Unexamined synergies: dam building and mining go together in the Amazon

[Albrás] and one to Alumar. Whereas now it’s all mixed in the SIN.”

Still, residents along the Tapajós River are highly suspicious concerning the true purpose behind the controversial São Luiz de Tapajós mega-dam. Many believe its 10,000 MW of generating power were destined for the nearby Jurutí bauxite mine to make aluminum for export.

Environmental activists, indigenous communities and traditional riverside dwellers in the Tapajós River basin recently fought successfully to halt construction of São Luiz de Tapajós. IBAMA, Brazil´s environmental regulatory agency, archived the project last year. Nonetheless, opponents are concerned that the government could re-start the project any time.

Interviewed shortly after IBAMA´s decision last year, Cacique Juarez Saw Munduruku of the Sawré Muybu indigenous community, told Mongabay he wasn´t resting easy. “I worry a little. I worry because I don’t believe in the Brazilian government. They could appeal the decision on the licensing to re-start the studies. That’s my concern. So that’s why we can’t stop fighting. We’re going to keep fighting until the government abandons building anywhere on the Tapajós because the Tapajós is part of the Munduruku.”

A spokesperson for Alcoa, which operates the Jurutí mine, countered that producing energy at the São Luiz de Tapajós dam wouldn’t necessarily benefit them. “From the energy perspective, Juruti’s connection to the grid depends on transmission infrastructure, not on new generation.”

Though SIN has erased the obvious one-to-one link between a particular dam and a particular mine, that doesn’t diminish the mining industry’s urgent need for energy, which can be met by Amazon hydropower. The Pará state Mining Plan 2013-2030 issued by the Secretary of Economic Development, Mining and Energy makes clear that a lack of affordable energy stands in the way of attracting new investments. The plan affirms that a lack of energy “represents a significant challenge to the growth of the state’s industrial chain,” which ultimately “threatens the aluminum industry itself in Brazil.”

Amazonian mineral wealth

The northern Brazilian state of Pará, traversed by the lower Amazon River and major tributaries including the Tapajós and Xingu rivers, is one of Brazil´s leading mineral producers. It also illustrates Brazil´s mineral wealth.

The state´s Secretary of Economic Development, Mining and Energy (SEDEME) told Mongabay that the mining sector makes up two-thirds of Pará´s exports and accounts for 13 percent of the state’s Gross Domestic Product. An overwhelming 85 percent of Brazil´s total bauxite originates in Pará, SEDEME told Mongabay.

Bauxite is the essential ore needed in the highly energy-intensive process for making aluminum. Alcoa has been operating the Jurutí mine on the western edge of Pará state since 2006. Jurutí sits atop what some estimate to be the largest bauxite deposit in the world. Lucio Flavio Pinto, a recognized journalist from the region, estimates that its three strata layers hold 700 million tons of bauxite. Alcoa says there are 21.1 million bone-dry metric tons (bdmt) there. The company’s website notes that Alcoa World Alumina and Chemicals (AWAC) has contracts for its bauxite with customers in China, Brazil, Europe and the United States, and the company estimates the value of these 2017 third-party supply agreements at nearly $665 million.

Bauxite is Brazil´s second-largest mineral export, with 10.4 million tons sent abroad in 2016. Manganese is third with two million tons. In terms of market value, however, gold is Brazil’s second most important mineral. Gold exports in 2016 were valued at US $2.89 billion.

Iron ore is Brazil’s largest mineral export, although price slumps halved its value from nearly US $26 billion in 2014 to just over US $13 billion in 2016. Still, the amounts mined stayed relatively stable, increasing from 344 million tons in 2014 to 373.9 million tons in 2016.

Minerals such as these are critical to the world economy and ubiquitous to daily life. People across the world use aluminum in cell phones, bicycles and cars, for example. And the power from hydroelectric dams ensures that refrigerators, lights and air conditioning keep running.

Still, Brazil’s citizens and environment pay for the country’s commitment to large-scale mining — and for its lack of commitment to safety and stewardship. For example, the country’s largest-ever environmental disaster occurred in 2015, when the Fundão iron mine tailings dam failed in Minas Gerais. The dam collapse killed 19 people and impacted 1.6 million people in the region. Its failure poured 50 million tons of ore and toxic waste into Brazil’s Doce River, polluting the stream and croplands, killing fish and wildlife. It also contaminated drinking water with toxic sludge for the river’s 853-kilometer (530 mile) length. People in Pará worry because the same technology is now being proposed to store waste from Belo Sun´s proposed gold mine near the Belo Monte dam.

