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.
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.