SOUTH AMERICA: Plundering the Amazon

For four decades, Edimar Bentes and his family have
survived by farming tiny clearings in the jungle near their
dirt-floor shack in the state of Para in the Brazilian Amazon.

On this April afternoon, Bentes, 56, squats in the driving
rain and dips a glass into what just four years ago was a
crystal-clear stream that provided drinking and bathing water.
He frowns as the glass fills with brown silt. A thin man with
short-cropped dark hair and a tanned, deeply wrinkled forehead,
Bentes gazes around his land.

There are no signs of the deer, armadillos and pacas he
used to hunt to feed his wife and 10 children.

For Bentes and thousands of others in the Juruti region of
Para whose livelihood depends on wildlife and plants, everything
changed in 2006. That's when New York-based Alcoa Inc., the
world's second-largest primary aluminum producer, started to
bulldoze a 56-kilometer (35-mile) swath of the rain forest
across hundreds of families' properties to build a railway.

This cleared corridor, 100 meters (109 yards) wide, will
lead to a mine that will chew up 10,500 hectares (25,900 acres)
of virgin jungle over three decades.

More than half of the mine will lie inside a forest that by
Brazilian federal law is supposed to be preserved unharmed
forever for local residents. By year's end, Alcoa says, the
railway will transport 7,000 tons a day of bauxite, the dark red
ore that's used to make aluminum, from the mine to a port on the
Amazon River.

'Want to Cry'

"It makes you want to cry when you see this stream," says
Bentes, his bare feet sinking into the mud. He views a wasteland
of uprooted trees and brown rivulets seeping into the water.
"It reminds me of everything bad that Alcoa did to our land."

A growing array of evidence in court documents puts Alcoa
among the multinational corporations that prosecutors accuse of
destroying or causing destruction of the world's largest rain
forest.

Brazilian federal and Para state prosecutors sued Alcoa's
Brazilian mining subsidiary in 2005 in an effort to block the
Juruti mine, saying the company had circumvented the law by not
applying for a federal permit and instead seeking a license from
the state of Para.

After four years of legal haggling, the suit is still
pending. Alcoa, which denies any wrongdoing, has already
completed construction of the railway, port and processing
plants. It's now ready to start mining.

"The state agency has no power to give anyone full rights
to exploit land, especially in the case of a reserve," state
prosecutor Raimundo Moraes says. "Alcoa invaded the area,
undeterred. Alcoa has no shame."

'All Necessary Licenses'

In written responses to questions from Bloomberg News,
Alcoa says it "has all necessary government licenses to
implement the Juruti mining project."

The Amazon, which spans nine countries and is roughly the
size of Australia, has for centuries been the lungs of the
Earth, its plants and trees absorbing pollution from the air.
But that strength is fading. The world's largest inhaler of
carbon dioxide is shrinking -- thus aggravating, instead of
slowing, global warming.

Every week, federal prosecutors say, people acting outside
the law use bulldozers, chain saws or fire to wipe out parts of
the jungle to make way for crops, cattle and mines.

The fires men set to clear land for ranches and farms
create 6 percent of the carbon dioxide spewed into the air
worldwide, according to the Cambridge, Massachusetts-based
Union of Concerned Scientists. That equates to half of all the
emissions from cars, trucks, planes, trains and ships in the
world.

'Amazon is the Key'

Brazil has become the planet's fourth-biggest polluter.

The fires that rage across the Amazon could help increase
Earth's average surface temperature by as much as 11.5 degrees
this century, says the Intergovernmental Panel on Climate Change,
a group of scientists from 194 countries.

Global warming threatens to melt glaciers, raise sea levels
and lead to drinking water shortages, the United Nations-
sanctioned panel says.

"We are not going to reduce global warming if we don't do
something about deforestation in the Amazon," says Doug
Boucher, director of the Tropical Forest and Climate Initiative
at Concerned Scientists. "It's that simple, and very alarming.
The Amazon is a big part -- if not the key part -- of a solution
to deal with global warming."

Wal-Mart, McDonald's

To date, companies and individuals have destroyed more than
857,000 square kilometers (331,000 square miles) of the Amazon,
an area almost the size of France and England combined,
according to the UN Environment Programme. Cattle ranchers have
caused 80 percent of the illegal deforestation, according to
Brazil's environment ministry.

