Brazil’s Bolsonaro eyes Amazon riches

A proposal by the Brazilian government to open up the Amazon rainforest is facing global scrutiny.

The mineral wealth hidden beneath Brazil’s Amazon rainforest is believed to be considerable.

In recent years, the state of Para, the second largest in Brazil’s Amazon region, has overtaken Minas Gerais as the country’s leading minerals producer, with companies producing iron ore, copper, nickel and bauxite.

Reserves of tin, manganese and oil and gas are also thought to be found in the state, especially in areas that until now have been closed to mineral exploration.

Elected in 2018, President Jair Bolsonaro is keen to exploit this potential, and his government has presented legislation that would allow mining and other commercial activities on lands reserved under the constitution for Brazil’s indigenous peoples.

The government bill, presented to Congress in early February, specifies how indigenous communities must be consulted and the economic compensation due to them.

Although the Brazilian constitution does not ban extractive industries from indigenous lands, development has been effectively blocked by a legal vacuum over how they should be regulated.

Opening up the Amazon to mining, Bolsonaro says, would not only invigorate Brazil’s economy and lift the incomes of some of its poorest citizens, but also strengthen its sovereignty over the region.

Covering 1.1 million sq. km or 13% of its territory, Brazil’s indigenous lands are overwhelmingly concentrated in the Amazon.

President Bolsonaro, a former army captain, has been a long-time critic of Brazil’s indigenous policies, which grant a sliver of the population exclusive control over huge swathes of the country, but little means to develop them.

“Unfortunately, some people, inside and outside Brazil, supported by NGOs, insist on treating and maintaining our indigenous peoples as true cave people,” the president told the United Nations in September 2019.

“The indigenous peoples do not want to be poor landowners on top of rich lands. Especially the richest lands in the world,” the president told the U.N., highlighting the diamonds, niobium and rare earths to be found beneath some of the largest indigenous territories.

Unsurprisingly the government’s proposal has caused outrage amongst environmental and indigenous campaigners.

Allowing mining and other activities on indigenous lands would be to invite catastrophe, environmentalists have claimed.

After the disastrous tailings dam collapses at Vale’s (NYSE: VALE) Brumadinho and Mariana mines, many people are skeptical of the Brazilian authorities’ ability to properly regulate extractive industries, and warn that the move will accelerate the destruction of natural habitat, loss of biodiversity and contamination of rivers.

Indigenous leaders fear for their very existence. Brazilian NGO Instituto Socioambiental estimates that 20,000 illegal miners operate in the Yanomami indigenous reserve.

These invasions have increased since Bolsonaro took office, activists claim, and although the legislation requires them to be consulted over economic activity on their lands, these would not be binding in the case of major investment projects, they say. In a statement, they likened Bolsonaro’s bill to a death sentence.

Lawmakers who must now debate the bill share some of these concerns and the head of Brazil’s lower house, Deputy Rodrigo Maia, has already said that he has no plans to put the bill to a vote. With relations between Congress and Bolsonaro already strained, analysts say, the legislation looks unlikely to succeed, at least in its current form, Leandro Lima, a political consultant for Control Risks based in Sao Paolo, said in an interview.

But by putting the issue on the table, Bolsonaro is bringing forward the day when the regulations may change, observers say. A more tactful government with more support in Congress might succeed in opening more of the rainforest to commercial activities, they warn.

Environmentalists say this could have global consequences.

After decades of deforestation by loggers and farmers, scientists fear that the Amazon rainforest is close to the point where it is no longer able to sustain itself.

“Given the Amazon’s role as a critical component of climate stability, this could be disastrous to the whole world,” Christian Poirier, program director at environmental NGO AmazonWatch, said in an interview.

As a result, Bolsonaro’s pro-mining policies are set to raise alarm. He has already received significant criticism for Brazil’s tardy response to forest fires that destroyed more than 900,000 hectares in the Amazon region last year.

Last year Germany and Finland threatened to withhold millions of dollars of aid for the Amazon over the president’s policies, while France’s President Emmanuel Macron threated to reject a new free trade agreement between the European Union. and Mercosur (Argentina, Brazil, Paraguay and Uruguay) if Brazil did not do and say more to fight climate change.

Bolsonaro shrugged off the remarks as “colonialist” but economics may force him to listen more closely.

Aware of public opinion on climate change, companies are growing increasingly sensitive to the issue.

Ahead of Bolsonaro’s speech to the U.N. last year, a group of 200 investment funds with more than US$16 trillion in assets under management, urged companies to address the role their operations and supply chains have played on deforestation.Major fashion chains, including H&M and Northface, have stopped buying Brazilian leather over concerns that it is sourced from cattle farms that were once rainforest.

In January, the head of Brazil’s central bank,Roberto Campos Neto, warned the government that its environmental policies could slow foreign direct investment into the country.

That same month the president unveiled a new Amazon Council to coordinate sustainable development between ministries in the region and a new environmental police force to enforce environmental regulations.

Although the council will be led by Vice President Hamilton Mourão, another strong advocate of the region’s development, its creation shows the government is concerned by the criticism and its potential impact.

But as the Brazilian government works out its policy on the Amazon under increasing international scrutiny, mining companies risk being caught in the crossfire.

For now, Brazil’s miners are striving to stay out of the debate.

In a statement, Brazilian mining association IBRAM said that mining in indigenous areas was feasible as long as the right legal framework is in place, and noted that both Australia and Canada allow it.

But speaking to journalists on Feb. 13, IBRAM President Walter B. Alvarenga insisted that mining companies are not pushing projects in indigenous areas and that any development remained several years off.

Even if policies are put in place to promote more mining in the Amazon, companies and investors will have to weigh public opinion as well as what is legally possible.

“Responsible investors, concerned with the climate crisis, will hardly take deforestation and indigenous blood into their portfolios,” said Brazilian NGO Climate Observatory.