Brazilian Mining: Beneficial to the Economy at the Expense of the Environment

Mitchell Robert Nylen Latin American and Caribbean History Fall 2011

Over the past decade, environmental degradation and ethical arguments in Brazil caused by economically beneficial mining has led critics to question its value, most concluding that the revenue is irreplaceable. The mining companies of Brazil, namely the Vale Mining Co. are bringing in huge numbers for the economy of Brazil. The mining industry has been on the rise for the past decade and foreign investors are investing billions of dollars into Brazilian mining. Even though mining is bringing so much income for Brazil, it is also destroying its portion of the Amazon rain forest and polluting cities. The government is unsure whether to keep mining although the rate of deforestation and pollution is a staggering number. Although there are clear negatives to mining, it is clear that Brazil relies heavily on it to stabilize their economy. Mining has been Brazils up and coming industry to stabilize its economy. Iron ore alone accounts for six percent of all income revenue of Brazil1. This statistic leaves out other minerals and ores such as gold, coal, bauxite, tin and lithium. The Vale Mining Company of Brazil is the second largest mining company in the world and the number one largest producer of iron. Not only is mining good for the overall income and economy of Brazil but it also benefits the citizens by providing jobs. Mining provides around five percent of the jobs in the country, and the more mining there is, the more jobs there will be in Brazil.2 Mining companies have even come together with worker unions looking for solutions on how to get the minerals while sustaining the environment. The only problem with the outlook for mining is that most of the minerals still left are predicted to be in the Amazonian areas of Brazil.

Tubino, Denise I., Nonita T. Yap, and John F. Devlin. "Brazil: Is the galss half full or half empty?" June (2011): 151-57. EBSCOhost. Web. 7 Nov. 2011. 2 Tubino, Denise I., Nonita T. Yap, and John F. Devlin.

The Brazilian section of the Amazon Rain Forest has been cut down by large amounts over the past decade. Another environmental problem caused by mining is that many river systems and the air are being polluted by mining. In order to set up mining quarries companies need to have land. In order for quarries to be set up mining companies need to clear large amounts of land and have control of the surrounding area as well. Chemicals, such as cyanide, are frequently used in the extraction of these precious metals and minerals.3 Although these chemicals are usually watched and used very carefully, there can be accidents and spills causing pollution. There can be traces of poisonous chemicals found in a lot of rivers throughout Brazil. Brazilians are getting diseases and in some cases dying due to the pollution causing an outcry for the mining industry to be reformed. The Vale Mining Company has come under fire heavily in 2010 when they wanted to set up a new mining project in the Gandarela Mining Range.4 There was an outcry due to people believing that the Vale Mining Co. were abusing the water supplies and that the flora and fauna Gandarela Mining Range should be considered an irreplaceable commodity.5 The way that the Vale Mining Company is set up, the Brazilian President can overtake the company if their business ventures go wrong and create more jobs through the companys assets. The government is trying to make sure that they dont allow too much deforestation and pollution, but at the same time they believe the mining is a

Wilson, Judith. "The Environmental Impact of Bauxite Mining." Helium.com. N.p., 2 July 2010. Web. 6 Nov. 2011. <http://www.helium.com/items/1878788-effect-of-bauxite-mining-on-theenvironment>. 4 Tenreiro, Manuela. "Brazil: Standing Against Mining in Gandarela." GlobalVoicesOnline.org. N.p., 27 June 2010. Web. 19 Nov. 2011. <http://globalvoicesonline.org/2010/06/27/brazil-standingagainst-mining-in-gandarela>. 5 Tenreiro, Manuela.

necessity. In May of 2011, the president of Brazil sent the CEO of Vale packing.6 The president has also held meetings this past year trying to get a larger share of the companys profits for the government. By the situation of the Vale Mining Co. it is clear that the president is trying to get a grasp on mining. Environmentalists have approved of the move to have the president take that position with the company but they are looking for more out of him and want to see more control and more cutbacks. Lately Vale has been scrutinized for ethical issues as well as their environmental degradation. Thousands of workers in the Canadian division of the Vale Mining Co. went on strike due to the company mistreating them. The mining company has also come under fire from local state governments saying that they only provide short term improvements and then become the end of a town when they are done extracting minerals. People are starting to question if the government should allow such ethics, including lying about dams efficiency and sub-par working conditions, regardless of the economic value. Brazilians are starting to worry about the national image of Brazil if this issue persists even though it has gotten little attention worldwide. Environmentalist Zachary Hurwitz did a lot of work showing how Vales history of mining has had a negative impact on local areas.7 He specifically talks about how Vale abused the water sources and how their projects displace thousands of people. In one of his articles Mr. Hurwitz outlines both extremes of the situation: The reservoir displaced 35,000 people, flooded 38,700 hectares of the Parakan Indigenous Reserve, and led to the removal and relocation of the Eastern Parakan, a tribe that had been contacted only a decade earlier. Construction of the Tucuru Dam attracted thousands of migrants to the area, which increased incidences of malaria and HIV. A full 20,000 workers were laid off after the
6

McAllister, Mary L., and Geraldo Milioli. "Mining Sustainability: Opportunities for Canada and Brazil." : 3-14. EBSCOhost. Web. 7 Nov. 2011. 7 Hurwitz, Zachary. "Mining Giant Joins Belo Monte Dam." InternationalRivers.org. N.p., 2 May 2011. Web. 28 Nov. 2011. <http://www.internationalrivers.org/node/6465>.

