- Although wildcat miners might be expelled from Indigenous territories and areas with high levels of protection, unallocated public lands and waterways will remain exposed to their harmful practices, as well as unregulated mining operations on private landholdings.
- Formalization of the sector should be accompanied by migration from mercury-based extraction technologies to other chemical and physical technologies, alongside incentives for illegal miners to adopt those practices.
- Existing oil and gas fields will continue to operate over the medium-term, with new production wells and feeder pipelines being established on landscapes adjacent to existing production fields. At the same time resistance from Indigenous and local communities against extractive projects – including for extracting gas resources underneath the Amazon Basin – will likely continue.
The activities of wildcat miners in the Pan Amazon has become an increasing issue of concern over the past five years; in part, because their numbers have exploded, but also because as a group, they have flagrantly violated the land rights of Indigenous people, particularly the Yanomami, but also the Murunduku and Kayapó (Brazil), the Ese Eja and Harakmbut (Peru), and the Lekos (Bolivia). Efforts to ‘tame’ wildcat mining is a stated priority for governments and civil society.
Over the short term, most wildcat miners will be forcibly removed from formally recognized Indigenous territories. These efforts will be successful because the global media has determined this is a human rights issue that governments cannot ignore. It is less likely, however, that miners will be criminally prosecuted and, in some jurisdictions, they will be allowed to salvage their equipment. In some regions, they will be exiled from high-level protected areas; however, many will continue to have access to multiple-use protected areas. Unallocated public lands and waterways will remain exposed to their harmful practices, as well as unregulated mining operations on private landholdings.
Environmental advocates want them eradicated from all regions of the Amazon. Their view, one popularized by the global media, is they are illegal operators who avoid taxes, ignore labor laws and pollute the environment. Although this is literally true, many operate on landscapes where mining is, theoretically, legal. Some hold valid concessions and operating licenses; nonetheless, virtually none are in full compliance with all the pertinent regulations. Unsurprisingly, wildcat miners do not consider themselves to be criminals, but members of an underprivileged economic class that has been traditionally exempt from the regulatory burden intended for corporate miners. In many jurisdictions, they are too numerous to eradicate by police action, which could lead to civil unrest and create a political backlash which weakens efforts to protect biodiversity, water resources and Indigenous rights.
Civil society groups working with wildcat miners have proposed an alternative strategy. Short-term, the goals should be to bring them into a formal framework where they can be influenced by incentives to improve their practices. This could begin with a program to register them into a national digital database and, simultaneously, legally recognize the de facto possession of their mining claims. In exchange, authorities could collect royalty taxes that materially benefit local government where miners actually reside. This procedure would allow authorities to identify large-scale miners for immediate registration as corporate miners, forcing them to pay royalties and income taxes, as well as to abide by labor and environmental regulations.
Formalization of the sector should be accompanied by migration from mercury-based extraction technologies to other chemical and physical technologies. Wildcat miners use mercury because it is easy to use and cost effective; many (most) are unaware of its long-term toxic impacts. Although it is subject to regulations, the use of mercury in mining operations is not strictly illegal and is widely available to miners via the black-market. The challenge, as always, is to organize policies and incentives that motivate miners to adopt different practices. Change can occur rapidly if the proposed solutions are more lucrative than the current system.
Technological change is already underway as medium-scale miners install cyanide-based extractive systems similar to those used by corporate miners. This technology’s biggest advantage is its ability to extract significant volumes of gold from low-grade ores, which also means operators can recover gold from the tailings created by previous miners who relied on rudimentary placer technology. The massive volume of placer tailings that characterize wildcat mining landscapes are (or soon will be) the site of the renewed gold rush.
Cyanide is a well-known poison and comes with its own set of environmental liabilities and social challenges. It is lethal to fish and other forms of aquatic wildlife at low concentrations, which is why corporate gold miners invest significant financial resources in recycling systems, geomembranes, isolation ponds and catchment reservoirs. If they fail to insulate their operations from surrounding landscapes, particularly downstream portions of their watersheds, they will face the wrath of their neighbors, regulatory agencies and financiers.