They sell steers to Brazil's three biggest beef producers.
One of them, Sao Paulo-based JBS SA, is the world's largest; the
others are Santo Andre-based Marfrig Alimentos SA and Bertin SA
of Lins.

Wal-Mart Stores Inc., the world's biggest retailer; French
supermarket chain Carrefour SA; and McDonald's Corp. have
purchased beef from those companies, according to Brazilian
internal revenue service sales and export records.

Ford Motor Co., General Motors Co. and Daimler AG's
Mercedes-Benz have bought leather for car and truck seats from
Auburn Hills, Michigan-based Eagle Ottawa LLC, a leather company
supplied with materials from illegally deforested ranches, the
records show.

These multinationals say they're working to avoid buying
products originating in deforested land.

Cargill's Port

Alcoa is the latest company in a decade-long legacy of
global corporations that have thwarted Brazil's environmental
regulations, federal prosecutors say.

Minneapolis-based Cargill Inc., the largest privately held
company in the U.S., spent $20 million to build a grain port on
the Amazon River in 2003 that led to farmers illegally
destroying thousands of hectares of rain forest to grow
soybeans, says Felicio Pontes, a federal prosecutor who sued to
block the project.

In early February, soybeans were piled high in a storage
area at Cargill's Amazon port, waiting to be loaded onto a ship
bound for Europe. The company ships about 60,000 tons of
soybeans a year grown near the town of Santarem. Before Cargill
built the port, there was no large-scale soybean production in
the area.

'Completely Obvious'

Cargill hired The Nature Conservancy, an Arlington,
Virginia-based nonprofit group, to confirm that soybean farmers
aren't clearing the Amazon around Santarem. The group says it
has certified this year that 155 of 383 farms weren't
deforesting.

"It's completely obvious that Cargill's port gave an
incentive that led to deforestation," Pontes says.

Both Alcoa and Cargill, prosecutors say, have persuaded
local officials to sign off on their plans, flouting federal
law. Brazil's constitution says minerals are national resources
that should be overseen by tougher federal agencies, says Daniel
Azeredo, a federal prosecutor in the Amazon port of Belem, who
specializes in environmental lawsuits.

"The problem is that in Brazil we have weak institutions
and laws, and companies take advantage of that," he says. "We
have laws, but they are impossible to enforce, which gives
companies complete impunity to do whatever they want to
profit."

Alcoa says it has abided by the law.

'Any and All'

"In Brazil, public attorneys tend to challenge in court
any and all major industrial and infrastructure projects,"
Alcoa wrote in responses to questions from Bloomberg News. Alcoa
says it doesn't need federal approval for its mine in Juruti.

Cargill also says it has done the right thing in Brazil.
The company won proper state approval to build its river
transport center, says Afonso Champi Jr., Cargill's external
affairs director in Brazil. He says the company strives to
guarantee the soybeans it buys don't come from deforested land.

Alcoa, which mines and produces aluminum in 31 countries,
champions itself as a responsible steward of global resources.

"Operating in a manner that protects and promotes the
health and well-being of the environment is a core value to
Alcoa," the company says on its Web site.

Cargill, whose products worldwide include animal feed,
salt, steel and financial services, says, "Being socially
responsible as a corporation means that we care about the
environment."

EPA Settlement

Alcoa has clashed with regulators and environmentalists in
other countries. The University of Massachusetts's
Political Economy Research Institute ranks Alcoa as the 15th-most-toxic
company in the U.S.

In 2003, Alcoa agreed with the U.S. Environmental

Protection Agency and the Justice Department to pay about $330
million to clean up air pollution at a power plant within an
aluminum factory in Rockdale, Texas -- a plant it has since shut
down.

Alcoa has received mixed notices in Australia. In 1990, the
UN Environment Programme gave the company an award for
replanting forests it had destroyed to build a bauxite mine
there. Alcoa, which generates electricity to process aluminum,
obtained the lowest score in a 2008 review of utilities by the
World Wildlife Fund.

