Brasil

Brazil, the biggest extractivist in South America

Eduardo Gudynas

11/05/2013

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Extractivism is the appropriation of huge volumes of natural resources or their intensive exploitation, most of them exported as raw materials to global markets. It seems to have gone unnoticed that by this definition the major extractivist in South America is Brazil.

This is not always recognized. When we talk of extractivism, we think firstly of mining and then it will be said that the outstanding examples are countries like Chile, Peru or Bolivia. In the popular imagery, these Andean nations are thought of as the leading miners on the continent, if not the world.

The reality in recent years is otherwise. Brazil has become the biggest mining producer and exporter on the continent. In 2011 it extracted more than 410 million tons of its major minerals, while all of the other South American nations, combined, mined a little less than 147 million tons. These statistics apply to the extraction in South America of copper, zinc, lead, tin, bauxite, coal and iron — the major minerals by volume of extraction and export. It is striking to note that Brazil extracts almost three times the total of all the other South American countries that have significant mining activity: Argentina, Bolivia, Colombia, Chile, Ecuador, Guyana, Peru, Surinam and Venezuela.

These enormous volumes in Brazil are derived especially from iron and bauxite mining. But Brazil is also the country with one of the most diversified baskets of mining production; it is also a major producer of coal, lead, some “rare earths,” etc. Nor is it only recently that Brazil has become the largest mining country in the continent; by 2000 it was already extracting double the volume of all the other South American countries.

As we know, for each ton of ore extracted there are distinct proportions of an “ecological pannier,” which represents all the materials that are disposed of during processing. The total of these appropriated natural resources is statistically increasing even more. This is an important indicator in the case of gold, since its final volume is small compared to its upstream indicators, but it has a very high ecological pannier (one kg of gold requires the removal of 540 tons of material, according to the global average) and in many cases it is obtained through highly polluting and destructive procedures (such as the associated deforestation and the use of mercury). In this regard Peru (188 tons) was the primary South American producer in 2011, but Brazil was second with 67 tons, trailed by Argentina and Chile.

Strictly speaking, extractivism is much more than mining. The appropriation of large volumes of natural resources, or using intensive processing, in order to boost exports, is recurring in other sectors, particularly hydrocarbons and agriculture. Here, too, Brazil is a “champion.”

While Brazil is currently a middle-level petroleum producer (holding third place in Latin America), and concentrates on consumption for the domestic market, it is also clear that it is preparing to exploit its marine deposits. Its government hopes to make the country one of the major world oil powers.

The new deposits are located in the coastal shelf, at great depth, imposing difficult conditions for drilling, and high temperatures. This extraction poses enormous environmental risk, as was clear in the accident involving the BP platform in the Gulf of Mexico in 2010. Despite that catastrophe and the evidence concerning those risks, the debate in Brazil has been much more focused on the levels of royalties or their distribution than in weighing whether it would be more sensible to declare a moratorium on this type of extractivism.

This is quite different from what is happening, for example, in various Amazon communities, where the experience of citizens facing clear social and environmental impacts has made them unwilling to accept greater economic compensation, and some even demand a moratorium.

Finally, Brazil is also the leader in agricultural extractivism. It is now the primary world producer of soy; its 2011-12 harvest exceeded 66 million metric tons (continentally, it was followed by Argentina with 40 million metric tons). And it is also the primary world exporter, a major part of which is marketed without processing. This goes hand in hand with a vast increase in the area under cultivation, which now exceeds 24 million hectares.

So extractivism is advancing in Brazil on various fronts. If we combine the extraction of natural resources, minerals, hydrocarbons and agricultural fuels, the level of appropriation of natural resources in Brazil is hair-raising, and it leaves any other South American country far behind. This style of development generates very strong environmental and social pressures, from the conflicts in rural settings to the ecological drama we see in the Cerrado[1] or the Caatinga,[2] ecoregions that could disappear through their conversion to farming and cattle-raising activities.

Exaggerated extractivism means that the Brazilian economy is highly dependent on such exports as iron or soy in order to grow. The proportion of primary production in foreign trade is increasing, while that of manufactured goods is falling. The country is becoming highly dependent on global conditions such as the international prices of raw materials or the availability of foreign investment.

That is why a close examination shows that the Brazilian economy appears to be more like that of the Andean countries than what is usually assumed by conventional analysts, who on occasion say that Brazil’s development is an example of industrialization. Moreover, during the two terms of Lula’s government the relative weight in the economy of raw resource extraction increased, at the expense of industrialization.

In contrast to what is happening in other South American countries, this expansion of extractivism is attributable not only to injections of international capital, but also to state funding. The Brazilian government deliberately promotes this extractivism by direct or financial means (and especially through its development bank, the BNDES).

There are various examples. Petrobrás is a mixed [public-private] petroleum corporation. Vale, the second largest mining company in the world, is formally privately owned, but about one half of its shares are held by the pension funds of the employees of the Bank of Brazil, and its principal funding source is the BNDES. Through these and other channels, the government has full control over that company.

Meanwhile, agricultural extractivism is also supported directly by the government. It is the recipient of the largest package of state financial assistance on the continent (the so-called Farming and Livestock Plan), which in the 2012-13 budget provided a total of 115.2 billion reals [$57 billion US] in credit to the expansion of export agroindustry in place of small farming operators.

This is a situation of enormous paradox: a by-no-means negligible share of the money collected by the state is used to promote, support and even subsidize extractivism, thus fueling globalization over and above the domestic necessities of Brazil itself — and leaving the country to shoulder the ecological and environmental impacts and a whole range of social, political and economic effects.

It is this support for extractivism, the persistence in pursuing international insertion in the institutions of globalization, and the containment of social protest that explain why the Brazilian government is time and time again presented as an example to follow for conventional economies. Hence the congratulatory messages to be found in the pages of The Economist or in the Davos forum. But if viewed in light of what it means for the civil society or for Nature, it is clear that Brazil should instead be considered the champion of extractivism, and it should begin to discuss a post-extractivist strategy as soon as possible.

Translated by Richard Fidler

From “El extractivista más grande del continente: Brasil,” by Eduardo Gudynas

[1] The Cerrado is “a vast tropical savanna ecoregion of Brazil, particularly in the states of Goiás and Minas Gerais. The cerrado biome core areas are the plateaus in the center of Brazil. The main habitat types of the Cerrado include: forest savanna, wooded savanna, park savanna and gramineous-woody savanna. Savanna wetlands and gallery forests are also included. The second largest of Brazil's major habitat types, after the Amazonia, the Cerrado accounts for a full 21 percent of the country's land area (extending marginally into Paraguay and Bolivia).” (Wikipedia)

[2] The Caatinga “is a type of vegetation, and an ecoregion characterized by this vegetation in the northeastern part of Brazil. The name ‘Caatinga’ is a Tupi word meaning ‘white forest’ or ‘white vegetation’ (caa = forest, vegetation, tinga = white). It covers between 700,000 km² and 1,000,000 km² (depending on the source), over 10% of the Brazil's territory.” (Wikipedia)

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