Robert Muggah is co-founder of the Brazil-based Igarapé Institute and SecDev Group. He is a fellow at Princeton University, Singularity University, Bosch Academy, the Chicago Council for Global Affairs and the World Economic Forum. His latest book is Terra Incognita: 100 Maps to Survive the Next 100 Years. He received his PhD at the University of Oxford.
Mac Margolis is a research editor at the Igarapé Institute and columnist with The Washington Post. He is the author of The Last New World: The Conquest of the Amazon Frontier.
Even before Brazilian President Luiz Inácio Lula da Silva assumed office on Jan. 1, he was steeling himself for a national emergency. From cratered riverbanks and escalating violence to deadly pathogens on Indigenous lands, wildcat gold prospectors had left their devastating mark on the Amazon basin. Waved on by former President Jair Bolsonaro between 2019 and 2022, they helped nudge Brazil closer to the status of global pariah.
Lula wasted no time, immediately revoking two of his predecessor's executive orders that had sped up irregular gold mining. He went on to dispatch security forces to evict the miners from besieged Yanomami territory, sanctioned a provisional decree to crack down on the purchase of illegal gold, and set aside more than 2,300 square miles as protected Indigenous land. In early May, he sent three ministers to the region to assess the damage.
Brazil's latest rhetorical pivot from plunder to preservation drew accolades at home and abroad. At the COP27 climate conference last year, Lula declared Brazil was back as a climate champion and would not tolerate any illegal deforestation. Whether the world's largest tropical forest can survive Lula's broader ambitions — to remake his country into a regional power broker, bolster the clout of developing countries and help ring in a new multipolar world order — is another matter.
Little more than four months in office, Lula has crossed continents and oceans, calling on President Biden in Washington and Xi Jinping in Beijing. His hyperactive diplomacy is part of a wider Brazilian campaign to show that Latin America's largest country is beholden to neither the United States or China and will blaze its own nonaligned path. To press the point, Lula has sent emissaries to meet with Russia, dissed the faltering U.S. dollar, talked up doing business in China's yuan currency, and offered to set up a "peace club" to resolve the war in Ukraine.
Lula's boosters argue this is nothing more than diplomatic boilerplate for strengthening the hand of nations of the so-called Global South. But here's the paradox. Owing to geopolitical uncertainty, Russia's ongoing war against Ukraine, a simmering U.S. and European banking crisis and wider global recession concerns, the dollar has tumbled on international markets. And as the greenback slides, gold — that age-old safe harbor of security and wealth in troubled times — has soared.
Having risen nearly sixfold in the last 20 years, the troy ounce recently breached $2,000 and may reach $2,200 by year's end. Central banks are leading the scramble for gold; nine of the top 10 official buyers are in the developing world, including Brazil. Cue the acceleration of the 21st century Amazon gold rush, and with it, an even steeper challenge for Lula, whose global ambitions may well ride on the fate of the rainforest.
Word travels fast in gold country. Every fluctuation in the price of the precious metal sends new waves of prospectors streaming to the hinterland, especially the states that make up the so-called Legal Amazon in Brazil. In recent years, tens of thousands of gold miners have diffused across the Brazilian Amazon (20,000 of them in Yanomami territory alone), many using mercury to extract the precious metal, spewing the toxic substance into rivers in the process. Artisanal gold mines (garimpos) expanded at three times the rate of industrial mines from 2010 to 2020, overtaking the land area for corporate prospecting in the Amazon.
In Roraima, a gold rush state in Brazil's far north, the number of gold brokers, smiths and jewelers has exploded in recent years. The frenzy is facilitated by the region's notoriously lax oversight, overstretched state institutions, local corruption and feeble command and control in mining regions. So even as authorities order episodic raids and inspections in the region, fortune hunters and their deep-pocketed sponsors decide the prize is worth the risk. Little wonder that clandestine airstrips and wildcat mining have multiplied in the nine states that make up Brazil's Amazon, with garimpos alone expanding 632% on vulnerable Indigenous lands from 2010 to 2021.
Illegal mining may not be the biggest environmental threat to the Amazon basin. Clear-cutting the forest for cattle, bootleg timber operations and land-grabbing are by far the region's leading drivers of deforestation, which has spiked in recent years and now threatens to push the world's signature tropical forest beyond the ecological tipping point of regrowth and natural recovery.
Yet the dirty secret of the Amazon is that predation isn't just an accumulation of transgressions but an ecosystem of criminality with interdependent accomplices who flourish in the shadows, studies by the Igarapé Institute have shown. Beyond the prospector is an elaborate web of buyers, sellers, suppliers, financiers and middlemen, many who conspire to usurp the rule of law for private gain.
Ask the Brazilian authorities who are struggling to crack down on illegal gold miners and their moneyed enablers. A recent writ before the Brazilian Supreme Court shows that, between 2021 and 2022, federal police launched 92 raids, which rendered 1,527 investigations into illegal gold prospecting and trade. Federal police found that roughly 30% of all the gold produced in Brazil is illegal, that production has spiked on nominally off-limits Indigenous land and conservation units, and that the whole enterprise is built on fraudulent financial certificates.
Much of the Amazon free-for-all is rightly attributed to Lula's predecessor, Jair Bolsonaro, who, during his 2019-2022 term, pandered to Amazon miners, timbermen and ranchers by easing environmental restrictions and scaling back inspections and policing. Yet the recent gold rush also owes to earlier measures to stimulate the Amazon economy by eliminating bureaucratic controls. Consider Law 12.844, a sprawling bill, signed in 2013 by then-President Dilma Rousseff, of Lula's Workers Party, which authorized the purchase, sale and transport of gold from artisanal mines, under the thinnest of pretenses. By signing an affidavit of good faith, miners, brokers and jewelers could bypass official oversight institutions to offer garimpo gold directly on the open market. At the end of April, the Brazilian court overturned that rule.
Such lenience, in the name of slashing red tape and job creation, created a regulatory fast lane for dirty gold by relaxing controls over buyers and sellers. In the process it weakened the "traceability of gold production and commerce, increasing opportunities for illicit practices," the federal police's Amazon and environment division concluded last month.
The new Lula government did the right thing not just by clamping down on the legions of wildcat miners but also in targeting the shadowy network of buyers and sellers who work the institutional blind spots, co-opt local officials and game the porous legal code to trade in tainted gold. Recent investigations show that much of this gold finds its way to foreign buyers, including in the U.S. and the Arab Gulf states.
Taking back the Amazon from bad-faith dealers and resource pirates who profit by putting rainforest inhabitants in jeopardy is crucial to restore Brazil's tarnished sovereignty and rule of law. That Lula's wider geopolitical ambitions for Brazil in a de-dollarized, multipolar world order could also help usher in the next Amazon gold rush also shows just how complicated that mission will be.
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