The Human Cost of Cheap Steel

By Dave Treece

IN THE MID-1500s the rich silver mines of Potosi, in what is now Bolivia, were discovered. By the middle of the 17th Century, with the refinement of the mercury amalgam process, the silver shipped to Spain from Latin America exceeded three times the total European reserves. It was a lucrative venture for the Europeans, but deadly for Bolivia's Indians. Within three centuries Potosi's "mouth of hell" had consumed eight million Indian lives. Many had been poisoned by mercury or toxic gases in the mines, others had simply been killed by the barbaric working conditions.

Today, in Brazilian Amazonia, Indians are still being poisoned by mercury as their lands are plundered for gold. But gold and silver are no longer the only, nor the biggest threats to the survival of the country's tribal people. Different minerals, other industries and new technologies have opened up new possibilities for economic exploitation. Disease, land expropriation and socio-cultural disintegration are the modern scourges of Brazil's 220,000 Indians, a brave but vulnerable shadow of the five million who once inhabited the country.

Today's equivalent of Potosi is the Greater Carajas Development Program. Occupying an area of eastern Amazonia the size of Britain and France combined, the Carajas Program is turning the region into a massive agro-industrial park of mines, smelters, dams, railroads, charcoal-burners, ranches and plantations, and is transforming its people into a destitute, landless labor pool. The $62 billion scheme is not the monopoly of a single colonial power, as Potosi was. Many governments, financial institutions and companies are sharing in the spoils, from the European Economic Community (EEC) and the World Bank to Japanese and North American banks and state and private companies within Brazil itself. But like the masters of Potosi they regard the region's 13,000 Indians as expendable.

As the director of Brazil's national Department of Mineral Production said: "There is clearly no intention of attacking the Indians; nor of obliging them to adopt a lifestyle contrary to their nature or which will expose them to problems which do not affect them today, in the isolation of their natural habitat. But beside this consideration it must be remembered that the majority of Indians in this country now wear jeans and listen to transistor radios, understanding perfectly well what the stations are broadcasting. It is not asking too much, then, that they should move a little way off or keep their distance when it is discovered that there is iron or gold, for example, ready to be extracted from the sub-soil, in order to make Brazil a more prosperous and just place."

The people who inhabit the Greater Carajas region have always been last on the list of priorities, rarely informed and never consulted about the likely impact of the scheme on their lives. The first, abortive plan to exploit the resources of the region followed the chance discovery of the world's biggest known deposit of iron--over 18 billion tons--by geologists working for the Meridional company, a subsidiary of U.S. Steel. The project was shelved in 1977 after attempts to establish a partnership between Meridional and the Brazilian state mining company, CVRD, collapsed.

The initiative then passed to the Japanese, and on the basis of a study by the Japanese Center for International Development (IDCJ) in 1980, the scheme was resuscitated, but now as the core of a much bigger development program for the entire region. The 900 km railway and deep-sea port facilities at Sao Luis on the north coast, which are included in the Iron Ore Project, would now not only serve the mine itself, but also form an export corridor for a whole range of industrial raw materials and agricultural commodities. Combined with the system of tax incentives instituted by the government in 1980, this has made it more than viable for companies to set up in the region, producing cattle, timber, palm-oil, metallurgical and other goods.

The Japanese have maintained interests both in the Iron Ore Project and in the Greater Carajas Program. In 1981 the Japanese agreed to a total investment of $500 million in the Iron Ore Project. The first shipments of ore to Japan were made in 1986, beginning a 15-year contract with seven steel companies for annual supplies of 10 million tons. In 1985, the Japan International Cooperation Agency (ICA) published a thousand-page regional development plan, a minutely detailed set of proposals for the exploitation of the region's natural resources. As a first step toward implementing the plan, the Nissho Iwai company applied to JICA in the spring of 1987 for nine billion yen to finance a eucalyptus afforestation project in conjunction with Florestas Rio Doce, a subsidiary of the CVRD. Meanwhile, the Nippon Amazon aluminum Company recently converted $44.4 million worth of the debt owed by Albras, which has a plant near Belem, into shares, giving it a 49 percent stake in the venture. While Brazil's enormous foreign debt is certainly a driving force behind the shift of capital into the region, it is clearly also highly profitable for the companies directly involved.

