected areas and Indigenous lands in the Amazon. The company, now renamed M.M. Gold, made 1.1 billion reais ($220 million) in just over a year from a single small mine, as Mongabay and The Intercept Brazil revealed in 2021. The figure represents gold production that’s 32 times greater than even the company had projected, according to the report, which would make the mine one of the most profitable sites on the planet.
The raids have gone some way to answering the question of how criminals manage to launder illegal gold into the formal market. Police are investigating Gana Gold’s alleged role as a front: using the cover of its legally acquired license to source illegal gold and resell it as if it had mined the metal itself. This would effectively give the gold a stamp of legitimization, although it was mined from areas in the Amazon where mining is expressly prohibited.
The alleged ploy was undone by a crucial detail: all gold bears a kind of DNA, or chemical signature, that points to its origin. Investigators carried out chemical analyses of the seized gold to show that not all of the metal bore the chemical characteristics of Gana Gold’s licensed mine, as reported by Brazil’s Globo news network. Five people associated with Gana Gold were arrested in the raids.
The licensed mine is located within the Tapajós Environmental Protection Area (APA), a conservation unit near the Munduruku Indigenous Territory in Pará state. It’s authorized by the National Mining Agency (ANM) for prospecting activity only, but Gana Gold allegedly doctored the other permits necessary for full mining operations. The company had neither valid environmental licenses nor permission from the Chico Mendes Institute for Biodiversity Conservation (ICMBio), the government agency that manages all federal conservation areas, including the Tapajós APA.
The use of research authorization to mask illegal gold mining activity is something of a novelty in the industry, according to experts and officials interviewed by Mongabay.
“This is a very new topic,” Aiala Colares Couto, a researcher at the Brazilian Forum for Public Security (FBSP), told Mongabay by phone. “It is necessary to understand how these groups get the territory research authorization and promote the expansion of illegal mining because it involves institutional bodies that facilitate this type of action.”
In response to questions from Mongabay, the Federal Police said this type of strategy could also be in use in other illegal extractive industries.
“The supervision of the gold production chain is extremely precarious, making it a favorable environment for money ‘laundering,’” the police said in an emailed statement. “There is a convenient environment for criminal organizations to heat the illegally extracted ore, including the ones from Indigenous lands, and use various mining processes to give gold a guise of legality.”
An analysis by the investigative outlet Repórter Brasil of mining applications filed with the ANM shows there are 3,100 requests to mine or prospect in areas that fall within or border Indigenous territories — even though mining in Indigenous territories is banned under Brazil’s Constitution.
Police valued the environmental impact at Gana Gold’s mining site at 300 million reais ($59 million) and said it could potentially be permanent. The area affected was the size of 212 soccer fields, according to the police.
Laundering with crypto token
The investigation into Gana Gold began more than a year ago. Police say they now have evidence of a range of crimes, from license and tax fraud to possessing federal mineral assets and stolen goods, corruption, racketeering, and environmental crimes, among other offenses.
Part of Gana Gold’s alleged scheme to give an air of legality to its enterprise was to equip its prospecting site with large facilities, high-tech machinery, and an airstrip, as shown in an institutional video released by the company.
According to Globo, the money obtained from the illegal operation in the gold mine was laundered through front companies in various parts of the country, especially Porto Velho, the capital of the Amazonian state of Rondônia, where one of the suspects arrested in the investigation worked.
Gana Gold also laundered part of its proceeds using crypto. According to police, the company created its own crypto tokens to pass on criminal gains to the accounts of stooges, pretending the amount was the result of third-party investments. These operations were made through Binance, the world’s largest cryptocurrency broker, which has long been under suspicion for allowing money laundering by drug traffickers, hackers, and fraudsters. The company is already the target of attention from the Brazilian Central Bank, according to the Folha de S.Paulo newspaper.
Police told Mongabay that a transport company in Rio de Janeiro, with a fleet of 600 trucks and heavy machinery, was Gana Gold’s main financier. The transport company’s owner is the majority shareholder in Gana Gold.
“The financier of the criminal organization had great management power in the mining company, determining layoffs, buying and selling equipment, and conducting negotiations on behalf of the mining company,” police said.
According to a report by Globo, a federal court authorized the blocking of more than 3 billion reais ($588 million) in cash and assets linked to Gana Gold. That’s less than a fifth of the 16 billion reais ($3.1 billion) that the organization is alleged to have transacted between 2019 and 2021, according to Federal Police estimates. The gains from illegal mining allegedly kept the scheme’s leaders in a life of luxury, with mansions, helicopters and speedboats, as reported by news outlet Metrópoles.
Gana Gold sent Globo copies of the licenses, and said that the company is a victim of government error if there are problems with the permits.
The age of the ‘narcogarimpo’
The federal investigation into Gana Gold stemmed from a drug-trafficking probe. It began with a drug raid on an aircraft hangar in upstate São Paulo, where officers discovered 78 kilograms (172 pounds) of gold. That indicated that these two seemingly distinct illegal activities — drug trafficking and illegal gold mining — are connected.
“The same clandestine flight paths are used to transport gold from illegal mining and to carry drugs, which consolidates this hypothesis of a connection between drug trafficking and mining,” said Couto from the public security forum. He added Brazil is witnessing the birth of the “narcogarimpo” — the overlap between narco-traffickers and illegal miners, or garimpeiros as they’re known in Brazil.
