A recent study by Sao Paulo-based Instituto Escolhas has revealed that all Brazilian gold imports by Germany and 71% by Italy originate from areas of the Amazon where illegal mining is rampant. This has raised concerns about the environmental and ethical implications of these imports.
In 2023, Germany imported 1.3 tonnes of gold from Brazil, all of which came from the state of Amazonas. Similarly, Italy imported 356 kg of Brazilian gold, with 254 kg originating from the states of Pará and Sao Paulo. The surge in wildcat gold mining in these regions has been attributed to relaxed environmental controls and development policies in the Amazon rainforest.
While the European Union has strict rules to prevent the sale of ores from dubious sources, the due diligence process has been criticized for having blind spots. According to Larissa Rodrigues, director of research at Instituto Escolhas, European companies buying Brazilian gold may not have a clear understanding of its origins and the chain of intermediaries involved in its export.
It is estimated that about 94% of the Brazilian gold imported by Germany and Italy has questionable origins, making it difficult to trace back to its source. Despite efforts by the Brazilian government to crack down on illegal gold sales, more than half of the 68 tonnes of gold exported by the country last year have suspect origins.
While Canada and the United Kingdom primarily import gold from legally licensed mines in Brazil, Switzerland, the second largest buyer, sources bullion from wildcat mining sites. This gold often finds its way to the EU, which receives 70% of its gold imports from Switzerland.
The findings of this study highlight the need for greater transparency and accountability in the gold supply chain, especially when it comes to sourcing from environmentally sensitive regions like the Amazon. Consumers and investors should be aware of the potential risks associated with gold products that may have been obtained through illegal or unethical means.
