BRAZIL: Enslaved workers make charcoal used to make basic steel ingredient

Labor inspector Benedito Silva Filho and six armed police officers move cautiously through the gray smoke that hugs the ground in the Carvoaria Transcameta work camp near Tucurui in the Brazilian Amazon. Enveloped in the haze is a solitary man, dressed in soiled red shorts and worn-out plastic sandals.

Alexandre Pereira dos Reis stops shoveling charcoal from a kiln after working eight hours and, wheezing, walks slowly toward the inspectors. The laborer says malaria, a chronic cough and the 95-degree heat have gotten the best of him.

"This hits you hard," says dos Reis, 32. "I would leave if I could, but I need the work."

Many laborers go months without pay or see their wages whittled to nothing because of expenses such as tools, boots and gloves. Lack of money, an impenetrable jungle and a long distance to get home make it impossible for the slaves to leave.

Dos Reis toils six days a week and can't afford to leave; he doesn't have enough money to get back to his home in Teresina, 500 miles away in northeastern Brazil. He lives next to the brick kilns at Transcameta in a shack with no ventilation, running water or electricity.

The charcoal he and the other laborers produce by burning scraps of hardwood will be trucked south to a blast furnace six hours away. It will be used to make pig iron, a basic ingredient of steel.

That pig iron will end up in cars and trucks made in the United States by Ford, General Motors, Nissan and Toyota. Pig iron that goes into steel used by Whirlpool, the world's largest appliance maker, and is used in foundries at Kohler, which makes sinks and bathtubs, can be traced to slaves in Brazil.

"This is slavery," Silva says. His eyes tear from the acrid smoke. Silva has descended unannounced in September on this charcoal-making camp - one of about 1,000 in the Amazon - to investigate reports that it uses unpaid labor. The policemen who flank him wield automatic weapons, ready to fend off the deadly violence that Silva says is part of his job. They determine all 29 workers are slaves who haven't been paid in months.

More than a century after Brazil became the last country in the Americas to abolish slavery, in 1888, nearly 1 million men and women work for little or no wages as forced laborers in Latin America, according to the Geneva-based International Labor Organization, a United Nations agency that tries to improve working conditions.

Recruiters dispatched by slave-camp owners promise steady paying jobs, says Marcelo Campos, who runs the Brazilian labor ministry's Special Mobile Enforcement Group. Once at the Amazon camps, some workers are forced - at times at gunpoint - to work off debts to their bosses for food and clothing bought at company stores.

At camps visited by Bloomberg News in Brazil and Peru, slaves live where they work, in clearings surrounded by miles of jungle. They make charcoal, mine for gold, log mahogany and clear trees for cattle pastures.

The scene at Transcameta is primitive. A man stoops to light a pyre of wood he's packed into a kiln, and he winces from the smoke.

Dos Reis, the laborer from Teresina, watches from the windowless shack where workers live, 100 feet from the kilns. "Sometimes it gets so hot in here you don't want to come in," he says. He coughs up a glob of black spittle.

In July, he contracted malaria from the mosquitoes that swarm the camp, medical records show, and he gets exhausted early in the day and has to stop work. Twenty feet away, a man walks by a patch of ground covered with human excrement that serves as a camp bathroom.

Three companies - Ford, General Motors and Kohler - say they didn't know that steel they were using was made from material produced with the help of slaves. Ford and Kohler have bought pig iron from importer National Material Trading, which is supplied by a charcoal camp that Brazilian officials say uses slaves. Ford and Kohler say they stopped buying pig iron from National Material Trading after being asked by Bloomberg News about the Brazilian findings.

If National Material Trading can't certify that its pig iron was produced without a trail leading to slave labor, Ford will use other suppliers, the company says.

Kohler says it will conduct its own investigation. "The use of slave labor is an illegal, unethical and abhorrent practice," says Steve Cassidy, director of global procurement at Kohler.

Whirlpool opposes involuntary labor and complies with laws in all countries, spokeswoman Jody Lau says. She says Whirlpool relies on suppliers to ensure proper work practices.

