Global brands continue to sell excavators in Brazil’s ‘illegal mining capital’

Trade has cooled following an increase in the seizure of machinery on Indigenous lands and conservation units during police raids, but excavators are still being sold in Itaituba
By Isabel Harari

DESPITE THE INCREASE in enforcement operations against illegal mining, dealerships selling machinery from global companies such as Hyundai, John Deere, and Caterpillar continue to sell backhoes in Itaituba, located in the Brazilian Amazon, a city known as an important mining hub in the country.

The use of heavy machinery boosts the productivity of mining in the Amazon. An excavator can accomplish in 24 hours what it would take three men about 40 days to complete. As a result, stores with machinery, parts, and mechanical workshops are spread along the Transamazônica Highway, around the city considered one of the epicenters of illegal mining activity in the Amazon.

In 2023, ICMBio, the federal agency responsible for overseeing national parks and other conservation areas, destroyed 83 heavy machines used in illegal mining in 12 conservation units in the Tapajós basin. 

In addition to the machines seized in 2023, 40 more excavators have been destroyed since the beginning of this year. “Mining is highly mechanized; these excavators have an incredible destructive power. Considering the machinery that was destroyed, imagine the profit these companies are making,” emphasizes Ronilson Vasconcelos, coordinator of the ICMBio Advanced Special Unit in Itaituba.

Reports and Commitment Against Illegal Mining

In addition to the intensified inspections, the “Stop the Excavators” report by Greenpeace, published in April 2023, revealed that 176 excavators were being used in illegal mining on Yanomami, Kayapó, and Munduruku indigenous lands in the previous two years. Before that, in 2022, an investigation by Repórter Brasil had already alerted to 157 occasions where federal inspection teams seized or destroyed machines in protected areas over the previous five years.

With the release of these studies, Hyundai, a South Korean company that led the ranking of equipment found in protected lands, committed to promoting “actions to become even more reliable in each area of ESG [Environmental, Social, and Governance].”

:: Read also: Hyundai and Caterpillar lead the ranking of backhoes used in illegal mining operations

Among the commitments made by Hyundai is the suspension of the contract between its official distributor in Brazil, BMC Máquinas, and a dealer in Itaituba, BMG Comércio de Máquinas.

Contacted by Repórter Brasil, BMC Máquinas confirmed the termination of the contract with the Itaituba dealer in May 2023. They stated that it did not supply more machines or parts to BMG after the 90-day period stipulated in the termination.

A year later, Repórter Brasil was in Itaituba. A BMG employee said, under anonymity, that Hyundai machines are still available in the store. The products are not displayed at the front of the store as before. But “the new machines are at the back of the store”, said the employee. BMG closed last year but later reopened at another address.

The presence of Hyundai equipment in the BMG store even after the contract was terminated is confirmed even by the brand’s official distributor in Brazil. When contacted, BMC Máquinas said it had recently received information from a customer about a Hyundai equipment being sold in the BMG yard in Itaituba. After tracing its origin by its serial number, the distributor identified that it was a machine originally sold to a company in Minas Gerais. Subsequently, the equipment had been sold, already used, to BMG.

“BMG today sells parts for Hyundai machines purchased from suppliers not authorized by Hyundai or BMC. We have no way of prohibiting or interfering in this activity. BMC has completely stopped selling machines for mining, whether legal or illegal. The result has been a drop in our market share in the region, as competitors continue to supply,” the distributor said.

BMC also said that it had stopped selling to miners in the Brazilian states of Mato Grosso, Rondônia, Pará, Goiás and Maranhão. The interruption led to a 15% to 20% drop in market share, according to BMC. The full statement can be read in Portuguese here.

BMG did not respond to Repórter Brasil‘s inquiries. The space remains available for future statements.

“The public authorities have a role in preventing and punishing criminal activity. The private sector should also bear these responsibilities. There’s no point in talking about ESG when the product is being used to commit crimes,” argued Jorge Eduardo Dantas, coordinator of the Greenpeace Indigenous Peoples Front.

