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Digging into the mining arc
El Callao, Venezuela

Digging into the mining arc

For three months reporter Bram Ebus travelled Venezuela’s disputed mining areas where he was confronted with illegal armed groups, indigenous communities repressed by Colombian guerrillas and enclaves of informal miners tormented by malaria. An illegal detention by the National Guard almost prematurely ended this investigation.

In this journey, we talked to miners, companies, academics, indigenous, politicians and activists and gathered exclusive material on Latin America’s most underreported natural resources conflict.

With muddy hands, a miner throws mineral-rich rocks into a spinning mechanical mill that crushes the stones to be processed with mercury. At a small distance, a few soldiers hang around. The military escorted us during our visit to the green hills next to El Callao, one of many heavily contested mining hotspots in Venezuela. “A shootout or a massacre could happen any moment, all days were like this,” another miner enthusiastically tells about the violent behaviour applied by armed groups that fought for access to this very mine.

The gold that is extracted will end up on the world market in the form of jewellery, locked up in a bank or used in electronics, but few people will know about its origin. “They work commando style,” the miner continues about the nightly shootouts in the hills surrounding the village where bullets are shot at every visible headlight as a curfew is imposed by active gangs. Most of the miners do not want to be named as they fear repercussions from armed actors in the region.

The Venezuelan military also participates in the violence and is often involved in mining through associated gangs and its own operations. Venezuela’s armed forces gained power during the presidency of the late Hugo Chávez. Clíver Alcalá Cordones, a Chávez loyalist who retired in 2013, was a Major General that held command in the mining regions. At a meeting in a hotel lobby in Bogotá, Colombia, he explains that Maduro is increasingly handing over power to the military and government sectors that now partake in what is called “disaster and pillage”.

A road trip to the south of Venezuela, near many illegal gold mines, gives the impression that the region is well controlled. While driving on the main roads, we are interrupted every 30 minutes at checkpoints by armed National Guardsmen, who are charged with maintaining internal public order—but when approaching the mines, it is the military that runs the show.

It does not really matter if the gold has a legal or an illegal origin, whether it is mined by companies or gangs. Four areas in Bolívar state, decreed in 2016 as an immense mining zone and branded the Arco Minero del Orinoco (Spanish for “Orinoco Mining Arc”), represent a dark symbiosis of both worlds.

What matters most, is the impact that the Arco Minero creates on the region. The four areas overlap many legally-protected environmental and indigenous territories, which will likely lead to their destruction. Miners risk their health and lives as working conditions are unsafe and mining areas violently disputed. Damage to the environment is of no concern to the enclaves of subsistence miners and the brutal forces that control them. Moreover, the environment is considered inconsequential by the government that created the legal framework that sanctions all the extraction activities.

Alexander Luzardo, a former senator with a doctorate in political and environmental law, has been personally involved in Venezuela’s environmental legislation. He wrote the environmental standards for the current constitution, in place since 1999. With these standards he underlined how important it is for Venezuela to protectenvironmentally vital regions. However, in 2016, he saw his decrees violated by the Arco Minero. “The Arco Minero is illegal. It denies the existence and creation of protected areas by decree,” Luzardo says in an interview at a small coffee shop on the campus of the Central University of Venezuela (UCV), in Caracas, where he currently teaches.

The professor has a very grim prediction for the country. “This is the easiest road for environmental destruction in Venezuela. The big contribution from Venezuela to the destruction of the planet,” Luzardo says. The professor adds that Venezuela had made some impressive progress in terms of environmental protection and fears that the Arco Minero will undo it all: “This project is the worst answer to the crisis and the denial of the whole environmental project.”

Not much is known about mining in a country that has built its entire economy on its nationalized oil industry. Now the government is tapping into another finite resource, because Venezuela not only possesses the world’s largest oil supplies, but also claims to have the second biggest gold reserve. If Venezuela is able to certify the deposits, it would undoubtedly be welcome news during the country’s darkest hour.

The country has already found itself in financial and political turmoil, but current levels of hyperinflation and shortages in basic products are driving the economy towards rock bottom. The government needs concrete solutions, hence the announcement that a significant part of the country will be opened for a new motor of economic development: mining.

The billions of dollars generated by oil and gas exploitations financed President Chávez’s social programs from 1999 until his death in 2013. Unfortunately these revenues dried up after structural self-enrichment by the country’s elites and declining oil prices after 2014.