Similarly, Alcoa’s Jurutí mine has been controversial since its inception, and has seen public mobilization and protests against its negative social and environmental impacts, such as water pollution. The Tucuruí dam, which was built before Brazil passed a law requiring environmental impact assessments prior to construction, eliminated 1,783 square kilometers (688 square miles) of forested land, displaced indigenous and traditional riverside dwellers, and damaged fisheries. Fearnside argues that since so much power from the dam was committed to aluminum production, other dams had to be built to provide electricity to cities in the region. Further, like other dams in the tropics, rotting vegetation in the reservoir produces methane, a highly potent greenhouse gas.

These impacts, he wrote, can only be properly assessed once it´s clear who benefits from a dam. “Unfortunately, this did not occur in the case of Tucuruí, which mainly benefits multinational aluminum companies.”

The ongoing marriage of mining and dams

The relationship between mining and hydropower is easily explained: the mining and processing of metals, particularly aluminum, requires vast amounts of electricity. Fearnside reports that fifty percent of Alcoa´s overhead at its Albrás and Alumar facilities stem from energy costs, that’s according to a statement by the company´s Latin America and the Caribbean Director at the 2010 International Aluminum Conference in São Paulo, Brazil.

However, the abundance of rivers in the Amazon basin combined with the region’s impressive mineral wealth, have made it attractive for planners to think strategically about supplying the energy for processing ore through hydropower.

The hitch, according to Doblas, is that little heed is being paid to the environmental and social consequences of this strategy. “The truth is that installing a hydropower dam provokes the installation of mining projects. This never, or extremely rarely, is integrated into the licensing process as a synergetic effect.”

In Ocekadi, a book published by International Rivers last year, Daniela Fernandes Alarcon, Maurcio Torres and Natalia Ribas Guerrero highlight the financial interests — including mining — behind the infrastructure plans in the Tapajós region, pointing to evidence in Brazil´s media. For example, In 2011, the Folha de São Paulo, one of Brazil´s most respected newspapers, reported on a round of investment aimed at the Amazonregion, and concluded that: “the electricity sector is the driving force behind this investment.” The report described plans for hydroelectric dams such as Belo Monte on the Xingu River, Santo Antonio on the Teles Pires River and the São Luiz de Tapajós project. It said that these dams should produce a 13-percent increase in energy from the region and thus “[become] one of the engines for growth.”

The Amazon basin, and Pará state in particular, offer several clear examples of mines associated with hydropower projects. Besides the Tucuruí dam and the foundries in Bacarena and São Luis, there is also the bauxite mine at Paragominas which the Norwegian firm Hydro acquired from Alcoa last year. Although not active yet, the Belo Sun gold mine would take advantage of the Belo Monte dam´s power supply.

Itaituba is a small city on the Tapajós River that has been a hub for the gold mining industry since the 1980s. Mongabay reached out to members of Itaituba’s Chamber of Commerce to get their perspective on the benefits of mining and dams to the region, but they declined to comment.

Generally, proposed Amazon hydropower dams are dissociated from the mining they will support. The 2,350 MW Cachoeira Porteira dam, for example, was first proposed in the 1980s as an alternative power supply for the city of Manaus and has yet to be built. But the prospective location is in Pará on the Trombetas River near Cruz Alta, home to a large bauxite deposit that Mineração Rio do Norte (MRN) aims to begin mining in 2022. Complicating matters, the bauxite lies underneath land claimed by a quilombola, a community of the descendants of escaped slaves. The slow titling process which would give a land deed to the community, and the proximity of the mining interests offer an example of simmering land rights tensions in the region.

MRN is a consortium made of up mining companies including Vale, Alcoa, BHP Billiton, RioTintoAlcan, CBA, and the Norwegian firm Hydro. A spokesperson for MRN said that the company has no relationship with the Cachoeira Porteira dam project or any other hydroelectric dam along the Trombetas River. He also said: “There are no conflicts between MRN and quilombola communities that seek land titling.”

Yet Lúcia Andrade of the Pro-Indian Commission disputed this. “Since 2013, MRN has been expanding its extraction area inside the quilombola territories. Now, in April 2017, MRN requested a preliminary license to expand mining even further onto Quilombola land.”

For Doblas, the idea that MRN has no interest in the Cachoiera Porteira dam is laughable. “The mining companies aren’t paying for these projects directly. They’re not lobbying for these projects. But they will benefit, and these projects will facilitate the arrival of more mining.”

