Brazil, Mark Eaton likes to say, will be the place where he builds
something – where he has an impact, where he leaves a legacy. Standing
on the grassy riverbank in the Amazon basin where he hopes to build
Brazil’s largest gold mine, he foresees a brilliant future.
The Brazilian present, however, is somewhat less appealing.
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Mr. Eaton is red-faced and sweating in the damp midday heat. He
struggles to make himself heard over the pounding music at his staff
Christmas party, then frowns dubiously at the heavily salted grilled
meat heaped on a plate in front of him. He cannot follow the Portuguese
conversation bubbling around him. When a huge rain-forest wasp stings
his hand, his jovial façade crumbles for a moment. He emits half an
expletive before managing to restore the tight smile to his face.
A few days before the Christmas party, Mr. Eaton’s company,
Belo Sun Mining Corp.,
obtained an environmental licence to work here, two hours by boat down
the Xingu River from the city of Altamira. Obtaining that licence, after
a bureaucratic process that dragged on over three years, gave Mr. Eaton
and his colleagues something to celebrate.
But there is a legal
challenge to that licence, filed by a federal prosecutor who appears
deeply mistrustful of the project, and two more licences must be
obtained before any earth can be dug. And there are several different
regulatory agencies responsible for the environment and the welfare of
indigenous people, who are demanding a say in what Belo Sun does here.
“There
have been so many days this past year when I wished I’d sold it a year
ago,” Mr. Eaton said, incinerating half a cigarette in a single
inhalation as he surveyed the Christmas party. “No major [mining
company] would want to go through this.”
At stake is the Volta
Grande gold project, which Belo Sun estimates contains more than 4.8
million ounces of measured and indicated gold. For Belo Sun it would be a
company maker. Construction would cost about $330-million (U.S.), and
the mine would produce an average of 167,000 ounces over 21 years. At
current gold prices, that represents an annual revenue stream well above
$200-million.
Volta Grande is a high-stakes project for Brazil,
too. This country has the world’s sixth-largest economy, but its glow
has faded in the past few years, as once-rapid growth slowed abruptly.
Brazil has raised interest rates sharply to battle inflation; in need of
investment and jobs, the country must now decide how quickly it will
encourage new developments, and at what cost.
Belo Sun’s adventure
on the Xingu is a microcosm of the many competing interests at play in
development in the Amazon, where Brazil’s most ambitious and potentially
lucrative projects are located. It’s an area whose economic potential
is matched only by the extreme vulnerability and staggering diversity of
its ecology.
Some of Belo Sun’s problems have nothing to do with
Brazil. Having bought in at the height of the commodities boom, Mr.
Eaton saw the price of gold sink even as the Brazilian project required
ever more cash to take it forward. There wasn’t a solitary piece of
infrastructure on the land (and even today there are only a bare-bones
office, accommodation and some rough sheds to store drilled core). He
wooed investors, led by gold funds, but conservation organizations did
their best to sabotage the financing rounds, warning that the project
would never happen. Today, the company trades on the Toronto Stock
Exchange at 44 cents, with a market capitalization of $117-million
(Canadian).
But many of the company’s problems have everything to
do with Brazil – and this particular swath of land for which it has
bought mineral exploration rights.
The gold is housed in volcanic
greenstone rock, an intrusion that dissects the Volta Grande, or “big
bend,” in the Xingu, a 2,000-kilometre southern tributary of the Amazon
River.
This has been known as gold territory for years:
Garimpeiros,
or “artisanal miners,” have worked the land for more than half a
century. This deposit was initially explored by the fallen Brazilian
tycoon Eike Batista, in his first foray into mining. Verena Minerals
bought it in 1996, and Mr. Eaton, a board member, was named chief
executive officer in 2010. Shortly thereafter, the firm changed its
name.
The Belo Monte dam
Pale with light
blue eyes and blond hair with a boyish flop to it, Mr. Eaton has an
English accent undiluted by his years in North America, and a formal,
awkward manner that sets him apart as much from the laconic Canadians on
his team as from the casually warm Brazilian ones. After a career as a
mid-level equities broker, mostly in precious metals, Mr. Eaton jumped
to the other side of the game at the height of gold prices. “As a former
stockbroker, I get such a good feeling coming here,” he enthused on a
recent visit, surveying the cleared land where the boats from Altamira
dock.
Mr. Eaton has no metallurgy or geology background, and
defers on most technical and operations questions to Ian Pritchard, Belo
Sun’s chief operating officer. As reserved as his CEO is voluble, the
operations chief is also English but a 23-year veteran of mines from
rural Botswana to the Northwest Territories.
