Casa da Moeda sells gold supplied by a company accused of being linked to illegal mining in the Amazon

The State Mint, linked to the Ministry of Economy, sells decorative medals made from gold supplied by a company accused by the MPF (Federal Ministry) of being one of the main traders of gold extracted from illegal mining in the Amazon.

The supplier is FD’Gold. According to the MPF, between 2019 and 2020, FD’Gold sold at least 1,300 kilos of gold of clandestine origin. Specialists claim that there is a risk that gold from the Amazon that reaches the formal market is “contaminated” with gold of illegal origin.

Sought, the companies claimed commercial secrecy and did not say what documents or procedures they adopt to assure their customers that the medals sold with FD’Gold gold are not made with illegal gold.

After the publication of the report, the Mint sent a new position in which it informs that the contract with FD’Gold foresees “social-environmental and anti-corruption requirements”. Among them, according to the state-owned company, there would be a requirement that both parties comply with environmental legislation and that they do not use resources from the contract to cause environmental damage.

The Central Bank, in turn, says it is only responsible for overseeing gold after it is purchased by financial institutions.

The Mint is the state-owned company responsible for manufacturing the Real banknotes and coins, as well as other items such as passports. The company uses its structure to manufacture medals and decorative coins made with various types of metal such as gold, bronze and silver.

They are usually sold to collectors through their website. Some of them are purely commemorative, while others are considered “financial asset”, a type of government subsidized gold investment.

FD’Gold, in turn, is a securities distributor (DTVM) regulated by the Central Bank that operates mainly in the purchase and sale of gold. According to data from the ANM (National Mining Agency), it is the third largest ore trader in the country, in 2021.

Unlike the top two, however, which are large mining companies, FD’Gold does not have gold exploration mines. It works by buying metal from miners or cooperatives and reselling it on the market. The company is headquartered in São Paulo, but has offices spread across several states in the Amazon, such as Rondônia, Pará and Mato Grosso.

The business relationship between the two companies began after FD’Gold contracted the Mint to sell decorative gold medals. The hiring is informed in the section of the Casa da Moeda website where its products are sold.

“The Casa da Moeda do Brasil was hired by the company FD’Gold for artistic creation, industrialization of gold for making medals and making the product available on its website”, says the site.

Also according to the website, the medals sold on the company’s website, as well as the shipping cost, packaging, shipping insurance and payment method are the responsibility of FD’Gold.

Medals can be purchased via the internet on the Casa da Moeda website for values ​​that reach R$ 3,900. Products are shipped by post.

financial assets

In addition to being items for collectors, the medals produced through the partnership between the Casa da Moeda and FD’Gold are also considered “financial assets”, in other words: they are investments recognized by the country’s financial authorities.

It is not known exactly what percentage of the amount paid for medals remains with the Mint and how much is transferred to FD’Gold. This happens because the state-owned company does not provide the terms of the contract signed with its supplier.

BBC News Brasil requested copies of contracts and documents relating to transactions between the two companies via the Access to Information Law (LAI), but the Mint claimed commercial secrecy and refused to disclose the information in the first and second instance.

An electronic spreadsheet obtained by BBC News Brasil and which is part of an electronic process by the National Mining Agency reinforces the gold supply link between FD’Gold and the Casa da Moeda.

It is a table for monitoring the progress of products made by the state-owned company. In one of the fields in the table, the information that the company supplies gold to the Mint is clear.

“OP (probable acronym for payment order) overdue since 08/30/2021, waiting for the FD GOLD client to deliver gold at the CMB (acronym for Mint) to complete the order for one hundred units, where we have 87 completed”, says the table.

Risk of ‘contamination’ with illegal gold

Specialists interviewed by BBC News Brasil claim that the facility to falsify the origin of gold extracted illegally in the Amazon, which is called “warming”, makes it virtually impossible to know if the ore circulating in the formal market has arrived to the Mint came or did not come from a regular source. The Amazon is the main region where FD’Gold’s operations are concentrated.

