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.
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.”
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.