completion of Phase I of Tucurus construction, and by 1985, the Carajs mines had already produced 1 million tons of iron ore using Tucurus electricity. By 1987, powered by Tucuru Dam, the Carajs mines were producing 13.5 million tons of iron ore per year.8 The two extremes shown are that mining can provide such devastation through flooding and displacement, while bringing in revenue through millions of tons of ore. Hurwitz chooses to overlook the fact that the mine brought in billions of dollars while questioning the public and government of Brazil. He asks if it is right to allow lives to be ruined in order for money to flow into the country. The government said that if it werent for the mines and dams built in the area more people would have suffered due to the government having less money.9 While President Dilma Rousseff has been reforming mining and creating new regulations on the industry and companies during her term, she has let mining stay a large part of the Brazilian economy. Most government officials agree on the fact that mining will always be a major part of the economy, however most conversations of mining fall onto how to control it. The government is doing all they can to control huge companies like Vale and control how much they affect the environment.10 President Rousseff has come out and befriended the environmentalists as previous presidents have done. What people fail to see is that even without the governments consent, mining will continue. Environmentalists pose the biggest threat to a president because they can rally people behind them and get people to join a cause. Mining companies dont necessarily need government backing to do what they aim to. On the surface, most observers would think that the government is trying to stop mining due to all the

Hurwitz, Zachary. Hurwitz, Zachary. 10 McAllister, Mary L., and Geraldo Milioli.
9

reforms, when in fact mining is growing at a record pace, and the government is fine with it. Althought Rousseff has tried her best to get on the good side of environmentalists, in 2011 she authorized the building of the Belo Monte hydroelectric plant which would provide power for a nearby mining quarry.11 The project was, almost entirely state funded,12 showing that the government backed this project completely. Since the dam project is directly connected with mining, the fact that the government backed this project shows enough proof the irreplaceable value of mining. Government officials have stayed relatively quiet in the past few months on mining, as they dropped in popularity with environmentalists. Alyson Warhurst, a professor at Britains Warwick Business School, is on the board of many global economic groups. In Warhursts book she outlines why mining is necessary for Brazil. She goes on to say that Brazil needs the economic value rather than worry too much about the environment.13 She says that it is clear the government is doing all they can to reform mining, so people should worry more about getting minerals. Warhurst shows that if everyone does their job right in their current position, you will have the mining industries mining and making money, and the government and environmentalists working to clean it up.

11

Faleiros, Gustavo. "Brazilian president's promises crumble under weight of Belo Monte dam." Guardian.co.uk. The Guardian, 1 Feb. 2011. Web. 15 Nov. 2011. <http://www.guardian.co.uk/environment/blog/2011/feb/01/brazil-dilma-rousseffhydroelectricdam>. 12 Faleiros, Gustavo. 13 Warhurst, Alyson. Mining and the Environment: Case Studies from the Americas. Ottawa, ON: International Development Research Centre, 1999. 50-291. Web. 25 Nov. 2011. <http://books.google.com>.

The mining industry has gotten worldwide attention and foreign investors have been putting in billions of dollars. In past years the government has been working to have foreign investors invest more money into the industry. Lately, other countries have been competing with Brazil for control of foreign investments.14 During a conversation on this topic, Brazilian Defense Minster Nelson Jobim said, Brazil cant fall behind in this (race).15 He acknowledged the importance of mining and how if Brazil loses its investments, the economy would take a big hit. Brazilian President Dilma Rousseff also stated in these conversations that she has high hopes for the mining industry to create more jobs and also technical expertise. She wants the industry to become more about the country rather than worry about its own gain.16 President Rousseff has shown her consent with the industry in the past few months however. Werner Baer, an American economist, has written extensively about Brazilian economic development throughout his career. He has a Ph.D. from Harvard and a Masters Degree from Queens College in Economics. He wrote in one of his books that not only is mining good for the economy but it is also good for the communities it can be found in. Baer said, The demand for food in the towns and mining sectors was a stimulus to agricultural production not only in Minas Gerais but also in what is now the state of Sao Paolo, areas further to the south, and even Northwest.17

14

Colitt, Raymond. "Brazil wants African allies in seabed mining quest." Reuters.com. Reuters, 19 May 2009. Web. 8 Dec. 2011. <http://www.reuters.com/article/2009/05/19/brazil-sea-miningidUSN1943603120090519>. 15 Colitt, Raymond. 16 Colitt, Raymond. "Exclusive: Brazil not curbing foreign mining investment." Reuters.com. Reuters, 4 Feb. 2011. Web. 11 Dec. 2011. <http://www.reuters.com/article/2011/02/04/us-brazil-miningidUSTRE7133LZ20110204>. 17 Baer, Werner. The Brazilian Economy: Growth and Development. Westport, CT: Praeger, 2001. 11456. Web. 22 Nov. 2011. <http://books.google.com>.

He is trying to say that even though what might look as a negative could also be looked at as a positive. Since mining brings workers to areas and that can exhaust resources, people in these towns have now taken initiative to grow their own food. He outlines how mining is the cause of Brazils emergence on the world market. Without mining he says Brazil would be in worse shape than they were thirty years ago. Throughout his book he brings in many charts in which mining is high on each list, usually number one or number two. The charts deal with exports, production and income. They are for production value, export values and other things. Even though mining has its negative effects on the environment and mining companies, namely Vale, have had questionable ethics, the fact people are trying to reform the industry so it works shows that it is necessary. If the income of mining wasnt a necessity to the Brazilian economy, people, especially the president Dilma Rousseff, wouldnt be in and out of meetings and discussions of how to fix it. If it wasnt necessary, the government would scrap the industry. However in Brazils case, scrapping the mining industry could lead to a severe drop in their income and the figures show that it would be devastating in years to come.