The darker side of gold

Export of the mineral is bucking Bolivia’s mining slump – behind the headlines, a darker reality.

Bolivia’s mining industry, a critical driver of economic growth, is facing a slump as large-scale projects stall. Bucking this trend, is gold mining which has experienced sharp growth in recent years. Not without some controversy that is. In December, the UN published a letter alleging that Bolivia had allowed the import and use of mercury – causing severe environmental damage – for gold mining and suggested that the country had become a gateway for contraband mercury flowing into neighbouring countries.

“The extraction of gold in Bolivia and its subsequent export to markets including North America and Europe is currently an operation plagued by illegality and controversy,” an opposition deputy in Bolivia explains.

“The extraction of gold in Bolivia and its subsequent export to markets including North America and Europe is currently an operation plagued by illegality and controversy.”

Opposition deputy, Bolivia

Official statistics show a consistent increase in the market value of gold, both in price and quantity. A deeper analysis reveals that gold mining presents a very different reality in comparison to larger scale mining operations.

An indigenous leader in Bolivia explains, “Gold mining is poorly regulated, across the country there is a proliferation of illegal mining activity. These operations are monopolised by organised criminal groups, especially in the country’s highlands and Amazon region where there is a large indigenous population. Mining operations in these areas cause significant pollution, but if we complain, they threaten and intimidate us.”

“Gold mining is poorly regulated, across the country there is a proliferation of illegal mining activity.”

Indigenous leader, Bolivia

The high price of gold and the relative ease of extraction is increasingly focusing the attention of criminal groups already active in the region, especially on the border between Peru and Brazil where mercury – which is heated to help extract the gold – can be easily transported across borders away from the eye of the authorities.

The deputy added, “For organised criminal groups, it is very profitable for them to include gold in their export portfolios because there is weak law enforcement in the regions in which they operate. Add to this similarly weak enforcement of labour, social and environmental policies and you start to create an atmosphere of impunity.”

Besides criminality, the mal effects of gold mining in Bolivia are increasingly spilling over to its neighbours. Gold mining has exerted profound environmental damage in neighbouring Brazil, especially in the state of Matto Grosso, the epicentre of its production. The browning of the Tapajos, one of the largest clearwater rivers in Brazil is thought to be due to the mud and sediment from illegal gold mining. Last year, it was claimed that some 45 tons of gold were moved from the area to Bolivia without taxes due being paid.

In Brazil, the election of Jair Bolsonaro saw a rapid loosening of environmental regulation and reduced funds translated to more limited observation of the remote areas where gold deposits tend to be found.

The incentives for illegal gold mining are unlikely to change anytime soon as commercial interest peaks. Mining giant Aura Minerals, with production in Mato Grosso, rose by more than 11% this year – where gold is found, criminals will follow not far behind.

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