More than 90% of Brazilian gold imported by Europe comes from areas at risk of illegality, says study

More than 90% of Brazilian gold imported by European countries last year originated in areas with a high risk of illegality according to a study by Instituto Escolhas, based on official data from the Brazilian government, released this Tuesday (13).

The study “Europe’s Risky Gold” reveals that 94% of the Brazilian ore purchased by the European Union originated in the states of Pará and Amazonas, locations where gold production from illegal mining predominates, and São Paulo, a state that does not produce gold but which exports the metal extracted from illegal mining areas.

In recent years, investigations and inspections by state agencies have identified small-scale mining as the main form of illegal extraction and sale of minerals in Brazil. In these locations, as investigations have shown, this type of mining is common without legal authorization or in areas larger than permitted, as well as extraction in conservation areas and indigenous lands.

Of the approximately 1.7 tons of gold imported from Brazil by Europe last year, 1.5 tons came from areas with a high risk of illegality. In terms of value, according to the study, 93 million dollars of the 99 million dollars traded with European countries came from these risk areas.

The data indicate that, in 2023, all Brazilian gold imported by Germany — the equivalent of 1,289 kilos, valued at US$ 78 million — originated from areas at risk of illegality in Amazonas. Italy, in turn, imported 71% of Brazilian gold from risk areas, which amounts to 254 kilos of gold from Pará and São Paulo (US$ 15 million).

The research director of Instituto Escolhas, Larissa Rodrigues, said that there are many blind spots in the so-called policy of prior analysis of gold purchased by the European Union. The economic bloc has strict legislation on conflict minerals, which in theory provides for a series of restrictions on the sale of minerals of dubious or illicit origin.

“Europe, is 94% of the gold you are buying from Brazil illegal? No, but you are buying from areas that are fragile at the source, from intermediary sellers, from hundreds of mines and different people,” he said.

“The European Union has many blind spots in its due diligence policy, so today it cannot be said that it has a responsible purchasing policy,” he highlighted.

Brazil is the world’s 14th largest producer of the mineral. Last year, the country exported 68 tons of gold to the world, valued at US$ 3.5 billion. Canada, with 30.7 tons; Switzerland, with 14.1 tons; and the United Kingdom, with 7.2 tons, are the main recipients of the gold exported by the country.

The director of Escolhas also draws attention to the specific situation in Switzerland, the second largest importer of Brazilian gold and responsible for 70% of the supply of the mineral throughout Europe. She said that the country does not always verify the origin of its purchases from Brazil, leading to triangulation.

“Brazil may not be your main or major supplier of gold, but we are showing that you have a blind spot in the due diligence rule that is quite large in the Brazilian case, because the gold that you buy from here, which you do not consider to be a risk area, has a risk of illegality,” he said.

In 2021, Brazil registered 52.8 tons of gold with serious signs of illegality, which is equivalent to 54% of national production, according to a previous study by the institute.

Rodrigues said that it is necessary to expand the traceability of the origin of gold in the country, highlighting that there are projects under discussion in the National Congress that improve the practice.

The director of the organization acknowledges that there was progress last year in the fight against illegal mining, with the adoption of electronic invoices and the end of the presumption of good faith in the sale of gold by decision of the Federal Supreme Court (STF). According to her, there was a “shock” in the gold trade, with a 30% drop in exports. It is not yet possible to determine whether production really fell or whether the ore was being stored for future sale, she added.