A Desperate Search for Gold After Brazil's Worst Mining Disaster Ever

• After death and job cuts, locals turn to illegal prospecting
• Mudslide shut iron pit and exposed remnants of 1700s gold rush

In the red-dirt hills of Minas Gerais, a part of Brazil named for the mines that provided livelihoods for generations, the country’s worst-ever environmental disaster has unearthed a new opportunity for locals stung by recession and job losses -- panning for gold.
Wildcat mining is on the rise in communities devastated by the collapse of a dam that in November unleashed a deadly avalanche of sludge from the giant Samarco iron-ore mine, killing residents and destroying homes. Thousands were left jobless amid a deep national recession. But the landslide also churned up riverbeds enough to expose flecks of precious metal like those that sparked Brazil’s first gold rush three centuries ago.
While no one knows how many people are digging illegally to make ends meet, the number of complaints to the environmental military police in the city of Mariana jumped about 30 percent since the disaster, said Sgt. Valdecir Nascimento, a 24-year veteran of the unit. That tally could grow because Samarco -- owned by BHP Billiton Ltd. and Vale SA -- has cut 3,000 outsourced jobs in a rural area where unemployment is already more than twice the statewide rate.
“I tried getting another job, but that’s hard, so, I pan for gold,” said Davidson Gomes, 49, as he peeled back rocks and sifted through sediment with his hands at the bottom of the river running through downtown Mariana. A father of three, Gomes said he performed odd jobs before the mudslide.

Dam burst damage in Bento Rodrigues, Brazil on Nov. 6, 2015.

Photographer: Christophe Simon/AFP via Getty Images

The Nov. 5 dam collapse unleashed billions of gallons of mining waste that entombed entire villages in a lush valley checkered with patches of rust-colored soil and dozens of baroque-style churches erected during the previous gold boom. The spill left as many as 19 dead and hundreds more homeless. Many wildcatters are betting that the communities that lost the most offer the best prospects.
“The mud that slid through the region did so with a lot of force,” said Hernani Lima, an engineering professor at a local mining college. “It scooped the river, digging the bed deeper, leaving gold closer to the surface. The mudslide did the work the miner’s dredger would do, but with more force.”

Iron Slump

Mining, illegal or otherwise, is part of the region’s DNA. The alluvial gold that first attracted fortune hunters here runs through the communities of Mariana and nearby Ouro Preto, which means Black Gold. In the 18th Century, these hills produced nearly as much gold as all of Spain’s colonies did in more than three centuries. Once the hills and rivers were perceived to have been stripped bare of gold, the fortune hunters abandoned the region, leaving their gilded churches behind.

Mining rig

Source: Bloomberg

These days, instead of hunting for gold, mining giants such as Rio de Janeiro-based Vale scrape the soil for iron ore destined for the steel furnaces of Brazil’s largest trading partner, China. But Minas Gerais has fallen on hard times as demand slowed and the price of iron ore slumped more than 70 percent from its 2011 heyday. Prospects deteriorated further after the shutdown of Samarco, the area’s primary economic driver.
“The situation is very serious,” Mariana Mayor Duarte Junior said. “You have people looking for work, but there isn’t any to be had. Our unemployment rate has hit 27 percent.”

Gold Rally

For some, the only option is to search for what’s left of the gold.
“When there’s a crisis and unemployment, the people who have this tradition of mining in their blood -- who are the grandsons, great-grandsons and great-great-grandsons of the first miners of this region -- they head back to the river to work,” said Lima, the engineering professor.
For those who can afford motorized equipment and a team of capable hands, gold ventures can still be profitable, especially with the added incentive that prices are once again on the rise, he said. After three straight years of decline, bullion is up 21 percent in 2016, touching an almost two-year high of $1,315.71 an ounce on Thursday.

“Things are very difficult right now,” said Adriano, a 55-year-old man in Mariana who declined to provide his last name because, like many others, he is afraid of being charged by the police. “But I think it’s better for someone to try to work rather than getting mixed up stealing or with drugs.”
Some of the officers in Mariana’s military environmental police unit said they tend to look the other way when it comes to individual panners like Gomes, preferring to use their limited resources to stop larger, mechanized operations that pose a bigger environmental threat.

Some of the pressure may ease if the iron mine reopens soon, which would put more people back to work. Before the dam collapse, Samarco was the world’s second-largest producer of iron-ore pellets, with an annualized output rate of about 30 million metric tons. The mine wants to restart by year-end at about 60 percent capacity to help fund a 12 billion-real ($3.5 billion) compensation package over 15 years.They aren’t alone. Many residents have staged protests in the hope of convincing authorities to quickly return Samarco’s operating licenses. About 1,200 of the mine’s 3,000 workers, who were kept on the payroll after the dam collapse, are scheduled to be let go at the end of this month. More than half of those are from Mariana.
For better or worse, this is a mining town.
“The source of jobs here is mining,” said Sergio Alvarenga de Moura, a Samarco union representative. “There aren’t other opportunities.”