Another result of the Greenpeace study, which showed the use of heavy machinery in illegal mining, was the initiation in June 2023 of a civil inquiry by the Pará Prosecutor’s Office. The goal is to investigate the relationship between the sale of Hyundai machines, its representatives, and illegal mining in Itaituba and Jacareacanga.

Prosecutor Thais Medeiros da Costa, who initiated the inquiry, does not rule out new investigations focusing on other brands. “Depending on what we find with Hyundai, it could serve as a paradigm to be applied to other companies,” she said. 

Social media and BMG

The termination of the contract between Hyundai and BMG was formalized in May 2023. A year later, however, the company still presents itself as a dealer for the multinational. 

The store’s new address in Itaituba may not bear the company’s logo, but its social media channels are full of mentions of Hyundai. A Facebook post at the end of May 2024, says that BMG represents Hyundai in Itaituba. In another post, from November 2023, the South Korean company’s logo appears on an invitation to a machinery and equipment fair.

On-site maintenance

Work in mining wears out excavators, so those who cannot afford to replace the old ones with new ones opt for maintenance or part replacement.

“There is a whole commerce behind mining, in the after-sales [of machines]. The spare parts drive commerce, it’s not just the excavators,” says Vasconcelos from ICMBio.

In addition to mechanics, it is possible to find maintenance services offered by equipment dealers. Employees of two stores visited by Repórter Brasil, Sotreq and Deltamaq, Caterpillar and John Deere dealers respectively, said anonymously that they offer their customers service directly in the mining areas. According to them, maintenance is offered there because it would take too long to bring the excavators to the city, where the mechanical workshops are located.

The Repórter Brasil contacted both dealers and asked if they had any mechanisms to verify the legality of the mining where the maintenance was performed. Sotreq did not respond to the questions sent by email, and Deltamaq stated that John Deere itself would respond on the matter.

John Deere informed that the machine is the property of the client and that it has no authority to interfere with the use of the equipment without their authorization. It also stated that “acting intrusively, such as blocking its operation,” would be a violation of privacy and security and a disrespect to the General Data Protection Law. The company’s full response can be read here.

Caterpillar did not comment when contacted.  The space is still available for companies to position themselves.

Reduction in Sales

Equipment sellers in Itaituba say that a “funeral atmosphere” has taken over the city after the intensification of inspections.

The machinery trade cooled down starting in 2022 when the crackdown on mining intensified in the region, but it is still possible to see some excavators lined up in front of the stores in Itaituba.

“The flow has slowed down a bit; it has stagnated due to the operations,” said an employee of an equipment rental store who wished to remain anonymous.

The mayor of Itaituba, Valmir Climaco (MDB), estimates that stores currently sell 30% of what they used to. “They burned a lot of things [backhoes], but now the burning has decreased because they [miners] are trying to work correctly or are stopping,” he emphasized.

“In the heyday of mining [with fewer seizures], there were people who bought two machines at once”, recalled a seller. Employees from dealing companies interviewed by Repórter Brasil said it was difficult to get a machine for immediate delivery: “The excavator arrived from the factory already reserved; it didn’t even stop at the store.”

Mesmo com o aumento da fiscalização e a redução da venda de escavadeiras em Itaituba, a atividade da mineração segue na região; brinquedos de máquinas usadas no garimpo em miniatura são os mais vendidos nas lojas (Foto: Repórter Brasil)
Even with the increase in inspections and the reduction in the sale of excavators in Itaituba, mining activity continues in the region; miniature toys of machines used in mining are the best sellers in stores (Photo: Repórter Brasil)

“This is because illegal gold production hasn’t stopped,” warned a source who requested anonymity. For Vasconcelos, from ICMBio, “if inspections cease for a while, they [miners] will come back in full force. It’s a very profitable business.”

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On the banks of the Tapajós, the city of Itaituba is considered one of the epicenters of mining activity in the Amazon (Photo: Repórter Brasil)