Diamond mining in Brazil

 

The purpose of this post is to analyse the origins of diamond mining in Brazil and the actual situation of it.

Firstly, I will briefly describe what is a diamond. Then, I will investigate how mining began in Brazil and the challenge of the production of diamond presently. 

It will be a qualitative research based on the second hand data drawn from different sources. The content will be mainly based on the Brazilian government’s documents. Some related organisations’ public announcements, publications and newspaper articles will also be referenced in the assignment. 

Gems like diamond, intrigued humans for more than ten thousand years, used as jewellery, usually reserved for the wealthy and also served as status symbols. Nowadays, diamond rings, brooches, tiaras, etc are used for pleasure and also investment.

As mentioned by Schumann (1976) the name diamond refers to its hardness, from the Greek word - adamas, the unconquerable as there is nothing comparable to it in hardness. Due to its optical effects, beauty, high hardness, and its rarity this stone became highly sought after.

It is the only gem known to man that is made of a single element, Carbon, besides graphite. Diamond is completely made of Carbon atoms crystallised in a cubic arrangement.

They are formed  at great depth, hight temperatures and high pressures and found in primary and secondary deposits. Primary deposits are the kimberlite and lamproite pipes that raise diamonds from Earth's mantle, where they originate. 

The primary deposits, or diamond pipes, are the vertical portion. The flared top of the pipes can yield substantial quantities of diamonds, but following the narrowing pipe downward eventually becomes unprofitable for mining.

Secondary deposits, created by erosion, include such deposits as surface scatterings around a pipe, concentrations in river channels, and fluxes from rivers moved by wave action along ocean coasts, past and present.

Because diamonds are dense they concentrate at the bottom zones of moving sand and gravel. These secondary deposits are eluvial (above a pipe), colluvial (adjacent to a pipe), alluvial (stream and river transported) and marine (along beaches that can wind up onshore or offshore with changing sea level). Secondary deposits may be found far from current means of transport, in the fossilised channels of now-vanished rivers or under fossil beaches.

The only known source of diamonds in the world until the 1700's were the deposits of the Golconda kingdom in India. The discovery of this mineral in Brazil in 1714 made the Portuguese colony the world's largest producer for 150 years. According to Brunet (2003 in LICCARDO et al.2012), in the second half of the 18th century, 70% of the world's outstanding diamonds came from Brazil. During this period, the main actors of the mining were slaves who were the main labor in the search of gold and diamond.

According to Schumann (1976) the Brazilian diamond deposits are all secondary and thus owe their existence to the erosion of kimberlite or other primary diamond-bearing rocks that have yet to be identified. The individual deposits generally are small in volume, and some have only low-grade concentrations of diamonds resulting in limited mining operations. Also, kimberlite pipes were not found in Brazil until 1968. Since then, hundreds have been found, but they are not economically interesting. 

In the town of Diamantina, in the eastern part of the estate of Minas Gerais, escaped slaves sought diamonds in distant places, known as "grimpas", which gave rise to the expression “garimpos”.

According to Harlow (1998) The discovery of the Brazilian deposits was, on one hand, extremely timely, as the Indian deposits were approaching exhaustion; in the latter years (about 1725-30) of Indian production, only 2,000-5,000 carats of rough arrived annually in Europe. But on the other hand by the late 1730s the Brazilian production had increased the world supply manyfold, to about 50,000 carats annually which caused a collapse in prices, with rough stones selling for as little as 30 percent of their previous prices.

In the period immediately following the discovery of diamonds in Brazil, it was the practice of the Portuguese Government to demand in return for the concession of mining rights a certain sum for every slave it was proposed to employ, the total number of slaves so employed to be fixed by agreement. This tax was continually being raised, and so irksome became the conditions imposed on prospective miners that no one could be found to undertake the work. Then concessions were granted on the payment of a fixed sum, but as the mineral wealth of the country still remained undeveloped, the mining was taken over altogether by the Government. The choicest of the stones found in this period therefore found their way to Lisbon, and were preserved with the Portuguese crown jewels. 

In spite of the laws of almost draconic severity leveled against illicit diamond-mining and trading, there was, besides the Government production, a great deal of surreptitious mining by unlicensed persons ("garimpeiros") of which of course no records were made. It has been estimated however, that the contraband production was at least equal in amount to that of the Government. However, a large proportion of the most perfect and beautiful stones fell into the hands of illicit traders, since a Government employee would scarcely risk detection for the sake of a stone of average or poor size and quality. According to other accounts the illicit trade was not of such extent and importance; in any case, however, those engaged in it, when relieved from the necessity of meeting the heavy taxes and high cost of production of the legitimate product, must have found their transactions very remunerative.

