Top Tech Giants May Have Bought Gold From Illegal Miners In Brazil
Gold, like silver and copper, is widely used in the manufacturing of consumer electronics, and so it’s normal to see tech companies listing purchases of the precious metal in their SEC filings. On Monday, news broke that four of the world’s largest tech companies, namely Apple, Google, Microsoft, and Amazon, may have indirectly bought gold mined illegally from Brazilian indigenous lands in the Amazon rainforest.
Brazilian newspaper Repórter Brasil wrote on Monday that according to police documents, Chimet, the Italian refiner that supplied gold to the four tech companies, is accused of buying millions of dollars worth of gold from trader CHM do Brasil. CHM allegedly sourced the precious metal illegally from wildcat miners operating in unregulated mines in indigenous lands of the Amazon rainforest.
CHM’s lawyer responded to the newspaper and said that the company’s acquisition of the precious metal is legal and properly documented.
A Chimet representative, on the other hand, said that the refiner has severed all connections to CHM since they learned of the allegations in October of last year. During this time, the police conducted raids targeting CHM and other entities allegedly involved in the illegal gold trade.
According to an August 2021 police document, the Italian refiner allegedly acquired about US$385 million worth of gold from CHM from 2015 to 2020.
Bolsonaro’s support
Brazil’s President Jair Bolsonaro is an advocate of wildcat mining, and has sought the legalization of mining on protected indigenous land. Cases of illegal mining have skyrocketed since he won the presidency in 2019.
Wildcat mines put the lives of indigenous tribes living in these supposedly protected areas of the Amazon rainforest in danger. Wildcatters are known to get involved in violent clashes with these tribes, and their mines ultimately destroy rainforest land and pollute the rivers with mercury.
A lack of regulation
These wildcatters operating small-scale informal mines, known as garimpo, are able to thrive because the government currently lacks the level of control and supervision needed to prevent them from selling gold to central bank-accredited firms.
According to local laws, as long as miners are able to provide a self-issued certificate of origin, central bank-accredited firms are allowed to purchase from them, and are exempted from accountability for any irregularities, including whether the claims of origin are authentic or otherwise.
This has caused Brazil’s formal mining industry, along with sustainability organizations to call for the involvement of the country’s central bank to properly regulate the country’s gold flows.
According to IBRAM, the Brazilian non-profit that focuses on mining, central bank chief Roberto Campos Neto pledged to operationalize the improved supervision of bank-authorized buyers. IBRAM and the federal police are also developing a system for traceability and to establish a DNA for Brazilian gold.
Information for this briefing was found via Repórter Brasil, Bloomberg, France24, and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.