Emeralds are some of the most valuable gems on the planet. For many centuries, they have bejeweled the rich and famous all over the world. Emeralds have also made many people millionaires overnight, sometimes by chance as in some of the cases reported in this study. On the other hand, even though emerald mining has brought some economic benefits, the activity has in many cases also caused several negative social and environmental impacts for most of the miners and the local populations. 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: widespread deforestation, erosion of abandoned mines, and soil and water pollution in the streams. The economic and social public benefits are often minimal. Even though taxes are not high, much of the mining activity goes on informally and the activities of high value-added processing take place outside the mining regions. Emerald mining regions attract many garimpeiros, increasing the demand for public services (infrastructure, health, education, etc.), but local governments are unable to provide for them because the activity leaves little 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 related activities have a large potential for local development. The experiences in this study can shed light on potential conditions that would allow the production of emeralds to bring some social and economic benefits to local communities and miners, while simultaneously keeping its environmental impacts under control. In the remainder of this report, some recommendations are made to potentially improve the positive impacts of emerald production on local development.
I. Improve the conditions for partnership between small mines owners and investors.
Low capital requirements and rudimentary techniques can be sufficient to support emerald production when mines are shallow. However, as mines become deeper, working capital must be increased, as each additional meter of tunnel becomes more expensive to maintain due to increasing technical, safety, and environmental mitigation needs. Geological studies and more sophisticated techniques (both in equipment and organization) are necessary for safer and more cost-effective production. Therefore, capital and technical expertise are required for continuation of the mining activity. Many owners of small mines do not have the necessary capital or expertise to upgrade their production. For these businessmen, local and external investors can provide funding alternatives to improve mine production, especially at deeper mines. Some investors can bring both capital and expertise, or at least capital to import better techniques. Moreover, investors can facilitate creation of safer and better working conditions for miners by giving better equipment and formalizing working contracts. Investors are likely to be interested in improving conditions as they do not want incur the risks associated with mines closing because of failure to uphold labor laws.
One of the barriers to increasing the number of partnerships between investors and mine owners is Brazil’s insecure environment for investments. Many investors cannot supervise production (they just come to visit the mines once in a while) or they do not fully understand the mining process. During my field visits, I came across cases of successful partnerships, which led to improvements in production, and cases in which investors were scammed by unscrupulous mine owners, and to a lesser extent, cases in which mine owners that lost their mines to investors. There is a need to make easy arrangements for partnerships and get both mine owners and investors more informed about contracts of partnership, and to do this in a way that fits the needs of mine owners, many of whom have a limited educational background.
II. Increase the public benefits (tax) for local governments in mining regions.
Mining regions are subject to population booms and resulting increases in demand for public services, but local governments are unable to increase service supply adequately because tax revenues do not increase proportionally to the demand. Even though economic activity increases, most of the gains are not officially accountable because mining activities and commercialization are mostly informal. Moreover, governments have little political and administrative accountability to miners because these workers do not pay taxes and generally do not plan to stay in the region for long. Increasing control over and amount of levied taxes could make local governments more effective at providing public services, as well as more accountable to local population.
The way to increase tax revenues is to formalize production and commercialization activities and increase the proportion of local governments’ share in national gem taxes. Most of local governments do not have the institutional capacity to crack down on informality (and many do not want to do that because it would be politically disastrous). State or federal government (DNPM) would have to be the main responsible agencies for increasing formality. Finally, a larger part of the CFEM tax could come to municipal governments, once they bear most of the impacts of emerald production.
Many regions that do not produce gems receive taxes because gems are commercialized and processed there. A change in the tax laws would also be desirable to ensure fairess to local governments in regions where mining takes place. Gems should be taxed were they are produced, not were they are commercialized, or at least part of the taxes should stay where initial production takes place.
III. Formalize miners.
Many miners have terrible working conditions and none of the benefits of a formal work contract, such as social security, health and life insurance. Improving enforcement of labor laws in mining regions would certainly advance the public good, but would not solve the problem fully. Besides the bureaucracy and high costs of Brazilian labor laws, informality in mining is also widespread because the profession of “garimpeiro” is not fully recognized by law. Also, since miners have high turnover, mine owners do not want to go the effort to formalize them. A special kind of temporary contract could boost formalization of workers in emerald mining. Finally, labor unions could play an important role in formalization of work, if they were better organized and strengthened in the mining regions. Most of the miners’ cooperatives currently do not aim to help in the formalization of workers.
IV. Incentives for voluntary amelioration of production activities.
Incentives from governments and national and international organizations could help to control some environmental aspects of emerald production. Many environmental impacts of gem production can be reduced by simple methods of environmental control, allied to stronger enforcement of environmental laws. The field research showed some cases where inexpensive projects led to improvements in environmental quality, such as the installation of common pools for the community to wash schist in Campos Verdes.
The rehabilitation of abandoned mine sites could be boosted. The environmental NGOs in Campos Verdes could implement a program of environmental education and reforestation with very little in additional resources. Cooperatives or labor or trade unions could also lead the projects in some of the producing regions that do not have organized civil society or NGOs.
Trade unions and the CETEM (National Center of Mining Technology from the Ministry of Mines) could play an important role in designing solutions to the environmental problems of emerald production. Those solutions could be adapted to the local conditions, such as low maintenance and operational budgets and the need for easy installation options. CETEM has helped to design and promote solutions for mercury poisoning that occurs in gold mining, so it could also help in gem production.
V. Upgrade the chain of emeralds in mining regions.
The regions that produce emeralds have few activities in the high-end sectors of the jewelry supply chain, where most of the value added to emeralds is generated (through jewelry production). Out of the three case studies, only Campos Verdes (GO) presented some intensity of activities related to emeralds besides mining, such as stone cutting (lapidary arts) and jewelry production, but those were still insignificant relative to the quantity of emeralds produced in the municipality. Most of the gems leave their producing regions in rough form and informal status.
Local governments were not very successful in trying to increase emerald-related activities. Even though the municipalities in the three regions mentioned their intention to improve value added opportunities, they could not do much because of lack of political support, interest or technical capacity. Itabira had almost no post-mining economic activity, but had plans to create a school of gemology in a local technical school and universit. However, the municipality still needs to find funding for this project. Local authorities were trying unsuccessfully to convince the Belmont company to bring some of its cutting activities, which are done in Sao Paulo, to the city. Campos Verdes had a program aimed at upgrading the chain of emeralds, and even received a prize to recognize the program, but after a change in government it was discontinued. The present government had good intentions but little knowledge of how to implement the value adding program.
There is a need for professional training in stone cutting and in gemology for evaluating gems, as well as for capital needed to spur business growth and expansion. One idea is to incubate local jewelry initiatives. Another is to bring companies from outside the area to open manufacturing centers in the mining regions. Much needed help could potentially come from the state trade unions and SEBRAE (Center for Support of Small and Micro Firms, a quasi-public organization organized nationally). State and municipal governments could provide economic incentives and political support for bringing outside companies to mining regions and for the development of training programs.