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Emerald Mining and Local Development: Three Case Studies in Brazil



Jose Antonio Puppim de Oliveira ~ Brazil 2005-2006

Associate Professor

Brazilian School of Public and Business Administration - EBAPE

Getulio Vargas Foundation - FGV

Praia de Botafogo 190, room 507

CEP: 22250-900, Rio de Janeiro - RJ, Brazil

phone: (55-21) 2559-5737

fax: (55-21) 2559-5710

e-mail: puppim@fgv


TABLE OF CONTENTS


Emerald Mining and Local Development: Three Case Studies in Brazil 1

Emerald Mining and Local Development: Three Case Studies in Brazil 2

Abstract 2

1) Introduction 3

2) Emeralds in Brazil 4

2.1) Carnaiba and Socoto (Pindobaçu/Campo Formoso Region), Bahia (BA) 8

2.2) Itabira Region, State of Minas Gerais (MG) 9

2.3) Campos Verdes, State of Goias (GO) 11

3) Emeralds Production and Local Development 12

3.1) Socio-Economic Conditions of the Three Regions 13

16

3.2) Socio-Economic Conditions of the Emerald Miners 17

3.3) Social and Economic Aspects of the Emerald Production in the Regions 18

3.4) Environmental Aspects of Emerald Mining 20

3.5) Safety and Health Risks of Emerald Mining 24

4) Recommendations 25

Bibliography 29



Emerald Mining and Local Development: Three Case Studies in Brazil




Abstract



For many centuries, emeralds have bejeweled the rich and famous all over the world. Emeralds have also made many millionaires over night, sometimes by chance. On the other hand, even though emerald mining has brought some economic benefits, the activity in many cases has caused several negative social and environmental impacts locally. Working conditions in small mines are very poor in general: bad ventilation, high temperatures, long working hours, lack of safety, informal working contracts and no health or life insurance. Environmental impacts can be significant, such as widespread deforestation, erosion of abandoned mines, soil and water pollution in the streams. The economic and social public benefits can be minimal. Even though taxes are not high, much of the mining activity is informal and the activities of high value-added take place outside the mining regions. Emerald mining regions attract many people, increasing the demand for public services (infrastructure, health, education, etc.), but local governments are unable to provide them because the activity often does not provide tax revenues. In the end, there is a growing mismatch between demand and supply of public services, leading to a series of social and environmental problems. However, emerald production has significant potential for local development. The purpose of this study is to understand the dynamics of emerald mining and its impact on local development through case studies in Brazil in three regions Campos Verdes/Santa Terezinha (Goias state), Nova Era/Itabira (Minas Gerais state) and Carnaiba/Campo Formoso (Bahia state).


1) Introduction



This article analyzes the impact of emerald production on local development through empirical research of three cases in Brazil. Emerald is one of the most valuable gemstones in the world. However, the places where the gems come from face several social and environmental impacts, as not much of the value of the gems stays locally, especially for the poorest and for investment in public goods.1 There is a tremendous contrast between the local conditions where the emerald is produced and the jewels one sees on the hands of wealthy jewelry consumers or in the windows of jewelry stores.


The economic impact and potential related to emeralds are immense. However, little is understood about local social, economic and environmental impacts on the places where emeralds are produced. There is some knowledge on the technical part of emerald production (e.g. gemology, see Giuliani et al., 1998; Giuliani, 1997), but very few studies exist about the social, economic and environmental aspects of gem production, especially in academia. The purpose of this study is to understand the dynamics of emerald production in Brazil through case studies in the three most significant emerald producing regions in the country: Campos Verdes/Santa Terezinha (Goias state), Nova Era/Itabira (Minas Gerais state) and Carnaiba/Campo Formoso (Bahia state). This will help to generate lessons to upgrade small-scale gemstone mining activities in order to ameliorate their impact on local development.


Emerald production can bring a lot of benefits to local development, as production can generate millions (or even billions) of dollars. Many cases of gem production have shown an apparent increase in local economic activity, but the real increase seems much lower than the actual economic potential of the activity. Furthermore, those economic indicators have not been translated into indicators of local development. There are several reasons for this discrepancy between economic progress indicators and social development indicators. First, most of the activity is informal, so governments recoup little in tax revenues. Second, most of the taxes of the formal deals are paid where the gems are commercialized, not in the producing regions. Third, local governments receive very little from the taxes that are collected, as much of the tax revenue stays with higher level governments (state and federal). Finally, many of the emerald supply-chain activities with high value-added potential, like cutting and jewelry manufacturing, are done outside of the producing regions. Thus, when emerald is found somewhere, there is a huge increase in the demand for public services (infrastructure, health, etc.) as miners (garimpeiros2) and mining companies rush to the region, but local governments have little capacity to respond to those demands because there is not a proportional increase in revenues and institutional capacity. Also, since much of the activity is informal, miners have terrible working conditions, such as high temperature and humidity, long working hours, lack of safety and informal work contracts. The question of how emerald sectors can play a more important role in local development is the motivation of this paper. Gem businesses, Non Governmental Organizations (NGOs) and governments each have important roles to play in addressing the poverty of many emerald-producing regions by promoting initiatives that help facilitate more effective local development.


The article is divided in three parts. The first part describes the three regions of study in the states of Bahia (BA), Minas Gerais (MG) and Goias (GO). In the second part, the text analyzes the social and economic dynamics of emerald production and how they impact local development in several aspects. In the third and final part, we conclude with some recommendations for improving the positive impacts of emerald production on local development.




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