Unregulated Diamond Mining Wreaks Environmental Havoc in Venezuela

While Chavez's government touts the policy for its enormous oil sector, it has left less lucrative areas like the diamond industry unregulated. The result is smuggling, environmental damage and international concern.

Playa Blanca, Venezuela — On the doorstep of the nation's most famous national park, Ruben Gonzalez's small team of miners needed only a month to carve a yawning crater out of a savanna with axes and high-powered hoses.

Gonzalez is among 200,000 miners searching for diamonds and gold in mineral-rich Bolivar state. He operates a mining camp called Playa Blanca outside Canaima National Park – a UNESCO world heritage site – and almost nothing about the operation is legal. His team has no mining permit, violates environmental laws, doesn't pay taxes and sells diamonds to smugglers.

"We have laws, but you don't see them," Gonzalez said. "The state is the one that fails to put the controls in place."

Under the banner of a socialist revolution, President Hugo Chavez intends to boost state control over Venezuela's vast stock of natural resources and funnel its fortunes to the poor. While his government touts the policy for its enormous oil sector, it has left less lucrative areas like the diamond industry unregulated. The result is smuggling, environmental damage and international concern.

The long chain of mismanagement in Venezuela's diamond industry starts at the top, with the government's own defiance of an international ban on trading conflict diamonds. For more than two years, it has not issued a single export certificate to traders in Venezuela under the United Nations-backed Kimberley Process, an accord signed by 46 diamond-producing nations including Venezuela. A certificate ensures that exported diamonds have not been used to finance wars that have killed hundreds of thousands of Africans.

The concern, say industry watchdogs, is that the South American nation's noncompliance with the U.N.-backed Kimberley Process mandate encourages politically unstable African nations to default as well.

"You hear people from governments saying if Venezuela's not going to crack down on this, then why should we crack down on ourselves," said Ian Smillie, research coordinator for Partnership Africa Canada, a nongovernmental organization based in Ottawa.

Partnership Africa Canada has recommended Venezuela's expulsion from the Kimberley Process for noncompliance and refusing to allow a team of experts from member countries to inspect the diamond industry late last year.

In June, mining officials said they would resume issuing certificates in the near future and blamed the lack of compliance with the Kimberley Process on a reorganization of ministries in 2005 that has caused a bureaucratic mess.

"There was a change … and many people retired," said Richard Jaspe, an inspection director for the Ministry of Basic Industries and Mining in Santa Elena de Uairen, a gem trading hub sand-wiched between the Brazilian border and Canaima National Park.

Since then, the resource-strapped mining ministry has put off solving the diamond industry's woes despite the loss of millions in tax revenue, said Gilberto Sanchez, president of the Venezuelan Mining Chamber. Instead, Sanchez said, the ministry has focused on the political fallout caused by an incident last year in which six miners were killed by soldiers enforcing a mining ban. "They put it (reforms) on standby," he said.

Several diamond buyers in Santa Elena de Uairen say the lack of Kimberley certificates forces traders to smuggle diamonds through Brazil to neighboring Guyana, where certificates are easily obtained.

The numbers suggest that many Venezuelan diamonds are registered in Guyana. According to Partnership Africa Canada, Venezuela's official diamond production plunged from 400,000 carats per year to fewer than 25,000 between 1993 and 2005 – then hit zero last year even though Japse said real production was currently around 90,000 carats per year. Guyana's production, meanwhile, climbed from 50,000 carats per year to 400,000 during the same period.

Venezuela is a small player in the global diamond market, with annual exports totaling about $30 million. Mining ministry officials say they intend to make their sector Venezuela's second-highest-producing industry, after oil. But diamond smuggling is robbing the government of significant tax revenue from diamond mining because miners typically declare only a small portion of their findings, Jaspe said.

The lack of oversight also helps mining areas exist on the remote fringes of society where few traces of law, infrastructure or decent living conditions can be found, miners say.

Most of Chavez's social development programs, the hallmark of his revolution, are notably absent here. In the mining town of Icabaru, a four-hour ride from Santa Elena, the roads are so muddy that even four-wheel-drive vehicles frequently get stuck.

In these frontier mining camps, thousands of Venezuelans and citizens of such neighboring countries as Colombia, Brazil and Guyana leave their families to live in shacks with palm fronds or plastic tarps for walls. Electricity is available only from generators, there is no running water, doctors are a rarity and barter is the norm. "We live like cavemen," said Gonzalez.

While some miners do strike it rich, many squander their earnings in beer halls and brothels. Mine managers say they sometimes suspend operations when their crews arrive too drunk to work.

"There is no government here. It's the law of the strongest – Western style," said Andrews Aquina, a Playa Blanca miner.

The lack of government control also encourages the use of primitive mining techniques in what scientists have called one of the most biologically diverse regions in the world. Miners say they depend on "miner's instinct" when determining where to blast pits, not preliminary environmental studies.

Six-cylinder engines salvaged from Mercedes-Benz trucks power water cannons and long tubes that suck up slurry from open-pit mines and run through an improvised rig propped up by tree branches – a contraption that catches only about 30 percent of the diamonds and gold. Gonzalez's rig dumped silt-filled water directly into a tributary of the sprawling Guri reservoir, a common practice that threatens to reduce the capacity of a hydroelectric complex accounting for three-quarters of Venezuela's electricity.

At Copsa 13, about 20 mining teams of five to seven men each blasted away at a series of pits more than 20 feet deep, several nearly as long as a football field. They carved out craters within walking distance of Canaima National Park, best known as the site of Angel Falls, the world's tallest waterfall. There are no efforts to replant or save vegetation as miners turned green savanna into lifeless white sand.

"Seeing that was like losing family," said Carmen Benavides, leader of the nearby Pemon indigenous community of El Pauji.

Last year, the Association of Tropical Biology Conservation, a Washington group that includes Smithsonian scientists, issued a resolution urging Venezuela to protect Bolivar state and indigenous groups living there from mining operations.

But the government appears unable to stop the onslaught of diamond miners.

Jaspe, the government regulator, has only two employees, three trucks and one boat to cover a territory of more than 30 mines, many of which are reachable only by river.

The state plans to reform its mining laws to increase its participation in mining projects sometime next year, Sanchez says. Citing environmental concerns at the mines, the government declared a state of emergency last year, and announced a program to move small-scale miners out of environmentally sensitive areas in Bolivar state within a year and compensate them to take up new professions.

Yet more than a year later, mining camps still flourish across the state.

"We resist," said Angel Torres, 36, who manages a mining operation at Copsa 13. "We're very used to being here in the mines, and it's not easy to go start another life elsewhere."