Mr. Eaton and his
team raised the cash to buy this land, but they would seem to have been
largely unaware of another project just 17 kilometres down the river
that would come to be their biggest problem – although that project is
remarkably hard to miss.
Between Altamira and the Belo Sun
concession lies the Belo Monte dam: Now under construction, it will be
the third-largest hydroelectric project in the world. It is the largest
infrastructure project in Latin America by far, and the most
controversial. It dams the Xingu and will flood an area of 516 square
kilometres, producing 4.6 gigawatts of power when it comes online in
2015. The dam has been in discussion since the 1970s; only in 2011 did
the Brazilian government finally move ahead with building it, in the
face of huge protests from environmentalists, indigenous peoples and the
complaints of international celebrities such as Sting. The dam is still
the focus of bitter protest, even as a giant concrete wall goes up in
the middle of the river – and the mine next door that shares its name
inevitably sits in its shadow.
“I tell the representatives of Belo
Sun, ‘Go get approval for a project like this in Canada,’ ” Jose
Colares, the Environment Secretary (equivalent to a Canadian minister)
for the state of Para, said in an interview in his office in the
capital, Belem. “It’s not easy. You’re in an area of conflict, next to a
huge dam with serious problems of social inequality with every actor
involved. You picked the worst possible place.”
Mr. Eaton appears
to have belatedly come to that realization. “I might have chosen a
different name if I’d known how controversial the dam was going to be,
because I think people sometimes think we’re affiliated,” Mr. Eaton
reflected.
The dam builders, at least, are at pains to convey that there is no such affiliation.
The
Belo Monte dam is emblematic of the attitude of the current Brazilian
government – that development takes precedence over any question of
conservation in the Amazon region. The precise impact of the dam won’t
be obvious until years after it dries up part of the Volta Grande, and
floods another – and for both environmental advocates and some in the
Brazilian government, the idea of allowing the gold mine to proceed in
that climate of uncertainty seems rash.
“We feel that any
additional environmentally stressful activity in this region before that
monitoring even happens is very dangerous,” said Eliane Morera, a
public prosecutor for the state of Para who sits on the environmental
licensing board. She was the sole vote against when the board decided to
license the mine in December.
For Ms. Morera and other critics of
the dam – including Thais Santi, the federal prosecutor who filed the
outstanding lawsuit – the most critical question is what the open-pit
mine will mean for the indigenous inhabitants of this region. Brazilian
law says that any project that is undertaken within 10 km of designated
indigenous land (like a Canadian reserve) must include an impact study
on how it will affect that community.
Belo Sun, arguing that its
mine site is 12 km or more from the land of the Juruna and Arara
peoples, didn’t do those studies initially – something Ms. Santi calls
illegal and unacceptable. Once indigenous people are involved, licensing
becomes a subject of federal as well as state jurisdiction, because all
indigenous issues are handled through the National Indian Foundation,
known by its Portuguese acronym FUNAI, a body much like Canada’s
Department of Indian Affairs.
The question of whether Belo Sun is
within or outside that critical 10-km zone remains disputed. The
prosecutor says the mine is 9.6 km away; Belo Sun says the mine is
closer than when it first applied for its licence because it has
acquired new territory, but is still at least 10.7 km away.
But
that kilometre-or-less issue is to some degree irrelevant. There are
indisputably indigenous people living extremely close to the mine site,
close enough that they will feel and hear blasting, and could be
affected by any accident at the site. Their traditional hunting and
fishing patterns will likely be disturbed – although any damage done by
the mine pales compared to what is about to be caused by the dam. The
name Juruna means “owners of the river,” but the dam is going to reduce
the flow of the Xingu by 85 per cent in this region.
“Belo Sun is
just down there, so we’re in the eye of the tornado,” said Marino
Juruna, the head of a community of about 100 people called Paquisamba –
about 13 km downriver from Belo Sun. “It’s clear that there’s going to
be an impact and it won’t be small. Already the noise from the machines
at the dam drove the animals away. We can’t fish [at night], because the
night looks like day, now, with all the lights they use.”
Mr.
Juruna worries about his people, his children and his tribe, but he
worries too about people he doesn’t even know. There is one, or two or
three depending whom one asks, uncontacted groups of indigenous people
living in the forests around the mine. They deliberately eschew
interaction with other people, living an entirely traditional life, and
no one is sure whether they are Juruna, Arara or something else
entirely. Mr. Juruna (many in the community use the tribal name as their
surname) said his people see their hunting trails in the forest some
times, have left them gifts of smoked fish that have been accepted, have
traded flute tunes through the trees – but that’s it.
In the past
couple of months, he said, they have disappeared – he has heard a
rumour that they are now in the forest several days journey down the
river – driven away most likely by the bright lights and the blasting
and the silt churned up by the dam construction.