“It is a desperate move by the Maduro government to raise cash,” says David Smilde, sociology professor at Tulane University and Senior Fellow at the Washington Office on Latin America. “There is a very real danger that it will lead to ecologically destructive mining operations in a territory with incredible biodiversity and protected indigenous populations.” He is convinced that Venezuela will destroy an important resource, in terms of watersheds and potential tourism, for short term gains.

Photo Credit: Bram Ebus/InfoAmazonia

Economies that are merely based on what is hidden in the ground do not necessarily mean trouble, financially speaking. “I actually have a somewhat different view from many scholars and think a rentier economy is not the basic problem, bad policies are,” says Smilde. “I think Venezuela’s current problems have less to do with the decline of the oil price and more to do with unsustainable economic policies. Remember that the 2014 cycle of protest was in part motivated by scarcities, inflation and unemployment, and that oil was almost $100 a barrel. The model was already unsustainable, the drop in oil prices has just hastened its decline.”

While international creditors desperately try to get their money back from Venezuela, which is on the verge of a default, there is somebody who is happy with the Arco Minero. It’s President Maduro. With a curious smile under his characteristic moustache, he shows a gold ingot to the Venezuelan press. The gold belongs to one of the first batches coming from the Arco Minero, an area of no less than 112 thousand square kilometres bordering the southern side of the Orinoco River, the main source of water for Venezuela and the third most important in Latin America. 

In August 2016 Maduro officially announced: “The Arco Minero is now a reality”. According to the government, 150 companies from 35 countries were willing to invest in mining, but after the big announcement, concrete mining projects remain absent.

There were a lot of press junkets and even a new Mining Ministry was created. A joint venture with Endiama, an Angolan public mining company, was signed to mine diamonds and a handshake with the Palestinian ambassador, revealed that two Palestinian corporations want to mine for coltan. The usual allies, China and Russia, both want a piece of Venezuela’s cake of minerals on their plate, mainly for debt management with both countries that facilitated loans. In total, Venezuela has a $150bn debt to pay to a long list of creditors.

The world’s biggest gold mining company, Barrick Gold, responded to our enquiry, explaining: “While Barrick did participate in a review of mining projects in the country, the company is not pursuing any projects or investments in Venezuela.” Maduro, however, claimed to have signed a contract with Barrick Gold in August 2016.

More than a year after Maduro’s announcements, talking about who really controls mining in the crisis-ridden country remains taboo. “Behind mining in Venezuela, there has always been the opacity of military factors”, says Américo de Grazia, who belongs to the political opposition and is a deputy in the government-sidelined parliament. De Grazia represents the state where most of the gold reserves are hidden, Bolívar, the state where most of the gold reserves are hidden. “[Illegal] mining has been criminalized for the public opinion, but their own clandestinity is allowed. Here the maximum operator [the ones in charge] are the public forces, and the practical operator [the executor] is organized crime,” he says.

Venezuela has an astonishing number of generals – about two thousand – and the armed forces rule the Arco Minero, which is underlined by De Grazia and Luzardo, who argue that military domination extends to most of the mining sector. They extort the gangs that operate the illegal mines and control the export routes. Mining is a cash machine that slowly is becoming institutionalized. Last year, the Anonymous Military Company of Mining, Petroleum and Gas Industries (Camimpeg) was created alongside a ‘Military Economic Zone’. Active or former military personnel are present in about 30 percent of the state companies with public boards of directors. Knowing that the Arco Minero will be exploited by joint ventures in which state companies will have a majority share, it is very likely the military remain in charge.

De Grazia says that generals are frequently changed, as are military personnel on the boards of companies: “Every military person that arrives wants to be rich overnight, which makes him more cruel, more violent and his norms will be more inhuman because he knows that the path to enriching himself is this, and that he has one or two months, maybe a year to do so.”

“When we destroyed some illegal mining activities, the miners complained about it, because they paid the military before,” says Alcalá, the retired general who held command in the mining regions. He mentions that many planes illegally export a majority of Venezuela’s gold to the Caribbean Islands. The military is involved: “They get [the plane] off the radar so they do not know where it is.”

Alcalá confirms that the army receives significant benefits from illegal mining, while the gangs that operate the mines, use violence to maintain control. “Since a year, there have been massacres executed by the army in some areas because there is gold.”

