Written by Ricardo Brito and Anthony Bodell
BRASILIA (Reuters) – Harley Sandoval, an evangelical pastor, real estate agent and mining entrepreneur, was arrested in July 2023 for illegally exporting 294 kilograms of gold from the Brazilian Amazon (NASDAQ:) to the United States, Dubai and Italy.
On paper, the gold was sourced from a legal site where Sandoval was licensed to mine in the northern state of Tocantins. But police said not a single ounce of gold had been mined there since colonial times.
Using cutting-edge forensic technology, along with satellite images, Brazilian Federal Police said they were able to prove that the sourced gold did not come from the Tocantins region. Instead, it was extracted from three different informal mines in neighboring Pará, some of which are on protected indigenous lands, according to previously unreported court documents dated November 2023 and seen by Reuters.
This trial is the first of its kind in Brazil to use new technology to address the underground trade that may account for up to half of gold production in Brazil, a major producer and exporter of the precious metal. Illegal gold mining has risen in thousands of locations in the Amazon rainforest, leading to environmental destruction and criminal violence in the region.
Seizures of illegally mined gold have risen seven-fold in the past seven years, according to federal police records obtained exclusively by Reuters.
Sandoval, who was released pending trial and continues to preach with his wife at a Pentecostal evangelical church in the central Brazilian city of Goiânia, denies the accusations. He stresses that there is no way to determine where the gold is extracted once it is melted down and turned into bullion for export.
“This is impossible,” he told Reuters by phone. “To export gold, it always has to be smelted.”
DNA gold
Historically, gold is very difficult to trace, especially after metals from different sources are melted together, erasing the original signatures. After that, it can be easily traded as a financial asset or used to make jewelry.
But investigators say that's starting to change. A police program called “Targeting Gold” creates a database of samples from all over Brazil that are examined using radioisotope scans and fluorescence spectroscopy to determine the unique composition of the elements.
The technique, long used in archaeology, was pioneered in mining by geologist Roger Dixon of the University of Pretoria to help distinguish between legal and stolen gold.
The program, developed in partnership with university researchers, involves using powerful light beams from a particle accelerator at the São Paulo laboratory to study nanoscale impurities associated with gold, whether they be dirt or other metals such as lead or copper, which help trace its origins.
The technology allows scientists to analyze “the DNA of Brazilian gold,” said Humberto Freire, director of the Federal Police's recently established Environment and Amazon Department.
“Nature has marked gold with isotopes, and we can read these unique fingerprints through radioisotope scans,” Freire said. “With this tool we can track down illegal gold before it is refined for export.”
The program has helped increase gold seizures since leftist President Luiz Inacio Lula da Silva took office last year – up 38% in 2023 compared to 2022, according to government figures seen by Reuters. Brazil's central bank's new gold market regulations, including mandatory electronic tax receipts for all trades and heightened monitoring of suspicious transactions, also helped, Freire said.
“We estimate that about 40% of the gold mined in the Amazon is illegal,” he told Reuters. Brazil exported 110 tons of gold in 2020, worth $5 billion, according to official data, ranking among the 20 largest exporters in the world. Last year, exports amounted to 77.7 tons, a decline that the government attributes to improved enforcement of illegal mining.
Local tensions
Lula's predecessor, far-right President Jair Bolsonaro, weakened environmental controls in the Amazon.
This led to a new gold rush in Brazil, driven by record global gold prices that were driven by geopolitical tensions and central bank purchases, led by China.
Prices continued to rise to new highs, trading at around $2,650 an ounce on Friday.
A gold rush has been a hallmark of mineral-rich Brazil since its Portuguese colonial past. But the recent increase in informal mining that began during the Bolsonaro administration has been unprecedented. Satellite images show that there are about 80,000 of this species today in the Amazon rainforest, a greater number than ever before.
Once dominated by prospectors using gold pans, artisanal mining in Brazil has become an industrial activity with heavy drilling machines and million-dollar river dredgers. Criminal organizations transport people, equipment and gold to and from the area using helicopters and planes that land at secret airstrips.
Mining operations often leave behind large pools of sludge contaminated with mercury, which is used to separate gold from dirt and other metals.
Last year, thousands of miners who invaded Yanomami territory, the country's largest indigenous reserve on the northern border with Venezuela, brought violence and disease that caused malnutrition and a humanitarian crisis among the tribe, prompting Lula to send in troops.
But many returned this year after the army withdrew. Lula, who has vowed to eradicate illegal gold mining, has tried to respond by deploying special forces from the Environmental Protection Agency Ibama to indigenous reserves and forest conservation parks.
Police say cracking down on organized crime gangs that support informal miners is the next step in stopping the illegal trade that fuels Switzerland's jewelry and watch industry, which buys 70% of the gold exported from Brazil, according to government trade data.
Police and diplomats said the Amazon region's neighbors, including Colombia and French Guiana, are considering adopting the Brazilian gold analysis method to deal with the illegal gold trade, and European governments have shown interest, including Switzerland and Britain, the largest importers from Brazil after Canada.
A statement from the Swiss Embassy stated that Brazil imports only 1% of the gold that Switzerland imports, which is a global trading center for this metal, and that “there are procedures in place to import only legally extracted gold.” The embassy said it had formed a working group with other importing countries to study tracking and anti-counterfeiting tools.
A 2022 study by a nonprofit watchdog, the Escolhas Institute, found that 52% of gold exported from the Amazon was illegal, almost all of it from protected indigenous lands or national park parks.
A vital lobby for informal gold mining has escaped Bolsonaro in Brazil's conservative Congress, where pending bills propose legalizing informal mining.
Currently, gold samples from all over Brazil are being added to a database with the help of scientists at the Federal Police Institute of Criminology laboratory in Brasilia, where forensic expert Eric Moreira Lima supervises microscopic scanning of gold nuggets kept in a safe.
“Now that we have formed a team, we hope to analyze 30,000 gold samples collected by the Brazilian Geological Service,” he told Reuters. “Within a few years, we should have mapped all 24 gold-producing regions in Brazil.”
Geologist Maria Emilia Schotsky and her team at the Geosciences Laboratory at the National University of Brasilia conduct mass spectrometric scans on gold samples to identify associated molecules, such as lead, to determine the origins of the gold.
“We researchers strive to be able to trace the gold 100 percent, but that is more than what the police need to prove the crime, which is just proof that the gold does not come from where the suspects claim it is from,” Shotsky said.