Mr. Pritchard
said Belo Sun will proceed with a study on the mine’s impact on
indigenous people, as requested. He acknowledged that no one with Belo
Sun knows what the area around the mine will look like in a year or two,
when the river has been diverted. “But time isn’t going to stop here
while everyone sits and watches the river.”
The garimpeiros
Meanwhile, Belo Sun has a second community demanding its attention: the
garimpeiros,
the small-scale miners who live on and still work the gold deposits on
the Belo Sun concession. There are four communities of them scattered
around the site; two are situated on top of what would be the pits when
the mine begins work. Many of those miners were born on this land, and
Brazilian law recognizes extractive rights of what it calls “traditional
communities.”
Until May, several thousand were still mining in
hand-blasted shafts – wildly dangerous and deeply unpleasant work that
involved being lowered up to 400 metres below ground in a
cobbled-together tire swing. When it finalized title to the land, Belo
Sun closed over the shafts and sealed off the pits. Many of the miners
and their families moved out. Some stayed, sifting the old tailings for
gold.
The mine would create 2,000 jobs in its installation phase,
Mr. Eaton says, and about 500 when operational, and some will go to
people from the
garimpeiro villages. But many of the jobs will require a level of education or skill that people in the community don’t have.
“Belo
Sun came here with great proposals, that they’d never stop anyone
working, that they’d give everyone jobs,” said Jose Lopes da Costa, who
has mined here for 26 years. “Those promises were a ploy – as soon as
they got their first licence, they came in and stopped the mining.” Some
people in the towns did get jobs – mostly make-work projects, such as
putting up fences, for which they are paid about $450 (U.S.) a month.
That compares to the $750 a month they made in a typical month of
mining, Mr. Lopes said – and that was work done on their own schedule,
when they felt like working. He acknowledged that the work was dangerous
and often unpleasant (the miners use mercury heated over open flames,
often in small enclosed spaces, to form the gold into small chunks they
can sell).
“The government could come here, give us training – but
no, they want to bring in a foreign company and throw us out,” said
Ideglan Cunha, another
garimpeiro who said his parents were
born on the land where he now has a three-room wooden house. “The wealth
could be kept here within this country – and instead it will go out.
What the company will spend here, it’s crumbs. They will get rich on the
backs of our poverty.”
Mr. Pritchard said the company has done a
census of who lived in the four small towns as of last year, and will
buy the homes and businesses of those people, as well as moving them to a
new community 22 km away. Royalties (currently set at 1 per cent of
gross value of extracted gold, these are projected to be $15-million a
year paid to a municipality of about 12,000 people) will pay for
schools, health care and roads.
But Mr. Cunha said his community
is frustrated because none of that is visibly under way. “They’ve
stopped us from mining, but there’s no resettlement project. They play
with time – they’re millionaires, they have investors. They just plan to
put pressure on this place [for years], so the people all give up and
leave.”
There is perhaps more truth in this statement than Mr.
Cunha knows: Mr. Eaton admits that with gold prices down, Belo Sun was
perfectly happy to have a quiet year in 2013, in which bureaucracy kept
them from being able to push forward at the original planned speed with
developing the mine.
But the bureaucratic woes may be abating,
because it is clear that the government in Para state – which has
primary responsibility for approving the mind – wants this mine to get
built. A few months ago a police force sent by the Environment Ministry
came to bust up the technically illegal mining on the company land, the
first time anyone can remember the police enforcing the law against
unlicensed artisanal mining.
Seventy per cent of the land Belo Sun
wants to use had small farmers on it. Mr. Eaton says the company was
ultra-careful with land title, taking the step of first formally
registering it in the name of the farmers who owned it before buying it
from them.
But that’s not as straightforward an assertion as it
might seem, said Ms. Morera, the state prosecutor: those farmers were
resettled under a federal program to give landless people farm land, in
an effort to reduce both violent conflict over land and illegal
agriculture that is seeing the forest cleared at a furious pace. How,
she asked, does the company know that the owners they registered
actually had a valid title claim, given that land transactions in this
area frequently involve invasions, faked claims and extortion? “These
people who negotiated with Belo Sun might be
grileiros [professional land thieves who operate across the rainforest]. This question worries me very much.”
The
federal land authorities told The Globe and Mail that the agency is
investigating “possible irregularities” in Belo Sun’s purchase of the
land and that the company had been informed that their work area
overlapped with land already used to resettle people. The authorities
would not say how long that investigation might go on or what its
outcomes might be.
The rain forest
The
other actor in all this is one largely without a voice – the forest
itself. This ecosystem is home to 10 per cent of the world’s species.