The WWF said Alcoa had failed to adopt targets to cut
greenhouse gas emissions by its coal-fired power plant in
Victoria state.

Slashed Emissions

Alcoa says it gets rapped by environmentalists because its
electrical power plants emit carbon. The company says it should
get credit for all of the pollution it's preventing by supplying
the lightweight aluminum that makes cars and trucks more energy-
efficient. Alcoa says it has slashed its greenhouse gas
emissions by 36 percent since 1990.

In Brazil, Alcoa is doing business in a political climate
that regulators say is favorable to polluters. Luciano Evaristo,
a director at Ibama, the federal environmental agency, says
forces in the government -- starting at the very top -- promote
and finance industries that feed on illegal destruction of the
rain forest.

President Luiz Inacio Lula da Silva calls himself an
environmentalist. In 2003, he introduced a plan to protect the
Amazon, creating task forces to raid areas being deforested.

Copenhagen Conference

In December, Lula will join leaders from almost 200 other
countries in Copenhagen at a UN-sponsored conference to discuss
a successor to the 1997 Kyoto Protocol, the first major
international pact on global warming.

"At Copenhagen, we will have to reach a global agreement
that will be both just and ambitious if we want to bequeath a
viable planet to future generations," Lula said in a July 7
speech. Lula set a goal of reducing deforestation by 80 percent
by 2020.

At the same time, Lula has authorized the building of new
roads and power plants in the Amazon and has increased funding
for ranches and factories in deforested areas. In June, he
congratulated people for tearing down trees to create farms
spurring economic growth.

"No one can say that someone is a criminal because he
deforested," Lula told a crowd of cheering ranchers in the
Amazon city of Alta Floresta as he announced plans to legalize
almost 300,000 ranches and farms built on illegally cleared land
that once was rain forest.

'Schizophrenic Government'

"It's a completely schizophrenic government," says Paulo
Adario, who directs the Amazon campaign for nonprofit
environmental group Greenpeace. "On one hand, they are
combating deforestation. On the other, they are financing it."

Foreigners have been cutting down Latin America's rain
forests since the 1600s, when Spanish and Portuguese conquerors
cleared jungles from Mexico to Brazil to build ships, farms and
cities. In the 1960s and 1970s, Texaco Inc. drilled dozens of
oil wells in Ecuador's Amazon, destroying rain forest and
polluting the region with poisonous wastes.

Alcoa, which produced the first commercially available
aluminum in 1888, has 63,000 employees around the world. The
company produces enough sheeting to make 100 billion cans of
beer and soda a year.

America's largest aluminum producer sells ingots, sheets,
wheels, fasteners and building materials to customers in the
aerospace, packaging and automotive industries.

Stock Recovery

The company reported $26.9 billion in revenue last year.
Its share price, which peaked at $47.35 in July 2007, slid as
low as $5.22 on March 6 during the global economic meltdown. The
stock value has since increased to $11.46, as of July 30, up 1.8
percent in the year-to-date.

Brazil has the world's third-largest reserves of bauxite.
In 1979, a group led by Rio de Janeiro-based Vale SA built a
bauxite mine in Porto Trombetas, 60 kilometers from Juruti. In
1994, Alcoa joined Vale in the venture, whose other members
today include Melbourne-based BHP Billiton Ltd. and Rio Tinto
Plc of London.

The scarred land and fouled water around Porto Trombetas
bears witness to the impact of the mine. Nearby, a lake called
Lago Batata still turns bright red from bauxite wastes workers
dumped for a decade.

The venture says it stopped polluting the lake in 1989 and
now uses sealed holding ponds to contain overflow. The
consortium replanted trees on the banks of the lake, but they're
low to the ground and brittle. Ademar Cavalcanti, the mine's
environmental director, says the cleanup will go on
indefinitely.

Revived Project

Alcoa inherited its Juruti mining rights from Reynolds
Inc., which it bought in 2000. Alcoa revived the project in
2003, as global economic growth increased demand.

Simao Jatene, the governor of Para, supported the Alcoa
project. BNDES, Brazil's national development bank, provided the
company with 1.9 billion reais ($1 billion) of financing for
construction.

