Home > Commodities > New technology aids Brazil's crackdown on illicit Amazon gold trade

New technology aids Brazil's crackdown on illicit Amazon gold trade

2024/12/15 3

By Ricardo Brito and Anthony Boadle

BRASILIA (Reuters) – Harley Sandoval, an evangelical pastor, real estate agent and mining entrepreneur, was arrested in July 2023 for illegally exporting 294 kilos of gold from Brazil’s Amazon (NASDAQ:AMZN) to the United States, Dubai and Italy.

On paper, the gold was sourced from a legal prospect Sandoval was licensed to mine in the northern state of Tocantins. But police said not an ounce of gold had been mined there since colonial times.

Using cutting-edge forensic technology, along with satellite imagery, Brazil’s Federal Police said it was able to establish that the exported gold did not come from the Tocantins prospect. Instead, it had been dug up from three different wildcat mines in neighboring Pará, some on protected Indigenous reservation lands, according to previously unreported court documents dated November 2023 seen by Reuters.

The prosecution is one of the first in Brazil using the new technology to tackle clandestine trading that may account for as much as half of the gold output of Brazil, a major producer and exporter of the precious metal. Illegal gold mining has surged at thousands of sites in the Amazon rainforest, bringing environmental destruction and criminal violence to the region.

Seizures of illegally mined gold have surged seven-fold in the past seven years, according to Federal Police records obtained exclusively by Reuters.

Sandoval, who has been released pending trial and continues to preach with his wife at a Pentecostal Evangelical church in the central Brazilian city of Goiania, denies the allegations. He maintains there is no way to establish where the gold was mined once it is melted down into ingots for export.

“That’s impossible. To export gold one always has to melt it down,” he told Reuters by telephone. 

THE DNA OF GOLD

Historically, gold is notoriously difficult to trace, especially once metal from different sources has been melted together, erasing the original signatures. After that, it can easily be traded as a financial asset or be used in the jewelry industry.

But investigators say that’s starting to change. A police program called “Targeting Gold” is creating a database of samples from across Brazil that are examined with radio-isotope scans and fluorescence spectroscopy to determine the unique composition of elements. 

The technique, long used in archaeology, was pioneered in mining by University of Pretoria geologist Roger Dixon to help distinguish between legal and stolen gold.

The program developed in partnership with university researchers includes the use of powerful light beams from a particle accelerator at a Sao Paulo lab to study nano-sized impurities associated with gold, be it dirt or other metals like lead or copper, that help trace its origins.

Humberto Freire, director of the Federal Police’s recently-created Environment and Amazon Department, said the technology allows scientists to analyze “the DNA of Brazilian gold.”

“Nature has marked the gold with isotopes and we can read these unique fingerprints with radio-isotope scans,” Freire said. “With this tool we can trace illegal gold before it gets refined for export.”

The program has helped fuel an increase in gold seizures since leftist President Luiz Inacio Lula da Silva took office last year — up 38% in 2023 from 2022, according to government numbers seen by Reuters. New Brazil central bank gold market regulations, including mandatory electronic tax receipts for all trades and tightened monitoring of suspect transactions, have also helped, according to Freire.

“We estimate that around 40% of the gold that is extracted in the Amazon is illegal,” he told Reuters. Brazil exported 110 tonnes of gold in 2020 worth $5 billion, according to official data, ranking among the world’s top 20 exporters. Last year, exports were 77.7 tonnes, a drop the government attributes to improved enforcement of illegal mining.

INDIGENOUS TENSIONS

Lula’s predecessor, far-right President Jair Bolsonaro weakened environmental controls in the Amazon.

That triggered a new gold rush in Brazil, spurred by record world gold prices that were driven up by geopolitical tensions and central bank purchases, led by China.

Prices have continued to new highs, trading at around $2,650 per ounce on Friday. 

Gold rushes have been a hallmark of mineral-rich Brazil from its Portuguese colonial past. But the latest surge in wildcat mining beginning during Bolsonaro’s administration has been unprecedented. Satellite images show there are some 80,000 such prospects today in the Amazon rainforest, more than ever registered before.

Once dominated by prospectors with gold pans, artisanal mining in Brazil has become an industrial-scale activity with heavy excavating machinery and million-dollar river dredgers. Criminal organizations fly people, equipment and gold into and out of the region with helicopters and planes that land at clandestine airstrips.

Their excavations often leave behind gaping ponds of sludge contaminated with mercury, used to separate the gold from dirt and other minerals.

Last year, thousands of miners who invaded the Yanomami territory, the country’s largest Indigenous reservation on the northern border with Venezuela, brought violence and disease that caused malnutrition and a humanitarian crisis among the tribe, prompting Lula to send in troops.

But many returned this year after the military pulled out. Lula, who has pledged to stamp out illegal gold mining, tried to fight back by deploying special forces of the environmental protection agency Ibama into Indigenous reservations and forest conservation parks.

Police say cracking down on the organized crime gangs that back the wildcat miners is the next step in staunching an illegal trade that feeds the jewelry and watch industry in Switzerland, which buys 70% of Brazil’s exported gold, according to government trade data.

Amazon neighbors, including Colombia and French Guiana, are considering adopting the Brazilian gold analysis method to deal with their illegal gold trade and European governments have shown interest, including Switzerland and Britain, the top importers from Brazil after Canada, police and diplomats said.

Brazil accounts for just 1% of gold imported by Switzerland, a global trade hub for the metal, and “measures are in place to import only legally mined gold,” a Swiss embassy statement said. The embassy said it has set up a working group with other importing countries to study traceability and anti-counterfeiting tools.

A 2022 study by non-profit watchdog Instituto Escolhas found that 52% of the gold exported from the Amazon was illegal, nearly all from protected Indigenous reservation lands or national conservation parks.

A vibrant lobby for informal gold mining has survived Bolsonaro in Brazil’s Conservative Congress, where pending bills propose legalizing wildcat mining.

For now, though, gold samples from across Brazil are being added to a database with the help of scientists at the Federal Police’s criminology institute lab in Brasilia, where forensic expert Erich Moreira Lima oversees microscopic scanning of gold nuggets that are kept in a safe.

“Now that we have a team set up, we hope to analyze the 30,000 gold samples the Brazilian Geological Service has collected. In a few years, we should have mapped all Brazil’s 24 gold producing regions,” he told Reuters.

© Reuters. Amazonas state, Brazil June 19, 2024. REUTERS/Bruno Kelly

Geologist Maria Emilia Schutesky and her team at the National University of Brasilia’s geosciences lab conduct mass spectrometry scans on gold samples to identify associated molecules, such as lead, to place the gold’s origins.

“We researchers seek a 100% ability to trace gold, but that is more than what the police needs to prove a crime, which is just to establish that the gold does not come from where a suspects claims it is from,” Schutesky said. 

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