Amazon – the mining disorder

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By JOSÉ RAIMUNDO TRINDADE*

Reflections on the insertion of the Amazon in Brazil today

In recent decades, the presence of large mineral capital in the Amazon has become the region's economic tonic, with these companies being mostly transnational companies that operate the international flows of production and transaction of the main strategic mineral commodities, such as iron and aluminum. The shareholding composition of these companies is formed by the three main economic agents of capitalist modernity: State, financial capital and industrial capital, national and international.

The analysis developed here centered on the mineral sector of the eastern Brazilian Amazon is justified by its importance for the regional and national productive dynamics and by the strategic character for capital accumulation represented by the mineral reserves found there, and by the profound social and environmental impacts that the mineral exploration causes in the region. Mineral exploration corresponds to almost 75% of the export basket of the state of Pará, the largest economic segment of the state's GDP (Gross Domestic Product) and one of the most significant in the region as a whole.

The privatization of CVRD (Companhia Vale do Rio Doce) in 1997 represented the main movement towards the internationalization of the Amazon and the loss of sovereign capacity over this region. Before 1997 we had the condition of capital expansion centered on the three vectors of the Brazilian economic order: the State, national private capital and international capital, the alteration in the pattern from then on led us to the current logic of an Amazon completely linked to the interests international markets defined from the system of international stock exchanges. This process of loss of entropy and gigantic transfer of wealth from the Amazon to different international centers constitutes the basis of the logic of accumulation by dispossession, but we also have another central point.

Mining constitutes an economic form of its own that defines six important processes, whose Brazilian and Amazonian logic deepens and makes the plundering of nature at these levels even more irrational.

(1) The mineral sector has historically constituted a strongly monopolized segment, especially in the iron ore and aluminum (bauxite) segments, which is partially due to three aspects that have enabled a strong concentration and centralization of capital, two of which have already been listed above: (i) the spatially limited monopolistic capacity to appropriate mineral potential; (ii) the technological capacity to operate, especially in the long-haul and scale transport industry (rail transport logistics and ocean navigation) and; (iii) the intricate relationship between sector capital and state institutions that define the complete or partial appropriation of mineral income by private capital.

In the case of iron ore, three large companies control the seaborne market: Companhia Vale, Companhia Rio Tinto and BHP Billiton. The primary aluminum segment is controlled by the so-called “six sisters”, with some structural changes occurring in the last two decades: Alcoa, Alcan, BHP Billiton, Norsk Hydro, Pechiney and Comalco, the first two of which are integrated producers of the raw material (bauxite) to final goods. In the case of the Amazon, the two main mineral exploration segments, iron and aluminum, are respectively controlled by the transnationals: Companhia Vale and Norsk Hidro, with the presence of Alcan and Alcoa.

(2) Price fluctuations in the mineral market are intense, influenced at times of intense capital accumulation by ore demanders, considering that they are, to a large extent, mega-companies in the steel or metallurgical sector that impose business contracts in these periods , which in the case of iron were once every three years and in the case of aluminum are defined by movements on the London Stock Exchange. This price swing is central to speculative markets. Thus, mining constitutes an important interaction point of what constitutes real gains, from the production of a growing mass of use values ​​and increasing capital profitability, as well as enabling rentier valuation, a specific point.

(3) The mineral sector presents important specificities: (i) the manifestations of mineral veins are restricted, which strongly conditions monopoly rents; (ii) the qualitative differences of the ore between the different mineral veins is very expressive and produces two important effects: on the one hand, it influences the entire subsequent production chain and, second, it compensates for transport costs, which determines a strong dispute for control of the mines with these characteristics; (iii) the exhaustion of mines, or the loss of mineral content, defines extraordinary profits only for a certain time, which leads to the acceleration of the economic use of the most qualified mines and, paradoxically, accelerates their time of exhaustion. These aspects, as well as the structural relationships between mineral income and supplementary profit, will be addressed based on the case study of the Carajás mines operated by Companhia Vale.