In January 2005, Alcoa requested state permits to build the
$1.7 billion mine. Gabriel Guerreiro, who was then Para's
environment secretary, says the company submitted an impact
study done by an independent firm, Sao Paulo-based CNEC
Engenharia SA.

Guerreiro says his agency analyzed Alcoa's proposal and
concluded the mine would be modern and efficient. Guerreiro says
Para's mineral riches must be explored for the good of the
state's 7.1 million residents, 50 percent of whom live in
poverty.

'Rich Civilization'

"Nobody is going to build a rich civilization without
using the natural resources of the tropics," he says.

Guerreiro gave Alcoa a preliminary license in June 2005 and
asked for 35 improvements to the impact study. After Alcoa made
adjustments, he recommended the project be accepted by the state
environmental council, called Coema, which approved it in August
2005.

A month later, federal and state prosecutors sued Omnia
Minerios Ltda., the Santarem-based Alcoa subsidiary running the
mine; Para's state government; and Ibama, the federal regulator.
The government's civil suit, filed in federal court in Santarem,
says Omnia Minerios was required to seek and obtain a federal
environmental permit.

Prosecutors say Ibama failed by not taking control of the
licensing process. In court filings, Alcoa and the two
regulators each say they followed proper procedures.

Court to Court

The case against Alcoa has languished for four years as the
participants argue over which level of the Brazilian judicial
system -- federal or state -- should have jurisdiction.

Franklin Feder, Alcoa's Sao Paulo-based president for Latin
America and the Caribbean, says Ibama advised Alcoa to get state
approval for the mine.

Marcus Luiz Barroso Barros, Ibama's president from 2003 to
2007, says no one told him about such a decision. He says he
didn't know about Alcoa's project until after the company had
applied for licensing with Para. At that point, he decided it
would be too complicated for Ibama to get involved -- a position
he now regrets.

"Now that I know more about Alcoa's mine, looking at the
significant impact it's having in the area, I'd say it's a major
project that should have been handled by the federal agency,"
says Barros, 61, a physician who's now in private practice in
the Amazon city of Manaus.

Licensing Guidelines

A government advisory panel called Conama lays out
guidelines for when Ibama should get involved in reviewing a
project.

"Ibama shall be responsible for the environmental
licensing for projects and activities with a significant
environmental impact of a national or regional scope," Conama
Resolution 237 says.

State regulators aren't as reliable as the federal
government, Barros says.

"The main problem with licensing by state agencies is that
they are often too close to projects and fall victim more easily
to political and economic pressures than Ibama," he says.
"They may be more easily manipulated."

The state licensing of the Juruti mine was riddled with
irregularities, the prosecutors' suit says. Alcoa's consultants
limited their environmental research to two separate one-month
periods during the dry season, in a jungle with some of the
highest rainfall levels in the world, prosecutors say.

'Comprehensive'

The researchers didn't analyze how the mine, which will
consume 505 cubic meters (133,407 gallons) of water per hour
from an Amazon River inlet, will affect fishing. They also
didn't study how heavy ship traffic would affect fish
populations near the port, prosecutors say.

"All environmental studies, conducted by qualified
specialists, were comprehensive, as demonstrated by the fact
that all necessary licenses were duly granted," Alcoa said in
its responses to questions from Bloomberg News.

Fatima de Sousa Paiva, a nun and community organizer who's
spent almost a decade near the Juruti mine area, says Alcoa
approached the rain forest community like Portuguese explorers
who grabbed Brazil in the 16th century.

"Alcoa offered gifts like plastic sandals, thermoses and
bicycles," says Paiva, 48, who teaches at a local elementary
school. "To them, we were just some ignorant Indians in the way
of their plans to make billions."

In its written response, Alcoa said, "This is a groundless
allegation."

'Provide for the People'

In granting Alcoa permission to mine in the Juruti
preserve, Para officials clashed with Incra, the federal
government's land reform institute. By law, the reserve can be
used only by residents to hunt, fish and gather nuts to sustain
their families.

"The reserve allows a way to make sure the land is able to
provide for the people," the law says. All decisions about land
use must be made by residents of the community, according to the
law.

"Maybe the state wanted to play Alcoa's game by approving
an environmental licensing process that was full of holes, but
we didn't," says Luciano Brunet, who runs Incra's office in
Santarem.