On Aug.17, Reuters reported that a top U.S. Treasury official visiting Brazil had learned “alarming information” about the links between the PCC, the largest drug cartel in Brazil, and illegal gold mining in the Amazon.
One of the common elements shared by illegal gold miners and drug traffickers is an airstrip in the middle of the forest. A report by The Intercept Brasil in partnership with The New York Times identified 1,269 unregistered airstrips in the Brazilian Amazon last year. These allow access to gold-rich areas that are otherwise inaccessible by land. The report also showed that at least a quarter of the airstrips are within 20 kilometers (12 miles) of an illegal mine.
News outlet Metrópoles reported that the Brazilian Air Force and the National Aviation Agency authorized the Gana Gold’s airstrip operation, even after the Federal Police investigation became public.
According to the Brazilian Mining Institute, a nongovernmental organization, Brazil exported 104 metric tons of gold in 2021, valued at $5.3 billion. Top buyers included Canada (31.4%), Switzerland (24.5%), the U.K. (14.5%), India (11.5%), the U.A.E. (8.1%), Belgium (4.5%), Italy (3.4%) and Germany (1.1%). However, the National Mining Agency recorded production of only 95 metric tons in the same period.
Besides highlighting shortcomings in how gold production is reported, the figures reveal that almost all the gold mined in Brazil ends up outside the country. This includes gold mined from protected areas and Indigenous lands. Between 2019 and 2020, Brazil exported 174 metric tons of gold, Mongabay and The Intercept Brasil reported previously. Of this total, 38% were of unknown origin, 28% had evidence of irregularities, and 34% were apparently of legal origin, according to a report by researchers at the Federal University of Minas Gerais (UFMG). A study by the Instituto Escolhas, a sustainability nonprofit, is even more alarming, pointing to evidence of illegality in almost half of the gold traded in the country between 2015 and 2020.
Experts say the illegality is facilitated by weak law enforcement. In August, a bill was introduced into the lower house of Congress to tighten oversight of the gold production chain, including requiring the verification of the product’s origin in all cases, as reported by Folha de S.Paulo. This would do away with the “good faith” basis on which gold transactions are currently conducted, which is considered the primary enabler of the illegal gold trade. The bill also calls for the digitalization of official records, which today are still made on paper, hindering inspections.
Bruno Manzolli, a researcher at UFMG’s Center for Territorial Intelligence (CIT), welcomed crackdowns by police, protected areas administrator ICMBio, and IBAMA, the environmental protection agency. But the fact that they’re happening at all “shows that we are failing at a previous point, the inspection of the activity,” Manzolli told Mongabay by phone. “We are allowing several irregularities to be made, which ends up overburdening these institutions with actions that don’t always resolve the situation. The police enter an area of illegal mining, but then leave. And the mine is usually reactivated.”
It’s very easy to launder illegal gold in Brazil, said Larissa Rodrigues, portfolio manager at the Instituto Escolhas. “On one hand, there are gaps in enforcement,” she told Mongabay by phone. “On the other, there is a regulatory issue that facilitates gold laundering, especially the mechanism of ‘good faith,’ without effective checks on the origin of the gold. Considering the evidence of the huge volume of illegal gold circulating in the market, we need to increase control.”
Foreign responsibility
Documents revealed by Repórter Brasil show that technology giants Apple, Microsoft, Google and Amazon have bought gold from refiners associated with illegal gold from the Brazilian Amazon. One of their suppliers is the Italian company Chimet, investigated by the Brazilian Federal Police as a suspected buyer of gold from illegal mines in the Kayapó Indigenous Territory.
Mongabay reported that Chimet is under investigation and that Switzerland has pledged to stop imports of gold mined in Indigenous reserves in Brazil.
“Brazil’s gold exports practically match the production numbers,” Manzolli said. “The gold we are taking here is going abroad. So, the gold taken from Indigenous lands and environmental preservation areas is reaching the countries that are big buyers.”
Rodrigues from the Instituto Escolhas said investigative reporting, police raids and pressure on foreign buyers are all positive steps because they keep the issue of illegal mining in the Amazon in the spotlight.
“Almost all the gold produced in Brazil is exported, but the impacts of this activity stay in the country,” she said. “We need the international market to recognize the problem.”
Rodrigues said much of the onus should be on the overseas buyers: “The foreign companies that buy gold from Brazil also need to create their own control mechanisms if they don’t want to be exposed to illegal gold. We are exporting gold with Indigenous blood.”
The Federal Police recently carried out another major raid on illegal mining, this time in the Yanomami Indigenous Territory in Roraima state. The operation involved 12 federal institutions and resulted in the seizure of 23.9 metric tons of ore (cassiterite, gold and mercury), 36 aircraft, 15,600 liters (4,120 gallons) of fuel, and 119 guns. At least 25 people were arrested. Although such raids weaken illegal mining groups, they’re not enough on their own to solve the problem, experts say.
“We have an articulated reaction due to society’s pressure regarding the issue, but we need more actions and a solid presence in combat, so that the Indigenous territories feel protected,” said Couto from the public safety forum. “The Indigenous populations are vulnerable to the actions of the ‘narcogarimpo,’ having their territories invaded, their families threatened, and their ways of life extremely altered because of the fear of violence, as there are fatal victims of the action of these groups.”
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