By Anthony Boadle and Lisandra Paraguassu
BRASILIA (Reuters) – The Brazilian government is breaking new ground in its efforts to crack down on illegal gold mining in the Amazon and is preparing legislation that would require electronic tax receipts for buying and selling the precious metal, four sources with knowledge of the plans said.
President Luiz Inacio Lula da Silva wants to end years of ecological regression under his far-right predecessor Jair Bolsonaro and take action against illegal mining in the Amazon.
Lula has also pledged to end deforestation, which soared to a 15-year high under Bolsonaro, and to take better care of indigenous peoples in the Amazon who are threatened by armed, disease-carrying wildcat miners.
A draft interim decree presented by Reuters on Wednesday proposes new rules for buying, selling and transporting gold.
According to the proposal, which is backed by Brazil’s Ibram mining lobby, gold from Wildcat mining would be considered a financial asset that must first be purchased from an institution or broker authorized by the Central Bank of Brazil.
Gold is currently sold with paper receipts based on the “good faith” of the seller, making it impossible to trace its provenance.
The electronic receipt, called “Nota Fiscal” in Portuguese, must contain the name and tax number of the seller, the mine from which the gold was mined and the authorization number of the license for the mine.
The central bank and other government agencies have been investigating the introduction of electronic tax vouchers for buying and selling gold to track whether it was mined illegally, the bank said in documents released Monday.
The central bank said the goal is to implement “a new inspection system that will allow traceability of mined gold, as well as the introduction of e-invoices.”
The tax receipt could be an effective tool in combating illegal mining in the vast Amazon region the size of Western Europe.
The National Mining Agency, Brazil’s regulator of the sector, said it could not control illegal mining due to staff shortages with just five inspectors overseeing all mining production, a Supreme Court document said on Monday. The regulator said it doesn’t even have the resources to review stacks of paper receipts from brokers buying gold.
About half of the 100 tons of gold produced by Brazil each year is illegally mined and laundered by financial brokers regulated by the central bank, according to Ibram, a mining industry lobby group. The situation is so bad, Ibram says, that even the central bank doesn’t know if the gold it’s buying is legal or illegal.
The mining lobby has called for the introduction of e-invoicing to end the illegal gold trade, Ibram President Raul Jungmann told Reuters.
Jungmann, whose lobby represents multinationals and large mining companies operating in Brazil, has urged the government to take steps to disrupt a network that is laundering illicit gold through the financial system to sell to buyers in countries like Switzerland and the UK.
Brazil’s new leftist government last week launched an enforcement operation to remove about 20,000 feral miners from the Yanomami reserve bordering Venezuela after declaring a medical emergency over deaths from malnutrition.
The miners devastated much of the vast reserve, polluted rivers with mercury, and terrorized the Yanomami with disease and famine by hunting their game and bringing disease.
(Reporting by Lisandra Paraguassu, Anthony Boadle, and Ricardo Brito; Editing by Leslie Adler and Lisa Shumaker)
