BRASILIA (Reuters) – According to a report released by the Sao Paulo-based Instituto Escolhas, all Brazilian gold imports by Germany and 71% by Italy originate from areas in the Amazon where illegal mining is prevalent. The study, titled Europe’s Risky Gold, highlighted the concerning connection between European demand for Brazilian gold and the environmental and social consequences of illegal mining in the Amazon.
Gold Imports from Brazil
The data revealed that all 1.3 tonnes (2,866 lb) of gold imported by Germany from Brazil in 2023 came from the state of Amazonas. Similarly, Italy imported 356 kg (784.85 lb) of Brazilian gold last year, with 254 kg originating from the states of Pará and Sao Paulo.
Impact of Illegal Mining
Wildcat gold mining, commonly referred to as garimpo in Portuguese, has witnessed a significant increase in Amazonas and Para due to the relaxation of environmental regulations and development encouragement by former President Jair Bolsonaro. This has led to heightened deforestation in the region.
European Scrutiny
Despite the European Union’s strict regulations to prevent the sale of ores from questionable sources, the due diligence process has significant blind spots. Larissa Rodrigues, the director of research at Instituto Escolhas, emphasized the lack of transparency in the gold supply chain, stating that European companies purchasing Brazilian gold are unaware of its origins.
Untraceable Origins
Approximately 94% of Brazilian gold imported by Germany and Italy has dubious origins, passing through multiple intermediaries from various gold prospects in the Amazon. Even with efforts by the Brazilian government to combat illegal gold sales, over half of the 68 tonnes of gold exported last year have untraceable origins.
Global Buyers and Legal Sources
While Canada remains the top buyer of Brazilian gold, sourcing from legally licensed mines, the United Kingdom follows suit as the third largest importer. However, Switzerland, the second biggest buyer, imports bullion from wildcat mining sites in Brazil, with a significant amount ending up in the EU, which relies on Switzerland for 70% of its gold.
(Reporting by Anthony Boadle and Ricardo Brito; Editing by Richard Chang)
Insight:
The findings of the report shed light on the intricate web of the global gold supply chain and the challenges associated with ensuring responsible sourcing practices. The demand for gold, particularly from regions with lax environmental regulations, highlights the need for increased transparency and oversight in the precious metal industry. The European Union and other major buyers must work towards strengthening due diligence processes to eliminate the exploitation of natural resources and promote sustainable mining practices.
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