Shady contracts, backdoor deals spur illegal gold mining in Bolivian Amazon

Shady contracts, backdoor deals spur illegal gold mining in Bolivian Amazon

  • In the northern regions of the department of La Paz, Bolivia, illegal gold mining has led to widespread deforestation and mercury pollution.
  • The Bolivian Amazon, including protected areas like Madidi National Park, face a growing risk of environmental destruction in the years to come from this ever-expanding industry.
  • Mongabay visited multiple illegal mine sites, interviewed the investors behind them, and reviewed their work contracts to better understand how the industry operates unchecked in secluded parts of the Amazon.
  • The investigation found that miners take advantage of the government’s lack of resources and slow-moving bureaucracy to avoid accountability for the harm they do to the environment; they also rely on illegal, backdoor agreements with well-funded foreign investors to maximize production.

LA PAZ — Gold is Bolivia’s second-biggest export, valued at more than $1 billion annually and employing hundreds of thousands of people in the country. But much of that gold has uncertain origins, coming from somewhere deep in the Amazon rainforest, where environmental regulations often go unenforced.

Setting up camp in secluded parts of the rainforest, mining operators carry out their excavations hours or even days from the nearest town. They block off paths with excavators and bulldozers or, in other cases, work on dredge boats in the middle of rivers, making it difficult to trace their output. Some of them have also turned violent, throwing rocks and explosives at unfamiliar boats and threatening to hold visitors hostage.

Government officials and local media outlets alike have acknowledged the difficulties accessing gold mining hotspots, and of regulating their environmental impact. The area of greatest concern is Madidi National Park, a nearly 19,000-square-kilometer (7,300-square-mile) protected area with some of the highest biodiversity rates in the Americas. The area has become the nucleus of illegal gold mining in Bolivia, with more operations pushing into the park from the south every year.

“You can’t help but feel sorry for the complete and total change that’s taking place,” said Jairo Gómez, an environmental official in the mining town of Guanay. “It’s immense. It’s monstrous work. [Mining operations] clear endless stretches, and all you’re left with is stone and rubble.”

Mongabay managed to visit multiple illegal mining sites, interview investors, and review their work contracts to better understand how the industry operates in secluded parts of the Amazon. The investigation revealed widespread government negligence and the presence of a network of international interests that clear the forest and pollute rivers with impunity.

Third-party contracts and missing licenses

Over the past decade, Bolivia has created a series of national regulations meant to keep track of mining activity, mostly in the form of land concession registries and work permits. But a lack of government resources and a slow-moving bureaucracy have made it easy for mining operators to manipulate the system.

Many of them obtain initial approval from the government to study the viability of the land, but don’t wait for the other permits needed to break ground with heavy machinery, according to several local officials and mining investors who spoke to Mongabay. Instead, they take advantage of a legal gray area in which their paperwork is being processed but hasn’t been fully approved, and thus doesn’t attract visits from government officials.

One 2019 mining permit reviewed by Mongabay in Franz Tamayo province showed that only a dozen mining concessions had been granted full authorization in a 25-hectare (63-acre) area, while the several dozen around them were still in the process of being reviewed. Nevertheless, excavation had already begun across the entire area.

“By law, if you request an area, they won’t authorize it right away,” a mining investor, who asked to remain anonymous due to his participation in illegal activity, told Mongabay. “During that time, you’re not supposed to enter with heavy machinery. You can’t do anything. You can work artisanal but you can’t extract to the maximum. So, generally, you don’t wait for the permits. The permits are expensive. Some have taken up to 10 years to be approved.”

In Teoponte, a mining town outside the park, there are more than 100 mining operations, but only a few dozen of them are believed to operate legally, according to the City Council.

Because getting a permit can take so long, many mining operators will forgo the process altogether if they can’t call in a favor from national government officials. “You have to find a way to have friends in the city to be able to start the process with the Ministry of Mining,” said Milton Pinto Pimentel, head of the March 19 Wituponte Gold Cooperative.

Legally, only Bolivians can apply for the permits to mine gold. A history of Spanish colonization and bad deals with foreign companies led the government to nationalize the mining industry in hopes of keeping more wealth at home. Foreign companies are prohibited from the process except in very special circumstances.