Mineral rent is expressed in three connected forms: absolute rent, derived from the condition of private appropriation of subsoil wealth, even if institutionally the State can impose legal barriers that block the complete appropriation of these rents by mining capitalists. Differential income 1, based on different productivity patterns, derived from differences in ore composition, grades, shape, location and production scale. Last but not least, since it plays a key role in the disputes between the different capitals, the differential income 2, resulting from investments in technology or infrastructure that allow expansion in productivity gains and a greater reduction in production costs, and which are only possible due to the mining characteristics that made possible the differential income 1, being characteristically related to the investments in logistics necessary for the exploration of the mines.

Mineral extraction is conditioned by the types of income set out above, and in the Amazonian (Brazilian) case, big capital appropriates the absolute income due to the advantages offered by the Mineral Code (1967) and CF 88 (Art. 176) which defines the exploitation of the subsoil distinctly from the soil, and the liberality of the mining rights and the control of the same by the big capital established the complete control of these rents by the companies, as already exposed. On the other hand, the privatization process of Companhia Vale do Rio Doce transferred large swaths of land to the control of private capital and, consequently, the appropriation of land rents, not only over deposit areas, but also over land gradients that can be treated. as “financial assets” of the company, a form of capital that also generates income.

(4) Iron mining in the Northern System of Companhia Vale, dates from 1985, is located in Carajás (Marabá, Parauapebas and Canaã dos Carajá), in the state of Pará, and contains the largest deposits of iron ore in the world. The mines are located on public lands that have been transferred to private sectors, constituting, in our view, the greatest privatization of public resources in capitalist history. Due to the high grade (66,7% on average) of the Northern System deposits, it is not necessary to operate a concentrate plant in Carajás. The beneficiation process consists only of metering, screening, hydrocycloning, crushing and filtering operations. After this, the iron ore is transported by Estrada de Ferro de Carajás (EFC) to the maritime terminal in Ponta da Madeira, in the state of Maranhão.

It is worth emphasizing that capitalists receive extraordinary profits as a form of perpetuity for the mining advantages that they have since the granting of mining rights by the State, since the subsoil becomes a mere space for the enjoyment of a privately appropriable asset, however much the legislation establish mining as a public concession.

Thus, the mining capitalists appropriate the differential income made possible by the superior quality mines embedded in the Amazonian subsoil, that is, in a first approximation, the total profit perceived by individual capital consists of two components: the average mining profit by sector plus income land (or supplemental profit) (absolute and differential).

An aspect that must be emphasized is that the level of this supplementary profit is given by the difference between individual productivity and average productivity, and the price of production that prevails within the mineral industry. However, this natural force is not the source of added wealth (additional value) but only its natural basis, and the circulation of capital is what provides this process, given the growing appropriation and transformation into an element of the reproductive process of new deposits mineral grades, ease of exploration of the mineral lode and location of the mine in relation to the main centers of international demand.

(5) The mineral extraction industry has a recognized environmental impact, as emphasized by Penna (2009) “the mining activity is the one that has shown the lowest level of social and environmental commitment compared, for example, with oil exploration” . Exploration in the Amazon follows the international logic, with the aggravating factor that the extensive dynamics of the mining area tends to destroy a higher percentage of primary forest. Deforestation and the loss of biotic diversity in the Amazon, accompany the various processes of economic exploitation, and the literature on the subject brings as basic information that even though livestock is the main direct responsible for deforestation in the Amazon region, however, the mining fronts represent a important vector of destruction of native forests, see Trindade (2014).

(6) Regional development conditions seem to be even more aggravated by the contradictory relationship between export relief and the export of primary and semi-manufactured goods. The present contradiction is related to two central aspects: (i) the primary-export production chains are very short, which establishes the inability to appropriate income (mining or agrarian) that could define new social and environmental standards for the region ; (ii) the second contradiction is closely related to the previous one and refers to the tax exemption for the export of this type of good established by Complementary Law 87/96 (Kandir Law), without, however, any federative solution offered. The net exporting states end up bearing the environmental and social burden, without due return, either tax or arising from a federal agreement.

The alteration of the current standard, specified in the six points above, is a basic condition for thinking about the insertion of the Amazon in this late Brazil, something that is not of interest only to the 26 million Amazonian Brazilians, but to the other 210 million individuals who must conceive a complex society which includes the most diverse region on the planet.

*Jose Raimundo Trinidad He is a professor at the Institute of Applied Social Sciences at UFPA. Author, among other books, of Six decades of state intervention in the Amazon (Paka-armadillo).

 

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