Using cyanide to extract gold from mercury-laced tailings, however, brings its own suit of environmental and social impacts. The mechanical turnover of legacy tailings will mobilize trapped mercury, while cyanide will release other heavy metals from the pulverized ore and further amplify the toxicity of the residual tailings. Moreover, the chemical reaction that occurs between cyanide and mercury creates variants of methyl mercury that accelerate the phenomenon of bio-amplification, which is already a major health risk for Amazonian populations. The risks associated with cyanide and mercury motivated the Conference to the Parties of the Minamata Convention to characterize the unregulated use of cyanide to reprocess placer mining tailings as a “worse practice.” Regardless, cyanide based technologies will proliferate as the wildcat mining sector transitions into a formalized medium-scale domestic mining industry.
Ironically, this transition offers an opportunity to remediate the toxic legacy of the previous gold rush, but only if a new generation of mining companies can be recruited (or coerced) into adopting a business model that fuses tailings remediation with gold recovery. The Minamata document that outlines the risks of cyanide technology also describes how those risks can be minimized by the removal of mercury from the tailings before the application of cyanide solutions. Options include a variety of physical and chemical techniques that should be economically and technologically viable. Ideally, wildcat miners would cease invasions of protected areas in exchange for unfettered access to the landscapes that have already been degraded. Theoretically, they could evolve into a responsible business sector that generate good jobs and contribute to a stable and diversified Amazonian economy. Realistically, however, this win-win-win scenario will probably not materialize, because current stakeholders are unable to make that transition due to economic constraints, deeply ingrained behavior or an unwillingness to consider alternatives in a highly polarized political environment.
Oil & gas: stranded assets or strategic resources?
Energy markets in 2022 were characterized by a shortfall in the supply of oil and natural gas due to Russia’s war in Ukraine. Prior to the conflict, however, there was a surplus of both fossil fuels due to a combination of technological innovation in the United States (e.g., fracking and horizontal drilling) and excess-production capacity in countries that dominate global energy markets. Although commodity markets are inherently cyclical, the pre-war surplus supported a hypothesis that the transition to renewable energy would suppress investment in fossil-fuels. The anticipation that the ‘age of oil’ was coming to an end was particularly strong among environmental and human rights advocates who opposed the exploitation of hydrocarbons within the Pan Amazon based on philosophical and moral criteria. The potential for halting future development was no longer viewed as unrealistic.
This optimistic scenario has been called into question by the war in Ukraine and the subsequent commodity-driven inflationary cycle. Although the energy transition is now viewed as inevitable, the demand for fossil fuels, particularly natural gas, will remain robust over the next several decades. Consequently, global markets will continue to influence the hydrocarbon industry in the Pan Amazon, particularly those countries that are dependent on revenues derived from oil and gas (Bolivia, Colombia, Ecuador, Guyana) or which have legacy infrastructure assets that make investments financially attractive (Brazil, Ecuador, Peru).
Existing oil and gas fields will continue to operate over the medium-term. This means new production wells and feeder pipelines will be established on landscapes adjacent to existing production fields. Additional (greenfield) expansion is less certain. Attempts to drill within protected areas will be vigorously resisted by civil society, while Indigenous organizations will oppose any type of activity within their legally constituted territories. They will sue to halt operations in adjacent areas, arguing they enjoy customary-use rights to these lands and/or that impacts will extend into their territories.
Resistance to ongoing and expansionary investments is most likely to impact investment in northern Peru where pipeline failures and social conflict threaten the industry’s economic viability over the short term. The decision by several mid-tier companies to abandon concessions is an indication that they view the risk of failure to exceed the potential for an acceptable return on their investment. If the ageing infrastructure continues to suffer from mishaps, or if Indigenous groups successfully impede operations, then the region’s hydrocarbon reserves will become a ‘stranded asset’, a term investors use to describe a thing of value that cannot be monetized.