In 1834, the year in which the independence of Brazil was established, the Government monopoly of diamond mining ceased. Since this date the concession of full mining rights has been granted to any petitioner on the payment of a small tax, varying in amount with the area he proposes to work. The landowner is also entitled to demand 25 per cent of the rough production, and a duty of 1/2 per cent was imposed on exported stones.

Nowadays, with the exploration of the country's first primary diamond deposit, begun in 2016 in the Bahia municipality of Nordestina. (http://epocanegocios.globo.com/Economia/noticia/2017/02/brasil-de-volta-ao-clube-dos-grandes-produtores-de-diamante.html)

In 2015, Brazilian diamond production was around 31,800 carats, a total of US $ 1.5 million. World production, according to the Kimberley Process Certification System (which controls the production, import and export data of the member countries worldwide), was approximately 127.34 million carats, worth US $ 13, 7 billion.( http://www.cprm.gov.br/publique)

In the same year, Brazil exported about 34,700 carats to the total value of approximately US $ 5.7 million, while the world export was 351.4 million carats worth approximately US $ 42.4 billion .

The difference between production and export occurs because in the annual production the remaining stocks of previous years are not considered.

Much of the Brazilian diamond production is mainly exported to the United Arab Emirates, United States and Israel.

Lipari Mine data, a diamond producer responsible for South America’s first mine developed from a kimberlite deposit shows that production in 2016 was at least 100,000 carats. Brazilian diamond production, which in 2015 was 31,800 carats, as mentioned before and may increase up to ten times in the next few years with the exploration of the miner's Braúna 3 mine in Nordestina.

According to data from the Secretariat of Foreign Trade (Secex), the city of Nordestina (BA) exported 20 kilos of diamonds last year, or 100,000 carats, which resulted in revenues of US $ 18.88 million. There was no export in 2015 from that city. In 2016, exports were also registered in the cities of Diamantina (MG), with 3 kilos of diamonds worth US $ 11.2 million; Belo Horizonte, in the amount of US $ 4 million; Coromandel (MG); Juína and Cuiabá, in Mato Grosso; among others. (http://portal.siscomex.gov.br)

With the export of 23 kilos of diamonds, Brazil increased by 4.6 times the export of this type of precious stone in relation to the previous year, which was 5 kilos. In 2014, the export was 37 pounds. This estimate takes into account only the item "Diamonds, whether or not worked, but not mounted or set”.

The estimated average production of the Braúna mine, according to data released by Lipari Mine before it came into operation, was 360,000 carats per year.

The Braúna 3 deposit is part of the Brauna complex of Lipari Mineração. There are at least 28 diamond bodies, of which 11 are mineralized. Not all of these, however, have economically viable exploitation, says Lys Mattos Cunha, a geologist at the Mineral Resources Research Company (CPRM). "Diamond mining is very erratic: you can find a stone that pays for the entire investment, or you can find an amount that does not pay”. 

Almost all of the national diamond production is exported. In 2015, 34,100 carats of Brazilian diamonds were sent to other markets, taking into account the remaining stock of the previous year, against an apparent local consumption of 5 thousand carats. According to the Ministry of Mines and Energy (MME), the United Arab Emirates is one of the main buyers of the Brazilian stone.

Lipari has the capacity to process 2,000 tonnes of kimberlitic ore per day and, according to the geologist, it is possible to extract up to 40 carats of diamond per ton of stone. (http://lipari.com.br/?lang=en#brauna)

The mine is regulated and committed to safety and the environmental responsibility. But it is not like that around other mines.  In 2009, after a seizure of diamonds by the Federal Police, the government decided to map all the diamond sources in the country, setting up a large database. As mentioned by Lys Mattos Cunha "Each diamond brings a specific feature of the region where it was found”.

Coordinated by the CPRM, the research is almost complete and, from it, it was concluded that there are 1,1 thousand to 1,5 thousand kimberlite bodies in the country. Besides Braúna, there is potential to extract primary diamond in the region of the Serra da Canastra, in Minas Gerais.

Braúna 3 is the first Brazilian deposit where diamond is in its primary form with economically viable exploitation. In this, only companies with specific technology can extract the diamond from the stone itself, the case of Lipari Mineracao Ltd.