But mining cooperatives, which function like unions representing local workers, have learned how to exploit the system to bring in powerful international interests — many of them Colombian and Chinese.

Foreign investors help purchase the dredge boats and machinery needed to mine rivers. (Photo by Maxwell Radwin/Mongabay)

“The Chinese have a lot of machinery,” Rocio, the operations manager of a mine site in Guanay, who asked that only her first name be published because of the sensitive nature of her work, told Mongabay. “And when you have a lot of machinery, you can do a lot more mining. You can excavate a lot faster.”

One Chinese mining operator, who also owns a heavy machinery replacement parts store in the town of Guanay, told Mongabay she and her husband arrived in Bolivia seven years ago looking to take advantage of the mining boom. They now import and sell spare parts to other mining operators while overseeing an illegal operation of their own in the small village of Mariapu.

Foreign companies often partner with cooperatives that already have land legally assigned to them. They sign third-party subcontracts to help fund excavation, including providing mining equipment, fuel, mercury, as well as flatbed dredge boats for excavating in rivers.

The government doesn’t have records of the contracts they’ve made with cooperatives, so it’s nearly impossible to track their activity or hold them accountable for their environmental impact.

In some cases, local officials are aware of the companies’ presence because they register for a “work patent” that allows them to exist legally in the country. But the patent doesn’t always specify what type of work the companies are doing, leaving local officials to speculate about what’s really going on in their jurisdictions.

“It’s a way of manipulating the technicalities of the law,” said Teoponte City Council president Cleocir Sompero Salas. “It’s called a contract for a ‘loan of services,’ but they don’t have to say what kind.”

A store owned by a Chinese couple in the mining town of Guanay. (Photo by Maxwell Radwin)

One illegal contract obtained by Mongabay revealed that a mining company was responsible for establishing the parameters of the mine site, extracting gold, and handling managerial tasks in the area. The contract also authorized the company to bring in its own excavators, loader shovels, dump trucks, screens and chutes, as well as motors, pumps and other tools to extract gold for a three-year period, with the possibility of renewal once the contract expired.

In exchange, the cooperative promised to keep the mine site’s licenses up to date, and to file paperwork ensuring the delivery of fuel. Under their agreement, 40% of the earnings went to the mining company and 60% went to the cooperative.

Officials in the mining towns of Guanay, Teoponte and Mayaya told Mongabay they’ve seen other contracts give companies an even bigger cut of the earnings. “The cooperatives don’t have the investment to get machinery for gold mining, so they have to make agreements or temporary contracts with companies that give them 50%, 60%, up to 80%,” said Jairo Gómez, the environmental official in Guanay.

The earnings are only divided after the gold is sold to intermediary buyers, many of whom have set up stores in mining towns. Workers at a gold buyer in Guanay called Royal Bol told Mongabay they purchase gold based on the U.S. market price and then ship it in trucks to the capital, La Paz, from where it’s moved to refineries in the U.S., India, the United Arab Emirates and other countries.

The Guanay Productive Agricultural Development Directorate, as well as several mining investors and the Bolivian Mining Corporation (Comibol), confirmed that these are popular international destinations for Bolivian gold.

Foreign miners eating aboard a dredge boat. (Photo by Maxwell Radwin)

Powerful cooperatives, weak oversight

The mining contract reviewed by Mongabay also specified that it’s the cooperative’s responsibility to handle any backlash from local communities, saying it would provide “unrestricted defense of the site in cases of incursion, invasion or disturbance of the works by social and community groups in the area … as well as resolve any conflict or impasse with local authorities or neighboring cooperatives.”

In a separate paragraph, the cooperative promised to “maintain cordial relationships with neighboring communities.”

This language is consistent with information provided to Mongabay by investors, residents and local officials, who all said powerful mining interests work hard to maintain control over the communities where they excavate, both by giving gifts to residents and threatening them with violence.

Many Indigenous communities, faced with loss of their ancestral territory and the contamination of the rivers they once relied on for fishing and drinking water, suffer from displacement, disease and infighting, with some members deciding they have no choice but to work with the miners to survive.