The losers, Indians and non-Indians alike, are those whose lands have been appropriated, legally or illegally, for the various projects. Approximately 20,000 people were evicted from the island of Sao Luis to make way for the rail terminal and for the aluminum plant set up by the Alumar consortium, which includes Anglo-Dutch Billiton. Roads, the railway and electrical transmission lines pass through or close to the lands of 12 of the tribal communities in the region. Many, such as the Apinaye and Krikati, are under constant attack from local farmers and are forced to compete for land and game with the ever-increasing population of peasant squatters that the transportation network has attracted into the area.

The railway is also the central axis of an initial series of 11 pig-iron and cement furnaces, which are to be powered by charcoal produced directly from local timber. Called disastrous even by the CVRD's own environmental officer, these are among the most disturbing of the recently approved projects. If the final go ahead is given, it will mean the devastation of 1.5 million hectares of forest. As well as being environmentally catastrophic, the furnaces will almost certainly bring about the final destruction of the Guaja, Brazil's last purely nomadic, hunter-gatherer people, who depend wholly on the forest for their livelihood. Already, within eight years of contact with the encroaching white society, the Guaja have suffered devastating epidemics of infectious diseases, in one case reducing a community of 120 people to just 30.

Although the major international funders of the Iron Ore Project would prefer to disassociate themselves from the wider regional development scheme which their investment has made possible, the Carajas Iron Ore Project, the export corridor and the Greater Carajas Program are integrally linked. By separating the schemes, the funders hope to downplay the environmental and human costs of their investments and lessen international criticism.

Of the total $3.6 billion budget for the Iron Ore Project, over $300 million was supplied by the World Bank, and $600 million came from the European Coal and Steel Community. In return for the loan, the CVRD signed a series of contracts guaranteeing the provision of an annual 13.6 million tons of iron ore to European steel firms, reportedly at "banana" prices. This increase means Brazil now meets 50 percent of the EEC's iron ore needs, as compared to 25 percent before the deal. The Vice-President of the European Commission at the time, Christopher Tudendhat, admitted that "these contracts contain favorable pricing conditions which will contribute to preserving the competitiveness of the European steel industry."

Yet, despite the enormous gains to the European steel industry, the EEC has made no practical commitment to the protection of the tribal people and the forests jeopardized by the Iron Ore Project. Despite motions and questions tabled by Euro-MPs who have visited the area, repeated appeals by the General Assembly of Non-Governmental Organizations for a suspension of the loan and an independent inquiry, and even the conclusions of a draft report by the European Parliaments's own Environment Committee, which regrets the decision to finance the Project, the EEC has refused to back down. Instead, it has insisted that the assurances of the CVRD and the World Bank, which oversaw the institution of environmental and Amerindian protection measures, to the tune of $53 million and $13.6 million respectively, will adequately take care of the situation.

Although the Brazilian government's record in implementing effective protective measures elsewhere is poor, the Bank left the allocation of these funds up to the Brazilian government. The result has been on the one hand, a degree of ecological window-dressing but no serious attempt to set aside substantial biological reserves; and, on the other, an Amerindian Sub- Project designed, not to protect the tribal communities from the impact of Carajas, but to integrate them into its economic structure, shattering their social institutions and cultural identities.

Resources have been ploughed into ambitious profit-making agricultural schemes and into the bureaucracy of the government's corrupt and inept Indian agency, FUNAI. A derisory 1.8 percent of the budget was assigned to the crucial issue of land demarcation when the project was designed in 1982. This was raised to a still paltry 10.5 percent as a result of external pressure in July 1986, just a year before the project was due to terminate. Although it has now been extended indefinitely, there is no evidence to suggest that any progress is being made in guaranteeing territorial rights to the tribal communities of Carajas . To date, 16 out of the 27 territories in the region still lack the legal protection necessary to prevent invasions and the destruction of their livelihood.

What is worse, both FUNAI and CVRD, the state mining company responsible for overseeing the Amerindian Sub-Project and the Iron Ore Project itself, have repeatedly violated the Indians' land rights. Virtually the whole of the Catete Reserve, which lies adjacent to the iron ore mine and which is home to 300 Xikrin Indians, is subject to mining claims by subsidiaries of CVRD. In the case of the still undemarcated Guaja reserve, the CVRD actually obstructed the demarcation process in an attempt to guarantee its access to valuable bauxite deposits. The latest demarcation proposals excluded those deposits from the territory which would be recognized as tribal.

(balance of this article omitted here; unscannable) .

Dave Treece, a consultant to Survival International, is the author of Bound in Misery and Iron: The Impact of the Greater Carajas Programme on the Indians of Brazil. The report is available for $5.00 (£250 in the United Kingdom) from Survival International, 310 Edgeware Road, London W2 1DY, United Kingdom.