National Material Trading imports 1.5 million metric tons of pig iron a year from Brazil, says Tim Hogan, general manager. He says one of its major suppliers is Cia. Siderurgica do Para, or Cosipar, Brazil's third-largest pig iron exporter. Hogan declined to comment about slavery.

Brazilian pig iron is part of almost any product in the U.S. that uses steel, says Hogan, who's been trading scrap metal and pig iron for 30 years. "It could be in your car, your refrigerator," he says. "It could be in beams for the roadway, any kind of construction, any kind of oil industry stuff. Everything."

National Material Trading sells pig iron to Intermet, an auto-parts producer that makes components for General Motors.

GM, the world's biggest carmaker, stopped using Intermet as a supplier Oct. 12 after concluding the company wasn't answering questions about slave labor quickly enough, says Bo Andersson, GM's vice president of global procurement and supply.

Intermet supplies GM with about $3.2 million of engine and transmission components each year and sells other parts to GM's suppliers, GM spokeswoman Linda McGill says.

On Oct. 19, GM reinstated Intermet as a supplier after concluding the company provided sufficient documentation that its supply chain was free of forced labor, says GM.

Intermet President Jeff Mihalic says his company doesn't buy pig iron derived from slavery. "Intermet asked for and received certification from National Material Trading that the company's suppliers, including Cosipar and Cosipar's suppliers, do not use forced labor," Mihalic says.

Toyota didn't join Ford, DaimlerChrysler, General Motors and Honda on Dec. 4 when they announced plans to work together to train suppliers to avoid buying materials made by slaves. But a Toyota spokesman said it did change its decision Dec. 21 and joined the anti-slavery effort.

U.S. Customs records show Toyota's trading company, Toyota Tsusho's U.S. unit, bought at least seven shipments of pig iron from Usina Siderurgica de Maraba, or Usimar, in 2006. Usimar purchased charcoal from a camp where Brazilian inspectors in May found 22 people, including three children, who weren't being paid for their work. They were living in squalid shacks without electricity and plumbing, and drinking unsanitary water, the inspectors reported.

Usimar, a privately held company, has dropped out of a Brazilian association of pig-iron producers that's sponsoring programs to combat slavery in charcoal camps, says Marta de Lima Cavalcanti, a spokeswoman for the industry group.

Nucor, the second-largest U.S. steel company, also has bought pig iron from suppliers that Brazilian labor officials say used slaves to produce charcoal. Nucor Chief Executive Daniel DiMicco says the company will launch its own investigation. "If verified, we will not be buying from those brokers and producers until those matters are remedied according to Brazilian law," he says.

The immigration and customs-enforcement arm of the U.S. Department of Homeland Security is investigating imports of commodities from Brazil that may have been produced by forced labor, spokesman Dean Boyd says.

Companies that knowingly buy such products can be prosecuted under the U.S. Tariff Act of 1930, he says.

In response to the Bloomberg News story, the U.S. Congress began an investigation in December. U.S. Rep. Eliot Engel of New York, the most senior Democratic member of the House Committee on Foreign Affair's Subcommittee on the Western Hemisphere, has called for hearings on imports of pig iron.Two members of the House said they will call for hearings this year to examine the use of slave labor.

"Most Americans would be appalled if they knew they were driving cars or buying refrigerators that were made from pig iron involving slave labor," says Engel.

Slave-labor charcoal camps are scattered along Brazil's Amazon, says Campos at the Special Mobile Enforcement Group, which has freed more than 20,000 slaves. "Slavery is endemic to the charcoal camps that supply the pig-iron industry," Campos says.

Brazilian pig-iron producer Cosipar bought most of the charcoal produced by slaves at the camp inspectors raided in September, says Luercy Lino Lopes, a labor prosecutor. The camp was shut down and Cosipar agreed to pay back wages to workers.

Cosipar Executive Vice President Claudio Monteiro says workers weren't slaves because they weren't being held by force. "They were degrading conditions," he says. "But this is not slavery."

He says Cosipar, a privately held company, has built bathrooms and barracks for workers as required. The camp has reopened and is legally producing charcoal now, he says.

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