New technology helps Brazil crack down on illegal Amazon gold trade Reuters

Ricardo Brito and Anthony Bodle

BRASILIA (Reuters) – Harley Sandoval, an evangelical pastor, real estate agent and mining entrepreneur, was arrested in July 2023 for illegally exporting 294 kilograms of gold from the Brazilian Amazon ( NASDAQ: ) to the United States, Dubai and Italy.

On paper, the gold was acquired from a legal perspective that Sandoval had a permit to mine in the northern state of Tocantins. But police said not an ounce of gold had been mined there since colonial times.

Using state-of-the-art forensic technology, along with satellite imagery, Brazil’s federal police said they were able to determine that the exported gold did not come from the Tocantins prospect. Instead, it was mined from three different wildcat mines in neighboring Pari, some of which are on protected indigenous reserve lands, according to previously unreported court documents from November 2023 seen by Reuters.

The prosecutor’s office is one of the first in Brazil to use the new technology to combat the clandestine trade that can account for as much as half of gold production in Brazil, a major producer and exporter of the precious metal. Illegal gold mining has grown at thousands of sites in the Amazon rainforest, bringing environmental destruction and criminal violence to the region.

Seizures of illegally mined gold have increased sevenfold in the past seven years, according to Federal Police data obtained exclusively by Reuters.

Sandoval, who has been released pending trial and continues to preach with his wife at a Pentecostal evangelical church in the central Brazilian city of Goiania, denies the charges. He claims there is no way to determine where the gold was mined after it is melted down into ingots for export.

“It’s impossible. To export gold, it always has to be melted down,” he told Reuters by phone.

DNA of GOLD

Historically, gold has been notoriously difficult to trace, especially when metal from different sources is melted together, erasing the original signatures. After that, it can easily be traded as a financial instrument or used in the jewelry industry.

But investigators say that’s starting to change. A police program called “Targeting Gold” is creating a database of samples from all over Brazil that are being examined by radioisotope scanning and fluorescence spectroscopy to determine the unique composition of elements.

The technique, long used in archaeology, was introduced to mining by geologist Roger Dixon of the University of Pretoria to help distinguish between legal and stolen gold.

The program developed in partnership with university researchers involves the use of powerful light beams from a particle accelerator in a São Paulo laboratory to study nano-sized impurities associated with gold, whether dirt or other metals such as lead or , which help trace its origin.

Humberto Freire, director of the federal police’s recently created Environment and Amazon Department, said the technology allows scientists to analyze the “DNA of Brazilian gold.”

“Nature has labeled gold with isotopes, and we can read these unique fingerprints using radioisotope scans,” Freire said. “With this tool, we can trace illegal gold before it is refined for export.”

The program has helped boost gold seizures since leftist President Luiz Inacio Lula da Silva took office last year — up 38 percent in 2023 from 2022, according to government data reported by Reuters. According to Freire, new regulations on the gold market by Brazil’s central bank, including mandatory electronic tax receipts for all trades and tighter monitoring of suspicious transactions, also helped.

“We estimate that about 40 percent of the gold mined in the Amazon is illegal,” he told Reuters. Brazil exported 110 tons of gold worth $5 billion in 2020, according to official data, ranking among the world’s top 20 exporters. Last year, exports were 77.7 tonnes, a decline the government attributes to improved enforcement of illegal mining.

DOMESTIC TENSIONS

Lula’s predecessor, far-right President Jair Bolsonaro, weakened environmental controls in the Amazon.

That sparked a new gold rush in Brazil, fueled by record world gold prices fueled by geopolitical tensions and central bank purchases, led by China.

Prices continued to hit new highs, trading around $2,650 an ounce on Friday.

Gold rushes have been a feature of mineral-rich Brazil since its Portuguese colonial past. But the latest surge in wildcat mining that began during the Bolsonaro administration was unprecedented. Satellite images show that there are about 80,000 such prospects in the Amazon rainforest today, more than ever before.

Once dominated by prospectors with gold pans, artisanal mining in Brazil has become an industrial-scale activity with heavy mining machines and million-dollar river dredges. Criminal organizations use helicopters and planes that land on secret airstrips to transport people, equipment and gold in and out of the region.

Their excavations often leave behind gaping pools of mercury-contaminated silt, which is used to separate gold from dirt and other minerals.

Last year, thousands of miners who invaded Yanomami territory, the country’s largest indigenous reservation on the northern border with Venezuela, brought violence and disease that caused malnutrition and a humanitarian crisis among the tribe, prompting Lula to send in troops.

But many returned this year after the army withdrew. Lula, who has vowed to stamp out illegal gold mining, has tried to retaliate by deploying special forces from the Ibama environmental protection agency into indigenous reserves and forest conservation parks.

Police say cracking down on organized crime groups that support wildcat miners is the next step in cracking down on the illegal trade that feeds Switzerland’s jewelry and watch industry, which buys 70 percent of Brazil’s gold exports, according to government trade data.

The Amazon’s neighbors, including Colombia and French Guiana, are considering adopting Brazil’s gold analysis method to tackle their illegal gold trade, and European governments have shown interest, including Switzerland and Britain, Brazil’s biggest importers after Canada, police and diplomats say.

Brazil accounts for only 1% of the gold imported by Switzerland, the global trade center for this metal, and “measures are in force to import only legally mined gold”, according to a statement from the Swiss embassy. The embassy said it has established a working group with other importing countries to study traceability and anti-counterfeiting tools.

A 2022 study by the nonprofit Instituto Escolhas found that 52% of the gold exported from the Amazon was illegal, almost all of it from protected indigenous reserves or national conservation parks.

A vibrant lobby for informal gold mining has survived Bolsonaro in Brazil’s conservative congress, where bills are proposed to legalize illegal mining.

For now, however, gold samples from all over Brazil are being added to the database with the help of scientists at the Federal Police Institute of Criminology laboratory in Brasilia, where forensic expert Erich Moreira Lima oversees microscopic scans of gold nuggets stored in a safe.

“Now that we have a team in place, we hope to analyze the 30,000 gold samples collected by the Brazilian Geological Survey. In a few years, we should have mapped all 24 Brazilian gold-producing regions,” he told Reuters.

Geologist María Emilia Shuteschi and her team at the Geosciences Laboratory of the National University of Brasilia are performing mass spectrometry scans on gold samples to identify associated molecules, such as lead, to determine the origin of the gold.

“We investigators are looking for a 100% ability to find the gold, but that’s more than what the police need to prove a crime, which is just to determine that the gold didn’t come from where the suspect claims it came from,” Schutesky said.