An analysis of press reports by the Observatory of Violence and Crime in Bolívar state shows that in the first ten months of 2017, at least 1,415 people have been murdered there, many of them in mining areas. An accurate estimate of people killed in clashes between violent gangs and shootouts with the army is impossible to obtain, as it is not unusual that migrant miners, who are not from the region themselves, end up in clandestine graves after being murdered in remote areas.

Although Venezuela’s uncontrolled mining conflict is nothing new, the real battle for access to mineral resources seems just to have begun. Legalised looting not only directly impacts Venezuela and its border areas, but also the global demand for minerals and the numerous international networks of resource traffickers abroad. Therefore, the damage that is done to one of the most important ecosystems, the Amazon, makes the Arco Minero an issue of international interest. 

Unrest in Venezuela’s cradle of gold mining

Venezuela does not have an elaborate mining history like its neighbours Colombia and Brazil, but if there is one place in the country that traditionally breathes mining, it is El Callao. The face of the village in Bolívar state changed forever when gold was discovered there in The face of the village in Bolívar state changed forever when gold was discovered in 1853 and it even became the world’s leading gold producer in 1885. Various foreign companies operated mines in the area, but it is Minerven, a company created in 1970 and nationalised four years later, that has exploited most gold coming from El Callao.

Local miners tell that working for Minerven used to mean status, and that employees would wear company shirts with honour, but things have changed in recent years. Minerven has fallen into decay. Production plants have been dismantled and the yearly production targets are not met, by far. Meanwhile, many armed groups have started to overtake the larger mines that surround the village. About one year ago, the Venezuelan army increased its presence the area – for its own gain, many say – and has not stopped fighting with gangs and killing their members ever since.

Photo Credit: Bram Ebus/InfoAmazonia

Mining in El Callao belongs to the Arco Minero project. About four mixed companies claim to be part of it, but a visit to El Callao is more than enough to understand that illegal and legal mining go hand in hand.

Not only is most of the population directly or indirectly involved in the rudimentary extraction of gold, but mining and village life are intertwined. Wherever you are in El Callao, you probably will not have to walk more than a minute to find a gold merchant while it is a more difficult task to encounter a bakery or a supermarket.

Photo Credit: Bram Ebus/InfoAmazonia

In the evenings, when most shops close up and when most miners dedicate themselves to their favourite activity – drinking – you will see people sweeping the floor in front of the gold shops, not only to clean, but to find gold. Flakes of gold can be accidently dropped by an uncareful salesman, and small shavings of gold get lost while burning the mercury amalgam, which is an activity that one prefers to do in front of the shop so that the toxic mercury fumes do not remain indoors.

In 2017, until mid-November the Central Bank of Venezuela (BCV) received 8.5kg of gold, all from Minerven. “El Callao is maintaining Venezuela,” comments the owner of a gold pawn shop on the central square of the village. However, according to various miners and Minerven personnel interviewed for this report, the gold does not originally come from Minerven, but from the small-scale, and illegal mines.

"We are authorized to buy from 17 or 18 associations of artisanal gold producers, but we know they buy from illegal miners."
— Minerven source

“I can’t affirm that Minerven buys from illegal mines, because on paper it is not like that,” a Minerven source says. “We are authorized to buy from 17 or 18 associations of artisanal gold producers, but we know they buy from illegal miners. That’s how it works now. Everyday people are looking to conduct business with us to become legal.”

Miners explain that only a minor portion of Venezuela’s gold production ends up at the BCV. Most of it is smuggled abroad by the army and organized crime. “Eight thousand kilos are nothing,” says retired general Clíver Alcalá Cordones. “It goes to Aruba and Curacao.” About 80 per cent of Venezuela’s gold illegally leaves the country by airplanes transporting contraband, according to Alcalá.

Since the 19th century, various international companies, from France, the United Kingdom, and Russia have entered the region to mine the rich gold veins that not only surround the village, but run right beneath it. Neighbourhoods around the centre slowly became mines

Photo Credit: Bram Ebus/InfoAmazonia

It is not uncommon for a house to have a few processing mills in its backyard close to various holes in the ground.These holes must not be mistaken for bad sewerage – they are mining tunnels that lead to various horizontal mining galleries.

“Confrontations have already been taking place for two years, these occur because there are many mining zones here,” says a local miner from El Callao. “Mining zones are big, there are neighbourhoods with mining. If one neighbourhood has too much gold, another neighbourhood wants to enter. Not to work, but to rob with weapons in their hands and to get rid of the people who have gold they want to take.”

