Brazil is known for its wealth of gems, including these rubellite crystals from the "Lavra das Palmeiras" (Palm Tree Mine).

The country has gems aplenty, but for many Brazilian miners, money and government rules are getting in the way.

Text and Photos by Stefan Rainer Harbach

The city of Teofilo Otoni, located between the stony hills and rocky mountains that are so characteristic of the landscape of the state of Minas Gerais, is Brazil's most important commercial center for colored gemstones, where about 55 percent of the country's output is brought to be sold. The state has everything from aquamarine and tourmaline to imperial topaz in Ouro Preto and emeralds in Nova Era and Itabira, and most of it makes its way to Teofilo Otoni.

Stone traders compete for foreign and tourist dollars in "Tiradentes," the central square in Teofilo Otoni.

The informal colored stone trade is conducted in the town's central square, "Tiradentes," from around 9 a.m. until 8 p.m. Cambalacheiros, as the local stone peddlers are affectionately called - a reference to doing business without official knowledge or taxation - gather in the refreshing shadows of sheltering trees to exchange stones of all colors and sizes, little packages containing small fortunes passing from hand to hand. The square is also surrounded by very official, normal businesses in the form of small stands and stores, where artisans and local businessmen sell and barter their products.

For everyone there, the visitors from other parts of the country and the foreign tourists are the main target, as traders try to attract business by offering the best price. Exporting companies have their offices mostly in buildings surrounding the central square, but also in different locations around town.

In one of those small stores at Tiradentes square, you can find the office of Robson Caio de Andrade, a prospector and president of the Commerce Association of the Precious Stone Businessmen of Teofilo Otoni, as well as the Prospector's National Syndicate. He is a defender of the interests of the gem prospectors, the weakest link in a supply chain that goes from mine discovery until the finished jewel is sold.

A view of the city of Teofilo Otoni, where most of Brazil’s colored gemstones are brought to be traded and sold.

In another part of town, perched high upon a hill overlooking the city, is the spacious office of Agenor Tavares, mine owner and exporter of aquamarine and tourmaline through his companies, Tavares Mineração e Exportação Ltda. (TAMIL) and Mineração Barro Preto Ltda. Looking much younger than his 70 years, probably a consequence of his love for stones and passion for natural living, this much-respected citizen of Teofilo Otoni is known by his clients around the world for the quality of his products and his "Midas touch." He has a special feeling for buying land that later produces stones of extraordinary quality.

At 18 years of age, he left his home town of Salinas on horseback, worked as a counterman, and later decided to enter the coffee business and got involved with precious stones. Having only attended elementary school, he jokes that he is a graduate of the imaginary "Teofilo Otoni University of Precious Stones." After 44 years in the business, he has traveled around the world. He is also responsible for the cutting of what he claims is the largest citrine on the planet, a stone of 31,000 carats, found near Teofilo Otoni and sold in Spain last July.

"This stone should be in the Guinness Book of World Records," says Tavares with pride.

Men like Tavares and Caio de Andrade typify Teofilo Otoni, one of the most important gem-trading towns on the planet. But Teofilo Otoni, like the rest of Brazil's gem-producing community, is facing difficult challenges, both from within the country and without.

All over Brazil, gem production has been slowing down recently as it gets more and more difficult to mine. According to Caio de Andrade, the prospector situation is bad because there is too much red tape in the government's proposals and regulations. He gives as an example the recently-created federal laws against uncontrolled tree destruction.

Prospector Robson Caio de Andrade, president of the Teofilo Otoni Commerce Association of Colored Stones Businessmen, at his mining site.

The law against the sawing of trees of any kind without official permission requires each prospector to establish his own prospecting/mining company, and the majority don't have enough money to spend in such a costly and bureaucratic process. Although stone prospecting doesn't cause the same harm to the environment as digging for gold, the government doesn't take such factors into account.

That expense only adds to the difficulties that independent miners face - it is already hard for many of them to find jobs, since the big contractors have their own personnel.

Tavares agrees that this question of how to deal with the environment is creating serious problems for local prospectors. "If this problem isn't faced with courage by the authorities, and if they insist that prospectors should create their own companies - which is too expensive, since it involves so many fees and paperwork - we will have serious social problems, with unemployed prospectors crowding city streets without jobs and with no money. It [already] happens here in Brazil, with the small farmers arriving in large numbers looking for work in the big cities."

Adding to the miners' difficulties in finding work, he adds, are falling profits from business.