Brunet says Alcoa told residents that they didn't have a
right to stop the mine because they didn't have title to the
land.

Public Land

Most of the ground in the Amazon is owned by the
government, according to Imazon, a Belem-based nonprofit group.
Incra gave descendants of Mundurucu and Muirapinima Indians the
right to use the land in 1981 without granting titles to the
families. Incra certified the land as a federal reserve in
November 2005.

Brazil's laws regarding property deeds in the Amazon have
always been lax, Brunet says, because until recently no one has
challenged them.

"Those people don't own the land," says Alcoa's Tiniti
Matsumoto Jr., who has run the mine since 2005 and has worked at
Alcoa for 40 years. "That land issue is Incra's problem, not
Alcoa's."

Alcoa doesn't own the property either, prosecutor Moraes
says.

"Alcoa simply assumed it was authorized to mine an area
that is protected, where people live off the land," Moraes
says.

Soon after Alcoa received approval from the state to build
the mine, Bricio Lima, the company's community affairs director,
went from house to house, asking families to cede part of their
land. In the end, Alcoa secured the right of way through land
where 81 families live.

No Choice

Bentes, the farmer whose stream is now filled with brown
silt, says Lima told his family and their neighbors that
residents had no choice but to cooperate because Alcoa had
approval from the state.

Lima said Alcoa offered the family 23,000 reais, which
equals about 17 months of the median income in Brazil, to use
2.5 hectares of their land, Bentes says. He says he agreed to
the deal because he had no choice.

"He told us the railroad would go through our land whether
we accepted the offer or not," Bentes says, as he prepares to
roast half a deer he hunted for two days with a friend.

Alcoa wanted to pay them something, even though it wasn't
required by law, Lima says.

"There was nothing forcing us to pay any compensation,"
says Lima, who confirms Bentes's account of their discussions.

'The Right Thing'

Brunet says his agency plans to grant land titles to local
residents, allowing them to request royalty payments from
Alcoa's mine production.

Matsumoto, 59, a Brazilian of Japanese descent, says the
company is willing to pay people who live in the reserve part of
its royalty payments to the government -- 1.5 percent of the
mine's revenue -- if that's what officials want.

"We want to be here for at least 70 years, so of course we
want to do the right thing," he says.

Alcoa is paying Conservation International, an Arlington-
based nonprofit group, $100,000 a year to create a trust fund to
finance the preservation of 10 million hectares of parks and
preserves around Juruti.

Since 2005, the company has spent 10 million reais to
improve roads and build schools, water treatment units, a
health-care center and a government building in Juruti, Alcoa
says.

Replanting Trees

In 2008, the company commissioned a poll of 600 people in
the region, finding that 61 percent said the mine project had
improved their lives. Two-thirds of those questioned didn't live
close to the mine, Alcoa says.

Matsumoto says Alcoa will replant every tree it destroys.
It will send forestry engineers and biologists ahead of the
excavators to catalog plants and animals in all of the jungle
Alcoa cuts down.

"When we start planting trees at the mine, we want to make
it richer than the original forest," Matsumoto says.

Patricia Elias, a forestry expert for the Union of
Concerned Scientists, says Matsumoto's goal is impossible to
achieve.

"It would take centuries for trees to grow to their
original density and height -- and it would never be better than
virgin forest," she says. "It's of greater value in combating
climate change to avoid deforestation in the first place."

'Just Doesn't Work'

Andre Clewell, a botanist in Ellenton, Florida, who is a
consultant on restoration of mines, says it's difficult to
quickly restore tropical trees.

"You can try to grow 200-year-old trees in 50 years, but
it just doesn't work," Clewell, 75, says. "And some of it
never comes back."

About 160 kilometers from the Juruti mine, green fields of
soybeans stretch to the horizon near Santarem, flanked by narrow
stands of the rain forest that once covered all of the area.
Scorched trees lie on the ground at the far end of Edno
Cortezia's farm, where workers set fire to the forest to make
way for crops.

Cortezia says he's growing soybeans where the jungle once
stood because Cargill built a port 30 kilometers away at the
confluence of the Amazon and Tapajos rivers.

