94% of EU gold from Brazil may be illegal wildcat gold
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However, 1.5 tonnes of this gold, worth $93 million (94%), is exposed to a high risk of illegality.
Germany, Italy, Czech Republic, and Portugal imported 1.7 tonnes of gold from Brazil
These regions include the Brazilian States of Pará and Amazonas, where gold production is predominantly based on wildcat mining, and the State of São Paulo, which produces no gold and acts solely as a hub for wildcat gold exports.
The wildcat gold market operates with multiple intermediaries
This fact poses a significant challenge for countries sourcing gold from Brazil if they aim to ensure a responsible trade.
The issue of Brazilian gold is particularly challenging since:
Widespread and increasing illegal mining: illegal mining is rampant, especially in Indigenous territories in the Amazon rainforest, leading to environmental damage, mercury contamination, and human rights violations.
Proof of origin: the wildcat gold market operates with multiple intermediaries, making any due diligence effort to verify the origin and legality of gold challenging.
The most affected territories include the Kayapó and the Munduruku territory in the State of Pará, and the Yanomami territory in the States of Roraima and Amazonas
The most affected territories include the Kayapó territory (13,775 hectares) and the Munduruku territory (5,464 hectares), both in the State of Pará, and the Yanomami territory in the States of Roraima and Amazonas (3,278 hectares).
Furthermore, wildcat miners regularly use mercury — a highly toxic metal used to separate gold from other materials.
Between 2018 and 2022, Brazil likely used 185 tonnes of illegal mercury in wildcat gold mining operations This use is a ticking bomb for the environment and the health of Brazilians, particularly those dependent on the Amazon rivers, such as indigenous and traditional communities.
Another disturbing fact is the substantial increase in deforestation due to mining activities in the Amazon region.
Between 2015 and 2023, deforestation linked to mining totaled 69,331 hectares.
Despite annual variations, the trend points to an increase.
Governments and companies should be aware that it may be difficult to trace the origin of gold when importing wildcat gold from Brazil.
Wildcat gold passes through many hands and companies before reaching international markets.
Due diligence efforts and ‘know your supplier’ policies are incredibly challenging in this context.
Unlike gold extracted by mining companies, which can be sold directly from the mines, wildcat gold follows a complex chain of intermediaries.
Initially, wildcat gold must be sold to financial institutions authorized by the Central Bank of Brazil.
These institutions purchase gold from numerous wildcat mines — sometimes hundreds — and then pass it on to other companies and traders for export.
To make matters worse, people involved in the wildcat gold business — miners, cooks, aircraft pilots, fuel sellers, etc. — often get paid in gold and use the gold they receive as an alternate parallel payment method within wildcat mining regions.
Consequently, when gold leaves a wildcat mining site, it passes through many hands before individuals finally sell it to an authorized financial institution.
With so many intermediaries, the exact origin of the gold is unlikely to be determined, and this is precisely what countries and companies should consider when buying wildcat gold from Brazil. ■