The ugly underbelly of critical mineral mining

As the demand for critical minerals increases, so does the amount of illegal mining that takes place. There is a mining boom the likes of which we have not seen in decades, as governments and energy companies pursue new mining projects to extract the essential minerals needed to support the global ecological transition. Companies are looking to mine a wide range of metals and minerals, such as lithium, cobalt and zinc, to make lithium-ion batteries, renewable energy equipment and other clean technologies. The increase in global mining is also attracting unwanted attention from criminals looking to get their piece of the critical mineral pie through illegal mining.

Brazil has long suffered from illegal mining, and it is becoming more widespread as demand for valuable metals and minerals increases. One of the recent crackdowns caught criminals mining large quantities of cassiterite, which is the main ore of tin. Although less talked about than other critical minerals, tin is a key component for coatings on solar panels, lithium-ion batteries and solder for a wide range of electronics. The price of tin rose 29% in the first six months of this year, and Brazil is one of its biggest exporters.

Illegal mining in Brazil’s Amazon region has increased as more companies have invested in conventional mining in the area. In addition to cassiterite, criminal gangs also seek to mine manganese and copper. The number of mining projects has increased following the recent introduction of initiatives to attract critical mining investments by the Brazilian government.

The government has long tried to quash illegal gold mining activities in Brazil, but criminal gangs continue to seek gold as well as other essential minerals now. While the price of cassiterite is significantly lower than gold, around $14 to $21 per kilogram, it is much more abundant. The gangs can mine up to 300 kg of cassiterite per day on the land of the indigenous Yanomami, compared to only 4 kg or so of gold per month. Cassiterite mining can help finance illegal gold mining, making it a vital activity for criminal gangs. These gangs pay truck drivers to smuggle cassiterite across Brazilian state borders, hidden among other products such as fruit and fish. In 2022, 60 tons of cassiterite bound for China were seized in a single operation in the port of Manaus.

Police continue to confiscate huge amounts of illegally mined essential minerals hidden in trucks on Brazil’s highways every day. In June this year, police seized 23,000 tons of manganese that was in the process of being exported to China. This prompted federal police to shut down an illegal mining site in the state of Pará. Authorities in the state also raided several copper and gold sites, where they reported workers operating in slave-like conditions.

Caio Luchini, the head of the federal police in Roraima, Brazil’s northernmost state, emphasized the difficulties of cracking down on new illegal mining activities. Luchini said it is easier to hide the illegal origins of cassiterite and similar minerals than gold, which has “more rigid controls”. He added: “With this boom in cassiterite and other minerals, it’s worth looking at our legislation again.”

Brazil is not the only Latin American country struggling with illegal mining. In the “Lithium Triangle”, a region with abundant lithium reserves located in Argentina, Bolivia and Chile, there are fears of an increase in illegal mining activities as gangs seek to profit from the extraction of one of the most sought-after essential minerals. Meanwhile, in Panama this month, the government warned of an increased risk of illegal mining following the closure of operations at the Cobre Panamá copper mine last November. Panamanian Security Minister Frank Ábrego said: “These practices use inappropriate methods and extremely dangerous chemicals such as cyanide. There are reports that organized criminal groups are involved in this illegal business.”

The market for these critical minerals is huge as countries around the world work to strengthen their supply chains to ensure they have enough steady supplies of metals and minerals to meet growing demand. Criminal leaders have found innovative ways to use legitimate trade routes to export illegal minerals, making it more difficult to trace their activities. For example, recent reports suggest that free ports, originally intended to provide duty-free storage and transit of goods, have been used by criminal leaders to sell illegally acquired critical minerals around the world.

In April this year, the UN led a group that aimed to support more than 100 countries to establish guidelines to prevent some of the environmental degradation and human rights abuses linked to the mining of essential minerals. The guidelines would address the growing number of cases of illegal work and human rights violations related to the industry. However, much more needs to be done to address the rise of illegal mining activities in key mining regions around the world. As governments seek to stamp out illegal mining within their borders, the introduction of more rigorous international mineral export standards could help reduce the problem by encouraging greater supply chain transparency to track minerals from extraction to export.

By Felicity Bradstock for Oilprice.com

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