"We came here because of the port," Cortezia says.
Cargill's Champi says the company will remove Cortezia as a
supplier if it can confirm the deforestation.

Pot-Holed Highways

Before Cargill built its port, there were no soybean farms
near Santarem, says Marcus Bistene, chief of enforcement at
Ibama's Santarem office. Pontes, the federal prosecutor, says
Cargill bypassed federal environmental law to build a port
without properly studying how it would affect the Amazon.

In the mid-1990s, Cargill, the world's largest agricultural
company by revenue, was looking for an alternative to trucking
grains down pot-holed highways from the fields of Mato Grosso
state in western Brazil to the ports of Santos and Paranagua,
2,000 kilometers south.

They set their sights on a highway through the heart of the
soybean belt from the Amazon to Santarem, Champi says. At the
time, Cortezia farmed land in the state of Mato Grosso, near the
southern border of the Amazon. He says Cargill officials came to
town, urging farmers to move to Santarem, where it would be less
expensive to grow soybeans.

This season, he's harvesting soybeans on his farm near
Santarem that he plans to sell to Cargill.

EPA Brushes

Cargill has 160,000 employees in 67 countries and reported
$120 billion in revenue in 2008. Founded in 1855 by William
Cargill, it's still primarily family owned. It has been in
Brazil since 1965, when it started producing and selling hybrid
corn seeds. Within two decades, Cargill grew into Brazil's top
trader and exporter of soybeans and oilseed.

Like Alcoa, Cargill has had brushes with environmental
regulators.

In the U.S., the EPA has cited the company for polluting
rivers and killing fish populations. In 2005, Cargill signed an
agreement with the EPA and the Justice Department settling
charges that the company had underestimated air pollution at
corn and soybean processing plants in 13 states.

Cargill agreed to spend $130 million to reduce pollution at
27 plants, pay a fine of $1.6 million and finance $3.5 million
in environmental programs.

'Long History'

Cargill standards for protecting the environment are
stricter than the EPA's in some cases, spokeswoman Lori Johnson
says.

"Cargill has a long history of voluntarily reducing its
emissions and other environmental impacts," Johnson says.

In 2000, Pontes filed suit in federal court to halt
construction of Cargill's port, arguing that the company hadn't
done a proper environmental study. Cargill contested the suit,
saying it had approval from Para's environmental agency.

As the case was pending, Cargill finished the port in 2003.
In March 2007, a Brazilian federal judge shut down the port
until the company did a comprehensive environmental study.
Cargill won a reversal of that decision on appeal.

In 2006, Greenpeace reported it had traced soybeans from
the port to illegally deforested land. Since then, Cargill has
refused to buy soybeans grown on newly deforested land, Champi
says. Three days ago, Cargill and other grain exporter in Brazil
extended until July 2010 a commitment not to buy soybeans from
farms that were cleared from the Amazon since 2006.

74 Million Cows

Ranchers, more than anyone else, have illegally flattened
thousands of square kilometers of publicly owned rain forest to
create pastures for cattle, Pontes says. More than 74 million
cows graze in the Amazon today, covering a combined area larger
than Spain.

Ranchers are proud of what they have done to improve the
local economy. Ataides Gomes de Oliveira, a foreman on the
Itacaiunas ranch near Xinguara, walks among a wasteland of
scorched logs and splintered stumps. He stops as cattle appear
amid the ragged ferns and saplings.

"There are 6,000 cows here, where there used to be
unproductive jungle," he says. Sao Paulo-based Agropecuaria
Santa Barbara Xinguara SA, which owns Itacaiunas, says it's not
responsible for managing the ranch and has never illegally
cleared jungle.

McDonald's gets some of the beef for its Big Macs from a
meatpacker supplied by ranches cleared from the Amazon, cattle
sales permits show.

Deforesting Fines

McDonald's supplier of hamburger patties in Brazil,
Braslo Produtos de Carne Ltda. in Sao Paulo, has bought beef from its
parent, Marfrig Alimentos. Four ranchers that supply Marfrig
have been fined a total of 13.5 million reais for illegally
clearing the rain forest, public records show.