Villages becomes mines, and mines become villages. Mining areas around El Callao are called Colombia, Peru and Chile, along with other names that were given by previously present foreign mining companies. At the moment, these mines are worked by illegal small-scale miners. They operate under pressure of the local gangs that collaborate with the army. Meanwhile, unknown intruders who have fought for years over the gold mines have already stained El Callao with blood.

“These gangs are called bases here in the municipality. Before, there were three gangs, now there is only one [in charge],” the miner from El Callao explains. Still, various areas are filled with reminiscences of former gangs. “Small bases are still active between the people.” According to the miner, the ones in El Perú are the most horrific. Violent encounters occur frequently. In September, before our visit to El Perú—in a sector under command by a gangster alias “el Toto” – eight people died in a confrontation with the army.

Our pick-up truck is driven by Minerven personnel and leaves El Callao to visit the mines, not the ones controlled by Minerven, but the illegal ones around the village. Here, mineral extraction plants based on the prohibited use of mercury produce gold to sell to the state company.

Photo Credit: Bram Ebus/InfoAmazonia 

“Come with us,” our driver shouts at the local army major, who already is waiting for us in a black jeep. He puts an armed soldier in the back of our truck and escorts us with his own transport. We pass various military checkpoints before entering El Perú. The area is completely militarized, but the danger comes from the hilltops where gangs might come down to take over one of the mines. This lurking danger became evident after six locals were killed in a gang shootout the night after our visit.

“If you behave well nothing will happen to you.” One miner, who operates a small gold-processing mill, explains that a ‘vaccine’— an extortion fee of four or five grams of gold per month for each mill—is paid to one of the gangs. With a calm expression on his face, he adds: “If not you will go up [into the hills] and they will turn on the chainsaw.” Horror stories about mass graves and dismemberment are common. Gangs are known to come down to the village and disappear with people in the surrounding hilltops. 

Many of them are migrant workers and came to the region as a result of the crisis and a lack of job opportunities elsewhere in the country. One of those workers crawls out of a makeshift tunnel, followed by his 15-year old nephew. “If I do not work in the mines, I do not have a way to maintain my family,” the former carpenter says.

Close to him rests Minorca Maurera, a 23-year single mom who worked in a bakery before she came to El Callao. “The minimum wage just doesn’t cut it for me. I’m a single mother of three children. I resigned [from the bakery] because of the low wage and came to this place. It is a bit tough, but I’ve been doing quite well. Independently, I can maintain my children now.”

Dusty, slum-like neighbourhoods with dispersed and small makeshift wooden shacks that just have a thin corrugated roof are filled with mining migrants, but also with El Callao natives. More than a century and a half of gold extraction has brought the local population anything but riches, which even makes a hardcore Chavist wary of the Arco Minero.

"The Arco Minero practically has functioned to cover up many things."
— Darwin Lizardi, local coordinator of the government party

“The Arco Minero, practically has functioned to cover up many things,” says Darwin Lizardi Tabor. The 28-year old is the local coordinator of the youth branch of the Venezuela’s United Socialist Party (PSUV), the government party, and wears a red Minerven cap when we meet him. “The Arco Minero as such has not functioned, man. I will tell you that I’m a revolutionary Chavist, but you need to tell the things as they are. This is camouflage here. I don’t know why. Because in the end it’s hurting us as miners and the village.”

Lizardi is proudly El Callao-born, but times have changed. He explains that his mother grew up in quieter times. “This was when you could leave the door of your house open all night, nobody would enter.” Lizardi’s 66-year old mother now considers leaving the place they both carry in their heart.

Violence and poverty make El Callao a difficult place to live. “The miner is still the dirty one that walks on street. He earns 300 thousand bolívares, drinks a beer and the next day he has nothing and needs to find 0.3 or 0.4 grams of gold to bring food back to his home. A miner should not live like this if the Arco Minero really was functioning.”

Photo Credit: Bram Ebus/InfoAmazonia

We continue to speak in a bar closed to outsiders, as miners and alcohol can be a very explosive combination. Lizardi orders new beers as he continues his discourse about the lack of state infrastructure and medicines, all while the locals hand over their gold to the government. “Thanks to the miner, the one that goes down into a tunnel of 100-120 meters, thanks to this miner the state has four tons of gold.”

The Arco Minero has received a lot of criticism in the Venezuelan press, mainly because of its future environmental impact, gang involvement and its presence in indigenous territories. In October, the state’s Ministry of Information went on the counter-attack and published an article that