By law, gold can only circulate through the financial system through DTVMs. Under current legislation, these companies can buy gold from miners anywhere in Brazil as long as, at the time of purchase, the person selling the ore declares that it was extracted from a mine authorized by the ANM.

As the law provides for the principle of “good faith”, there is no direct check on whether the information recorded in this transaction is true or not.

A study prepared by the UFMG (Federal University of Minas Gerais) released this year indicates that 28% of all gold traded in Brazil between 2019 and 2020 had evidence of irregularities. This is equivalent to 49 of the 174 tons of gold registered in the country in the period.

To reach these conclusions, the researchers used satellite images and cross-referenced this information with the gold purchase declarations from several DTVMs, including FD’Gold.

The researchers identified that at least 1,300 kilograms of gold traded by FD’Gold between 2019 and 2020 would have an illegal origin because the areas registered as mining sites were intact, according to satellite images.

The study served as the basis for a public civil action filed by the MPF in August this year against the company. Asked about the action by BBC News Brasil, the company did not comment.

For the agency, the fact that the area from which the gold should be extracted is untouched is a strong indication that the company buys gold produced in illegal mines in the Amazon, including those located in indigenous lands such as the Yanomami, in Roraima, or Munduruku , no stop.

“The gold acquired by FD Gold DTVM, although formally linked to PLGs (mining permits) located in the region of Itaituba, Jacareacanga and Novo Progresso, underwent heating […] for this reason, this gold can actually come from any other point in the biome where illegal mining exists, such as the Munduruku Indigenous Lands, Kayapó, Yanomami, Raposa Serra do Sol, the Madeira Rivers […] among countless other mining points present in the Amazon”, says an excerpt of the action.

Also according to the MPF, given the volume of gold sold by the company, it could not claim ignorance about the illegal origin of the product. According to the attorneys responsible for the action, which is being processed in the Federal Court of Pará, the company practiced “deliberate blindness”.

“It was totally predictable for FD’Gold DTVM, therefore, the risk it was exposed to when acquiring gold in the Amazon […] in spite of that, minimum precautions to prevent environmental damage were not adopted, consolidating a business practice of deliberate blindness that ended up contributing to the proliferation of damage associated with illegal mining in the region”, says the lawsuit.

The MPF seeks compensation of R$1.7 billion from FD’Gold for material environmental and socio-environmental damage caused by the purchase of illegally sourced gold.

The researcher and one of the authors of the UFMG study, Raoni Rajão, says that, given the lack of control over the origin of gold in the Amazon, those who sell ore from the region are likely to be buying or selling an illegal product.

“Whoever buys gold from the Amazon today has a very high chance of buying a metal that comes from illegal mines located, even on indigenous lands”, says the researcher.

For the manager of products and projects at Instituto Escolhas, Larissa Rodrigues, the control system over the production and sale of gold in Brazil is fragile and there is no way to guarantee the legality of the gold circulating in the formal market.

“The extraction of illegal gold in the Amazon remains uncontrolled, as we have seen with the images of hundreds of ferries that have taken over the Madeira River in recent days […] without a traceability and origin control system, there is no way to know if the gold on the market has a legal origin”, says Larissa.

BBC News Brasil sent inquiries to the Casa da Moeda, FD’Gold and the Central Bank, responsible for the inspection of DTVMs.

To Casa da Moeda and FD’Gold, the report asked about the procedures and guarantees given to its clients that the medals sold were made with gold of legal origin.

Through a note, the Mint said it would not comment on the matter.

“The Mint will not comment on the matter as it contains confidential contractual information,” said the state-owned company.

FD’Gold followed the same line.

“This is a private relationship, legally constituted under the terms of current national regulations, protected by the civil obligation of secrecy and confidentiality”, replied the company.

The Central Bank, in turn, said that it is not up to it to oversee the gold trade before the acquisition by DTVMs.

“Only after the acquisition of gold by the financial institution, with the purpose of turning it into a financial asset or exchange instrument, and its insertion in the financial or exchange markets, does the metal enter the competence of the Central Bank”, said the BC.

Anoro did not respond to inquiries sent.