Dams are just one element in a growing infrastructure web in the Amazon. New roads, railway lines and shipping canals, facilitated by locks associated with dams, are being planned in the Tapajós basin and elsewhere to cheaply transport commodities. For Greenpeace´s Danicley Aguiar, this development is taking place without prioritizing the interests and needs of the region´s most vulnerable: “You have a construction boom, and you get a surge in job opportunities and what-not, but once the project is done, the only winners are short-term interests.”

Industry lobbies government

Interests such as mining and agribusiness make their influence felt in Brasilía. Aluminum exporters, for example, have been given large breaks on their energy costs, and they pay a lower tax rate than companies that produce for the domestic market.

Corporate profitability, for example, was guaranteed to Albrás in the final years of Brazil´s dictatorship. At the time, the government granted Albrás a 20-year energy contract that guaranteed the price of electricity wouldn´t exceed 20 percent of the global price of aluminum, ensuring ongoing profits. Fearnside reports that the contract was renewed in 2004 with substantial new subsidies. Norwegian firm Hydro is now the majority shareholder in Albrás, along with a consortium of Japanese companies.

Aluminum exports are likewise exempt from the country’s main tax, ICMS, (Imposto sobre Circulação de Mercadorias e Serviços – Tax on Circulation of Merchandise and Services). Since aluminum produced in the Amazon is mainly for export, this has a significant impact. Fearnside says that Albrás and Alumar pay roughly 8 percent in taxes once incentives and other benefits are taken into consideration. Their colleagues in the southern part of the country, producing for the domestic market, pay a 20 percent tax rate. This corporate welfare impacts competitiveness, giving exporters a serious advantage.

“Our raw materials leave without paying taxes, so we are still like a colony from the early times of our history,” Eduardo Costa told Mongabay. Costa is a physician and has been a conservative member of Pará´s state legislature since 2002. He argues that Brazil’s Kandir law, which would allow states to tax unfinished goods, needs to be implemented urgently. Since only finished goods are taxed, Costa says, the state is losing out on a significant potential stream of revenue because both ore and the energy produced by hydropower dams leaves the state untaxed.

“Neither mining, which the Kandir law [neglects] and has been costing the state for years, nor our own energy production generate dividends for the state,” he told Mongabay.

At the same time, he said, dams and other projects have social impacts. “There are areas of misery that were created by these mega-projects,” Costa told Mongabay, describing the dramatic increase in violence in Altamira since the construction of the nearby Belo Monte dam.

While some companies benefit, Brazil accumulates a series of financial, social and environmental impacts. In 2013, Brazil exported aluminum bars worth US $789.9 million, generating US $63.2 million in tax income, a figure Fearnside´s book calls “miniscule in comparison to the financial cost and the damages inflicted by the hydroelectric dams that are behind the industry.”

He argues as well that substantial government subsidies for export-oriented industries end up undercutting the power of domestically-focused industries. This has shifted the balance of political influence to exporters through a feedback loop that means they are likely to see more policies enacted that benefit them, such as dam, canal and railway construction.

The resource curse

Raimunda and João´s story brings the human impact of mining and dam construction into focus. It is also an example of the “resource curse” — a phenomenon in which many of the world’s most mineral-wealthy countries nonetheless report staggering levels of poverty and inequality.

Experiences like those of Raimunda and João are the focus for Daniel Rondinelli Roquetti´s doctoral research at the University of São Paulo. He is studying the lifestyle changes faced by people who have been displaced by hydropower dams. “Brazil generally exports people’s lives in aluminum bars,” he says. “There are a series of impacts in terms of human rights and environmental damage.” These impacts, Roquetti argues, don’t figure into costs the country shoulders to produce aluminum.

Before the Belo Monte dam was built, Raimunda and João split their time between their island home where they fished, gathered fruit, and planted vegetables; and a city home that gave them access to markets to sell their produce. Their city home was a humble place in an informal community next to the river´s edge, minutes from central Altamira. The community flooded seasonally, yet was vibrant with fisherfolk and other families.

Now the couple lives in a cinder block house in a resettlement community four kilometers from the river. Since there´s no public transportation, Raimunda must pay for a motorbike taxi to get from the house to the city center. The informal social network the couple once enjoyed has been disrupted because all the riverside families have been displaced.

In the shady gap between their cinder block house and the concrete wall surrounding it live Raimunda’s tortoises. She feeds them tomatoes and other vegetables. She also identifies with them. “I’ve promised not to eat them,” she explains. Once she and João can return to their island, Raimunda has promised to free the creatures. “I’m going to live where I like, and they’re going to live where they need to be.”