“They had the documents, the grid of mining concessions, and they moved us out,” said Alejandro Machado, founder of the Leco Indigenous People and Original Communities of Larecaja group (PILCOL). “They moved us out. They threw us out. And we found ourselves without work, with nowhere to earn our daily bread.”

Miners’ sleeping quarters on dredge boats allow them to work more hours. (Photo by Maxwell Radwin)

Moving north into the town of Apolo, located just 5 kilometers (3 miles) south of Madidi National Park, miners’ control of local life becomes increasingly combative, with some cooperatives blocking roads with heavy machinery, confiscating outsiders’ cellphones, and holding meetings to vote on who can or can’t have access to different parts of the park.

To strengthen their influence, some cooperatives band together to form larger coalitions known as centrales. One of them, called the Local Central of Gold Mining Cooperatives of Apolo (Celcomap), is made up of at least 20 cooperatives, and coordinates medical assistance, administrative duties, as well as area “surveillance,” according to a meeting agenda obtained by Mongabay. Celcomap was unavailable for comment.

A Madidi park guard told Mongabay they’ve lost control of the area near Apolo and can’t adequately carry out conservation efforts in areas with heavy mining activity.

Earlier this year, Senator Cecilia Requena, representing the electoral district of La Paz, took a series of covert trips to mine sites near Apolo in hopes of documenting the damage done to the park and Indigenous communities. But she was forced to flee after people started throwing rocks at her boat. Others set up roadblocks to delay her return to the city, according to her office.

One of the men “yelled at the others — and there were a lot of them — to block our boat,” she told Mongabay. “That would have been really worrying.”

An excavator blocks a road outside of Guanay. (Photo by Maxwell Radwin)

Requena, president of the Senate commission on land and territory, natural resources and the environment, said mining in the park could get worse in the years to come as more operations work north through the region’s many rivers. Gold in some parts of the Tipuani and Mapiri rivers has already been exhausted, according to officials in Guanay, and miners are now moving into the nearby Challana River.

Other towns, like Teoponte, are in the process of being abandoned as the gold runs out and miners look north for new opportunities. Many of them have settled in Mayaya, located just 16 km (10 mi) from Madidi. The town is so small that it doesn’t have paved roads or its own government building, yet its central plaza is busy with Chinese operators driving expensive new pickup trucks.

“It’s turned into an illegal economy very similar to the drug trafficking economy,” Requena said. “Not as violent at the moment, but taxing.”

Mining operations are supposed to undergo inspection by the Ministry of Mining and Metallurgy and the Mining Administrative Jurisdictional Authority (AJAM). However, officials from these agencies almost never visit, officials in Teoponte and Guanay said.

“The Ministry of Mining has never come,” Guanay Mayor Víctor Ticona said. “The Ministry of the Environment hasn’t come to observe how our cooperatives are working.”

Officials with AJAM and the mining ministry both declined several requests for comment for this story. The National Service of Protected Areas (SERNAP), which participates in licensing mining rights in multiuse zones of Madidi, also declined to comment.

Left to their own devices, local governments have been trying to develop their own strategies for controlling the environmental impact of mining. In Guanay, Ticona launched a program this year to create a registry of the cooperatives in the area with the goal of better understanding their operations.

“We have to work hard on the issue of regulating cooperatives so that we can adapt to taking better care of Mother Earth more than anything else,” he said.

But many of the cooperatives have resisted the project. During one visit to a dredge boat on the Mapiri River, Colombian workers turned off their machines and retreated to the inside of the boat, determined to wait out officials on the shore. “We’ve had to beg to get what we need to convince them to talk. That’s the only way we’re going to get to them,” said María Verónica, an agricultural engineer in the Guanay mayor’s office.

Completing the project would be easier if the national government would participate, Mayor Ticona said.

“If the ministry coordinates with the municipal government with much more force and takes more responsibility, these cooperatives will comply with everything they have to comply with,” he said, “and we’ll have healthy, responsible mining, and mining that supports an economy that doesn’t harm Mother Earth.”

Banner image: A dredge boat at work outside of Madidi National Park. Photo by Maxwell Radwin

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This story first appeared on Mongabay

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