"From the '90s until now, the problem has been with our national economy, which has a direct influence on the number of prospectors that are hired by landowners," says Tavares. "So the gems and crystals are there, but the number of prospectors has diminished in the last few years. We also have exaggerated export controls at the moment, not from our clients, but from the government, which requests a gem authenticity certificate at the port of exportation, sometimes holding the merchandise for a longer period if we don't present it immediately. But I am sure this is only temporary, and all exporters will be able to submit these certificates [more rapidly] soon."

Adding still more to the potential unemployment problem is competition from other countries, which buy Brazil's exported rough and cut it, sometimes setting it in jewelry, then export it back into Brazil. "So the Brazilian stone leaves the country in a cheap rough form, returning later as a gem, much more expensive than when it left," says Caio de Andrade. Although importing previously exported Brazilian gems is technically forbidden, it often happens under the tired eyes of customs agents.

"As the commerce of stones is mostly done in small quantities, the Brazilian government doesn't bother in controlling the import of gemstones," points out Guilherme Bamberg, executive director of the Gem Exporters Association of Teofilo Otoni (GEA). "It is so easy to enter the country freely with a few little packages full with gems inside your pocket."

The gem industry has been supported in part by foreign investment, particularly from Canada. Pictured are miners preparing the terrain for mechanized mining in Acurai, a few miles from Teofilo Otoni.

The country most often cited as an offender is India. "The government of India subsidizes the commerce of stones," says Bamberg. "Therefore, Indian businessmen come to Teofilo and buy mostly unwanted or leftover products from local mines. They take them home and use this product to make smaller beads, necklaces, and handcrafted goods, and these products sometimes return to Brazil and are sold in artisan parlors and popular fairs."

Adding to the general financial misery is the shaky world economy. According to the president of the GEA, Edmilson Alves Pereira, lapidary companies are going through a slowing-down period for the export of cut stones. The market received a frontal blow with the terrorist attack at the World Trade Center in New York. Even before that, exporting companies' profits were getting smaller because of the constant increase in the strength of the dollar and the slow but continuous devaluation of the real, Brazil's currency. Local businesses were ready to achieve their peak exporting moment for the holiday season - mostly to the Italian market, one of the city's greatest business partners - when the New York tragedy occurred and the commerce stopped; they are waiting to see what will happen next.

"Each time a warning sign happens in the economy, everybody stops buying," Pereira says.

To combat the downward trend, the GEA is introducing a series of basic business strategies, identifying the weak points of the city's trade in order to remove these obstacles.

One of them is labor qualification. The association is starting a new school project with technical courses in gemology, another specialized course in mining and environmental protection, and practical courses in jewelry making.

Another main function of the association is to promote the city and its commerce through an international fair. The last one, which took place in July 2001, assembled 230 exhibitors, leaving several foreign companies on waiting lists. The next fair will take place August 14-17, 2002, with the confirmed presence of more than 300 exhibitors.

Gem prospectors can spend 9 or 10 hours a day digging for gems; these miners are preparing to enter the mines for a day’s work.

The fact is that, although Brazil's economy is going through turbulent times, the miners continue their daily labor of 9-10 hours excavating underneath the earth, guided by hope and ambition. The last six months have shown a vital reactivation of prospecting, even in more distant areas like Capoeirana, 130 kilometers (81 miles) distant from Belo Horizonte, the capital of Minas Gerais.

India and local jewelers are increasing their buying shares, spurring more activity. Two international mining groups have stabilized production: The Belmont Group, which has been exploring for emeralds in the region for two decades, and Canadian Seahawk Minerals, which is also making great progress. The company has announced the discovery of a site with 750,000 tons of crystals containing emeralds.

Investment in mineral exploration continues to grow. According to the Brazilian National Department of Mineral Production (DNPM), Minas Gerais reached at the mineral exploration level an income of R59 million (US$22 million) in 2000 versus R44 million ($16 million) in 1999.

According to Edward Campos Abreu of the DNPM, "The interest of prospecting enterprises for gemstones derives also from the decline of gold prices in the international market before the terrorist strike to the U.S. The medium price of gold fell from US$378 per ounce in 1996 to US$279 last year, representing a reduction of 26 percent." He observes that there is a special concentration of Canadian companies in this market, due to the fact that they obtain financial resources easily in the stock exchange back home.

From January until the end of August, the DNPM received almost 2,000 requests for research, licensing, prospecting areas, and extraction registrations. In the gemstone sector, there were exactly 408 applications.

Although the Brazilian dealers and government are actively promoting their gemstones and jewelry to the world, it is the extent of their natural resources that gives them the greatest hope for the future. As Tavares puts it, "What I have to say is this: The land is rich. We only have to respect the environment, protect and support the prospector and the Brazilian gem cutter - who is certainly the best in the world - and let the commerce follow its normal way."