Mr. Pritchard says that although the open pits will be just 100 metres
from the river, the company’s impact on those species will be minimal:
It will draw no water from the depleted river, he said, instead relying
on rainfall collection. It will store tailings away from the riverbank,
in ponds that he said will not leach into the surrounding land or river,
that will keep cyanide out of the ecosystem. It’s not virgin rain
forest, he pointed out, but land that has already been cleared
extensively for agriculture and that has been heavily degraded by the
artisanal mining, damage the company will have to clean up.
The
state Environment Secretary, Mr. Colares, is persuaded by this argument.
“If this project doesn’t happen, people are going to continue to live
in misery and environmental degradation will continue,” he said.
Ms.
Morera called that assertion specious. “Yes, the land there is totally
degraded and nobody takes any care about improving it – but there are
other alternatives for sustainable development that they have totally
ignored,” she said. “You absolutely can’t say that [commercial mining]
is the only way to rehabilitate it.”
For Ms. Morera and other
critics, the mine itself is a problem, and so is what it represents –
Altamira, once a sleepy little town, has in the past couple of years
boomed to 100,000 people (but still dumps all its sewage directly into
the river.) By green-lighting the mine, the government is sending the
message that this region is open for development.
International
non-governmental organizations such as Amazon Watch are highly critical
of the proposed mine; 44 different organizations are part of a public
campaign called Belo Sun No! Mr. Colares doesn’t appreciate their
involvement. Foreign countries, he said, particularly those in the
developed world, like to talk about the Amazon as global heritage. That
it is, he said, but it also happens to be on sovereign Brazilian
territory, and Canadians who don’t like the idea of mining here should
remember that no one was trying to shut them down when they went hammer
and tongs after their own minerals a century ago.
Belo Sun’s
licensing process has taken as long as it has in part because the
company has been caught in a dispute between the state and federal
levels. This state, Para, is Brazil’s largest mineral producer and,
under a decentralization initiative from the centre, is entitled to
engage and license a project like Belo Sun itself. Yet a number of
federal agencies, including the indigenous peoples’ and one called the
Brazilian Institute of the Environmental and Natural Renewable
Resources, in charge of conservation, are entitled to a say, and the
federal prosecutor’s agency has taken a self-appointed activist role for
both the Belo Monte dam and this case – becoming in the process the
bane of Mr. Eaton’s days. He described Ms. Santi as an ambitious lawyer
unhappy at being posted to the backwater of Altamira: “She’s trying to
make a name for herself – and we’re a pretty easy target.”
The
oversight of federal agencies makes for a good system, in theory, he
said – “making sure someone doesn’t just come in here and trample over
the indigenous people,” he said. “But in practice it’s been a little
harder. I’d rather spend money on geologists than lawyers.”
Perhaps
fortunately for Belo Sun, the company happened into a situation where
the Environment Secretary who must sign off on their permits is palpably
irritated with environmentalists and others who oppose the dam, whom he
views as professional opponents of progress, and fed up with federal
interference in his state. Mr. Colares is having none of the public
prosecutors’ objections, or of the suggestion that because of the mine’s
proximity to the dam, the changed river flow and the indigenous lands,
that federal regulatory agencies should also be involved.
He opens
a discussion about Belo Sun with a long list of grievances. “The
effects of mining on the local economy are minimal,” he said. “In the
installation phase they employ thousands of people but when they
operate, the number of employees falls dramatically because these are
very technical, innovative projects, not reliant on human labour. The
federal government exempts them from taxes so that Brazil will be
internationally competitive.”
He says he has no idea how much
money the project will mean for the state. (Mr. Pritchard says the mine
will generate about $226-million in federal, state and local taxes over
12 years.) But Mr. Colares would seem very determined that the federal
agencies are not going to take away his power to make these decisions,
and if they oppose Belo Sun, he is determined to see it happen.
“We
don’t need to consult with [the federal agencies] … They’re just making
confusion,” he says. “It doesn’t matter if the mine is 9, 10 or 11 km
from [the indigenous people] – it doesn’t impact them – even their
border,” he said.
Many in the environmentalist community here
speculate that Belo Sun intends to sell the mine now that it has an
environmental licence; Mr. Eaton insists they will build.
“We’ve
spent $35-million on engineering studies to build it,” he said. He
gestured toward the rough wooden core sheds that house the 175,000
metres of rock the company has drilled, at the stacks and stacks of
trays that hold the proof this land is seamed with high-grade ore. “It’s
a great project. It’s a good enough project that I believe we will end
up building.”
Editor's note: An earlier online
version of this article incorrectly said the Belo Monte dam will
produce 4.6 megawatts of power when it comes online in 2015. In fact, it
will produce 4.6 gigawatts.
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