Less likely is the demise of the oil industry in Ecuador, where the administration of Guillermo Lasso has repeated an electoral commitment to double national production. His government would appear to accept judicial restrictions that prohibit operations in protected areas, while recognizing the obligation to consult Indigenous communities. This apparent contradiction might be partially resolved using technological solutions. However, the viability of the petroleum industry in Amazonian Ecuador over the medium-term will depend on access to the unallocated concessions in Pastaza and Morona-Santiago. This is unlikely to occur without considerable social conflict. Similar development conundrums confront the gas fields of southern Peru and the oil fields of the Putumayo in Colombia.
In contrast, there are extensive areas open for hydrocarbon development in Brazil, which has systematically avoided creating territorial constraints on the landscapes with the highest hydrocarbon potential. The Solimões Basin has significant shale-gas reserves that could be exploited using the existing infrastructure at Urucú whose useful lifetime can be prolonged using horizontal drilling and fracking technology. The recent sale of the Juruá concession to a company with expertise in LNG transportation systems could signal a move to commercialize the gas reserves of the Solimões Basin in overseas markets.
Exploiting the gas resources located underneath the Amazon River between Manaus and the delta (e.g., the Amazonas Basin) would require extensive exploratory drilling and, although there is no evidence this is being considered, there are few protected areas and Indigenous territories that might impede development on landscapes adjacent to the main stem of the Amazon River. Offshore development in Guyana and Suriname is a foregone conclusion. Less certain is the expansion of drilling along the continental shelf off French Guiana and Amapá where decisions will be made by central governments with minimal input from Indigenous communities.
The views of environmental and human rights advocates predominate in international forums and, to a certain extent, within urban elites in Pan Amazonian countries. However, there are influential constituencies that believe it is in their country’s interest to monetize their mineral resources. This view is greatest among service providers that benefit from the extractive sector but is mirrored by functionaries within agencies charged with regulating their activities. Mineral development is widely supported by the financial sector and the ministries that focus on macroeconomic criteria that measure economic health. Key private sector actors, such as the chamber of commerce, are deeply committed to the conventional economy. Many of these stakeholders also accept the reality of climate change but argue that the failure to exploit the mineral resources of their countries would forgo the last opportunity to monetize a natural resource that should be used to invest in economic development that benefit the nation.
“A Perfect Storm in the Amazon” is a book by Timothy Killeen and contains the author’s viewpoints and analysis. The second edition was published by The White Horse in 2021, under the terms of a Creative Commons license (CC BY 4.0).
To read earlier chapters of the book, find Chapter One here, Chapter Two here, Chapter Three here and Chapter Four here.
Chapter 5. Mineral commodities: a small footprint, a large impact and a great deal of money
- Mineral commodities: the wealth that generates most impacts in the Pan Amazon | Introduction March 21st, 2024
- The environmental and social liabilities of the extractive sector March 26th, 2024
- Mining in the Pan Amazon in pursuit of the world’s most precious metal April 4th, 2024
- Illegal mining in the Pan Amazon: an ecological disaster for floodplains and local communities April, 9th
- The environmental mismanagement of enduring oil industry impacts in the Pan Amazon April, 17th
- Outdated infrastructure and oil spills: the cases of Colombia, Peru and Ecuador April, 25th
- State management and regulation of extractive industries in the Pan Amazon May 2nd, 2024
- Is the extractive sector really favorable for the Pan Amazon’s economy? May 8th, 2024
- Extractive industries look at degraded land to avoid further deforestation in the Pan Amazon May 15th, 2024
- Global markets and their effects on resource exploitation in the Pan Amazon May 21st, 2024
- Sustainability in the extractive industries is a paradox May 29th, 2024
- In the Pan Amazon, environmental liabilities of old mining have become economic liabilities June 5th, 2024
- Solutions to avoid loss of environmental, social and governance investment June 12th, 2024
- The most prominent mining companies in the Pan Amazon – a review June 21st, 2024
- Mineral hotspots in the Pan Amazon June 27th, 2024
- Brasil, Venezuela and Peru: the geography of industrial metals July 5th, 2024
- Industrial minerals in the Pan Amazon July 12th, 2024
- Minerals for agricultural use can already be found in Amazonia July 19th, 2024