While these areas are not fully studied, secondary diamonds continue to be found by garimpeiros and small miners, especially in the Coromandel and Diamantina regions of Minas Gerais, as well as some areas in the states of Goiás, Pará and Roraima. The project has shown that the vast majority of Brazilian states have occurrences of diamonds.

The Diamante Brasil project, carried out by the Brazilian Geological Survey (CPRM) in partnership with the Ministry of Mines and Energy (MME), mapped 1,344 diamond mineralised bodies in the country in 10 years.

According to CPRM, the project seeks to gather and integrate into a public database information on the main aspects of diamond geology in Brazil, including primary and secondary sources, as well as economic perspectives. Realized by the CPRM, the project covers areas inserted in 20 States of the five Brazilian regions. (http://www.comunitexto.com.br/novas-jazidas-de-diamantes-no-brasil/#.WRxHkVKZPR0)

Initiated in 2008, the project mapped 24 diamond fields, 804 occurrences, 142 gold mines, 23 kimberlite fields and 1,344 mineralised bodies. "The survey may contribute to boosting new investments in mineral prospecting research," says  CPRM.

According to the Geological Service, Diamante Brasil has "important and up-to-date information with potential areas for prospecting and exploration of diamonds", in addition to collecting geological, geophysical, geochemical, petrographic and economic information from these areas in a database.

In my opinion, the greatest challenge for Brazil nowadays is to inspect the diamond extraction in the states where new areas were found conducive to diamond mining.

Unfortunately, the laws do not effectively regulate this process, putting the Brazilian forests at risk considering that the areas to be explored are in the midst of Atlantic forest.

Another problem is speculation by large international investor groups who would like to invest in these mines. The profit is not in the country and the concessions are often made for political and financial interests.

On the other hand, illegal mining is happening at this very moment under precarious conditions and surrounded by illegalities since crimes, drugs and prostitution are common in this environment. It is common to see in the news how bad is the situation around the mines in Brazil.

It will be necessary to expand the laws that regulate diamond mining in addition to a more efficient inspection, ensuring that all process is executed in the form of the law that regulates this process.

I will point out one example, the Roosevelt mine. Located in the south of Rondônia Estate it is inhabited by the Cinta-Larga Indians. With an area of ​​2.6 million hectares, a rare kimberlite, has only recently been discovered. According to the CPRM, the Ministry of Mines and Energy, the kimberlite has the capacity to produce more than one million carats, and a fifth of precious stones, which would represent revenues in billions of dollars. The reserve is one of the five largest in the world.

Due to lack of specific rules, the mine is exploited illegally, with environmental damage, tax loss and risk to the indigenous and garimpeiros. The absence of regulation also prevents the legal exploitation of the ore, which only benefits the criminals smuggling more than 20 million dollar of diamonds per month from Roosevelt. It seems that the authorities do not care about the conditions of mining not only in this area but all around the country where other gemstones mines 

It is different from Lipari mine as it is a private company and follows the rules written by the Brazilian authorities. 

To conclude public participation together with the Brazilian government is the key to create laws to regulate the whole mining process using sustainable techniques and a fair process.

Also, Brazil could study and follow the model which the Canadian government uses to regulate diamond mining as they have a fair trade process in place.

Bibliography

 

Schumann, Walter, 1976. Gemstones of the world. 

 

Liccardo, A. & Mesquita, D. 2010. Extração de diamante no rio Tibagi (PR) em lavra experimental nos anos 1980. In: 5o Simpósio Brasileiro de Geologia do Diamante, 5, Anais, Curitiba, p. 27-29.

Harlow, G. E.1998. The nature of diamonds

 

Epoca negócios: Internet WWW page at URL: http://epocanegocios.globo.com/Economia/noticia/2017/02/brasil-de-volta-ao-clube-dos-grandes-produtores-de-diamante.html (accessed 12/05/17)

 

Serviço Geológico do Brasil: Internet WWW page at URL: http://www.cprm.gov.br/publique: (accessed 12/05/17)

 

Portal Siscomex: Internet WWW page at URL: http://portal.siscomex.gov.br) (accessed 13/05/17)

 

Lipari Mineracao Ltda: Internet WWW page at URL: http://lipari.com.br/?lang=en#brauna (accessed 13/05/17)

 

Portal Comunitexto: Internet WWW page at URL: http://www.comunitexto.com.br/novas-jazidas-de-diamantes-no-brasil/#.WRxHkVKZPR0 (accessed 16/05/17)