The Treasure of Serra Pelada

An uncontrolled gold rush turns into a government project

Deep in Brazil's Amazon jungle, thousands of dust-covered laborers swarm over a mountain of red earth, using their pickaxes and shovels to carve its surface into a bizarre landscape. It is a scene that could belong to an outlandish biblical epic movie or a sinister labor camp. It is neither. Serra Pelada (Bald Mountain), 270 miles south of the mouth of the Amazon River, is the site of one of the biggest gold rushes in modern Brazilian history. It is also an experiment by Brazil's debt-ridden government to harness the skills of the country's hardy garimpeiros--nomadic prospectors who roam the vast backwoods. TIME Buenos Aires Bureau Chief George Russell recently visited Serra Pelada. His report:

Allowing for the portable radios and the constant shuttle flights from the nearby town of Maraba, Serra Pelada has become a tropical version of the 19th century Klondike. Around the big stike, which is carved up claim block by claim block, the landscape is a jumble of hovels and open bamboo shelters. Young miners in cutoff shorts and sandals throng the dusty alleyways; grizzled oldtimers wearing floppy straw hats lead their pack mules through the maze. Everywhere, anxious men watch drying handfuls of earth for signs of pay dirt. The ground around them flows with a liquid waste, from the panning and sluicing, that is the color of oxblood. The methods may be crude and oldfashioned, but they are productive: Serre Pelada is turning out gold at the rate of a metric ton per month, three times as much as the next biggest mine in Brazil.

by up els for the and the 19th come watch a their Young maze. and waste, around town big wearing claim signs of constant Allowing sluicing, pack open alleyways; of from them sandals drying century miners for landscape block that pay the tropical floppy in strike, is mules by the is a flows Maraba, shuttle bamboo Everywhere, throng the grizzled dirt. straw which they are productive: Sierra Pelada is turning out gold at the rate of a metric ton per month, three times as much as the next biggest mine in Brazil.

The rush to the mountain has actually been a sprint. Last January, after coming across traces of alluvial gold on his land, Farmer Genesio Ferreira da Silva hired a geologist to investigate whether there was a larger deposit. Word leaked out, and within a week 1,000 prospectors had descended on the farm. Five weeks later, there were 10,000 on Fer-reira's property and another 12,000 near by. Huge nuggets were quickly discovered, the biggest weighing nearly 15 Ibs., worth more than $108,000 at the current market price. "If we could have only kept the secret, we would have been rich forever," says Osvaldo Ferreira, Genesio's son. Not likely under Brazilian law. Though virtually anyone is free to prospect with "rudimentary" equipment, mineral rights belong to the government, and landowners receive a small royalty fee. The main consolation for the Fer-reiras was that they staked claims on what turned out to be the richest part of the site.

Complaints of another kind came from the prospectors. Prices skyrocketed as local landowners insisted on barracao (literally the trading post but, in another application, the company store), charging outrageous amounts for food and other necessities. Bottled water cost $3 a liter, eggs 500 apiece. At the same time, roving bands of local ranch hands began to extort gold from the miners. Soon, Serra Pelada was an armed camp.

Finally the government stepped in. It wanted no trouble, and with a foreign debt of $55 billion, Brasilia had good use for new gold. Last May federal police descended on the site. All miners were registered. Liquor, gambling and the presence of women were forbidden. At the same time, however, the government offered to mediate all claim disputes, set a minimum daily wage ($18) and provided free medical care. Federal experts began to advise the miners on safety precautions and on how to increase output. Before government officials arrived, for example, many of the garimpeiros had been throwing away "black gold," an impure mixture that can be refined to yield ordinary gold and palladium, a valuable metal in its own right, as well as manganese. Says a government mining engineer: "Our job is to orient the garimpeiros. They're individualists. Many were small farmers. They know this is the chance of a lifetime." On yet another level, official price controls wiped out the barracao, with the government trucking in 40 tons of food and other supplies a week. Says one garimpeiro, "This is the cheapest place in the country."

The rush to the mountain has actually been a sprint. Last January, after coming across traces of alluvial gold on his land, Farmer Genesio Ferreira da Silvia hired a geologist to investigate whether there was a larger deposit. Word leaked out, and within a week 1,000 prospectors had descended on the farm. Five weeks later, there were 10,000 on Ferreira's property and another 12,000 nearby. Huge nuggets were quickly discovered, the biggest weighing nearly 15 lbs., worth more than $108,000 at the current market price. "If we could have only kept the secret, we would have been rich forever," says Osvaldo Ferreira, Genesio's son. Not likely under Brazilian law. Though virtually anyone is free to prospect with "rudimentary" equipment, mineral rights belong to the government, and landowners receive a small royalty fee. The main consolation for the Ferreiras was that they staked claims on what turned out to be the richest part of the site.

Complaints of another kind came from the prospectors. Prices skyrocketed as local landowners insisted on barracao (literally the trading post but, in another application, the company store), charging outrageous amounts for food and other necessities. Bottled water cost $3 a liter, eggs 50-c- a piece. At the same time, roving bands of local ranch hands began to extort gold from the miners. Soon, Serra Pelada was an armed camp.

Finally the government stepped in. It wanted no trouble, and with a foreign debt of $55 billion, Brasilia had good use for new gold. Last May federal police descended on the site. All miners were registered. Liquor, gambling and the presence of women were forbidden. At the same time, however, the government offered to mediate all claim disputes, set a minimum daily wage ($18) and provided free medical care. Federal experts began to advise the miners on safety precautions and on how to increase output. Before government officials arrived, for example, many of the garimpeiros had been throwing away "black gold," an impure mixture that can be refined to yield ordinary gold and palladium, a valuable metal in its own right, as well as manganese. Says a government mining engineer: "Our job is to orient the garimpeiros. They're individualists. Many were small farmers. They know this is the chance of a lifetime." On yet another level, official price controls wiped out the barracao, with the government trucking in 40 tons of food and other supplies a week. Says one garimpeiro, "This is the cheapest place in the country."

In return for help of this kind, Brasilia demanded only one thing: a monopoly on buying up the treasure of Serra Pelada. The state mining company, Companhia Vale do Rio, opened an office at the site, and miners began to line up to weigh in and sell their gold at prices that stand at about 30% below the international peg. (The largest daily intake by the Serra Pelada so far is close to 327 lbs.) At first, many of the miners would accept only cash; it took officials some time to persuade the garimpeiros to take federally endorsed checks.

Administrators in Brasilia suggest that if illegal gold exports could be stopped and all the country's gold deposits controlled in the same way as Serra Pelada, Brazil could count on an annual yield of 300 tons of the metal. That is 40% of the production in South Africa, one of the world's leading gold diggers.

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