The gold rally fueled by the U.S.-China trade war is unleashing a growing wave of illegal miners who are increasingly pushing into fragile environments that range from Latin America’s Amazon to South Africa.
Bullion has surged 18% over three months to the highest in six years. While that’s good news for mining companies, it’s spurring a burst of illegal prospecting that has helped fuel drug trafficking and organized crime within some of the world’s top gold-producing regions.
In the Yanomami indigenous lands along Brazil’s border with Venezuela, the number of illegal miners has grown ten-fold since December to 20,000, according to Instituto Socioambiental, which monitors native groups. The miners are emboldened by President Jair Bolsonaro’s rhetoric on the area’s mineral wealth, and enabled by authorities that have lowered their guard. But the risk wouldn’t be as attractive without the price surge.
When prices rise, “it’s not just gold mining that increases,” said Livia Wagner, who authored a 2016 report by the Global Initiative Against Transnational Organized Crime. “It’s demand for sex workers -- women and young girls -- uncontrolled use of mercury, the killing of indigenous people, and the arrival of well-organized crime cartels.”
In general, miners are considered illegal when they fail to get proper permits, work in environmentally protected areas, use heavy machinery without oversight, fail to pay taxes or employ workers without labor contracts.
A third of the gold exported from Latin America in 2013 was mined illegally, Wagner’s report found. The value at the time: Around $6.9 billion. Meanwhile, the cost to local communities is what really stands out, starting with the environment.
Mercury is mixed with gold to help remove the natural impurities scooped up along with the precious metal by small mining operations. The two elements naturally form an amalgam that’s heated up. When the mercury dissolves, gold that’s now largely unadulterated is left behind.
But the heating process releases noxious fumes into the air, and leftover mercury too often works its way into the soil and local waterways.
Small gold operations dump more than 30 tons of mercury in rivers and lakes in the Amazon region every year, according to a study by the Carnegie Amazon Mercury Project quoted in Wagner’s report. Exposure can cause cancer, neurological damage and, potentially, shock and death.
"The animals are dying, the fish are dying, the river is polluted by mercury, and also the mercury is damaging the Yanomami people’s health, causing stomach pains and diarrhea," said Dario Kopenawa Yanomami, vice-president of the Hutukara association that represents the indigenous group. “That’s happening today.”