Marfrig has never bought "regularly" from ranches that
don't follow Brazil's environmental law, says Ricardo Florence,
director of planning and investor relations. The company demands
its suppliers follow all laws. It won't buy from suppliers that
Ibama has placed on a list of "embargoed" ranches cited for
illegal deforestation, Florence says.

The ranchers who were fined aren't on that list, so Marfrig
has no way of knowing their background on deforestation, he
says.

"The Marfrig Group does not buy from suppliers that
contribute to deforestation of the Amazon," Florence says.

McDonald's Policy

Oak Brook, Illinois-based McDonald's, which has had a
policy of not buying beef from deforested land since 1989, says
it relies on its suppliers to follow the law.

"Every McDonald's beef supplier has signed and affirmed
its compliance with this policy," says Bob Langert, McDonald's
vice president of corporate social responsibility. "They are
aware that McDonald's will immediately cease accepting raw
materials from any facility that is found to source cattle for
McDonald's from within the Amazon."

Marfrig complies with McDonald's policy, Florence says.

JBS, the world's biggest meat company, has purchased cattle
from fined ranchers. JBS owns Swift & Co. and part of Smithfield
Foods Inc. in the U.S. and has nine plants in the Amazon. Kraft
Foods Inc.'s division in Italy and a unit of H.J. Heinz Co. have
bought beef from JBS, according to sales and export records.

The number of slaughterhouses in the Amazon has tripled to
87 since 2004, as international meat exporters expanded into the
rain forest, prosecutors say.

'It's the Meatpackers'

"If you want to know who is financing the deforestation,
it's the meatpackers," Ibama director Evaristo says.

Angela Garcia, director of environmental affairs at JBS,
says the company counts on government enforcement records to
ensure cattle come from land that wasn't illegally deforested.

"We're not in enforcement," she says. "We don't have the
resources. I hope the ranches are complying with the law, but I
cannot say whether they are."

Evaristo says virtually all Amazon ranchers built pastures
on land that was illegally deforested.

"These are people who operate with 100 percent
illegality," he says. "They steal public land, destroy the
rain forest, plant grass and let the cows graze until they're
fat enough to sell."

In Sao Felix do Xingu, the municipality in the Amazon with
the most cattle, only one ranch out of hundreds has a license.
On June 1, Ibama and federal prosecutors filed suit against 21
cattle ranches, accusing them of illegally deforesting 150,000
hectares of rain forest.

Stopped Buying Beef

Prosecutors say that meatpacker Bertin sold beef from
cattle that had been raised on illegal ranches to 41 of its
customers --including Carrefour and Wal-Mart. Prosecutors sent a
letter to all Bertin customers recommending they stop buying
meat that comes from deforested land.

By June 19, Carrefour, Wal-Mart and 33 other buyers had
told Azeredo that they had stopped buying from Bertin and other
meatpackers named in the lawsuit.

Bertin says it stopped buying from 14 ranches named in the
suit and signed an agreement with prosecutors to develop tighter
controls to ensure cattle suppliers follow the law.

"We've suspended cattle purchases from deforested ranches
and will help ranchers stop deforesting the Amazon and replant
areas that have been devastated," Bertin spokeswoman Simone
Soares says.

'A Matter of Cost'

Bentonville, Arkansas-based Wal-Mart says it wants to buy
only beef raised on ranches that follow the law. The company had
suspected that ranchers were destroying the Amazon, says Daniela
De Fiori, Wal-Mart's vice president for sustainability in
Brazil.

"The truth is, Brazil's retail sectors rely on these
companies," De Fiori says. "And it's a matter of cost."

On July 17, Wal-Mart launched a global initiative to urge
all of its suppliers to assess and label the environmental
impact of all their products, going back to the source of raw
materials.

Spokespeople for Carrefour, Heinz, Kraft and car companies
Ford, GM and Mercedes say they have policies against buying
products from deforested land and requiring suppliers to assure
them they follow the law.

Leather producer Eagle Ottawa, which is a unit of
Whitehall, Michigan-based Everett Smith Group Ltd., says it's
satisfied with Bertin's agreement with prosecutors to stop
buying from illegally deforested ranches.

Shrinking Amazon

In Juruti, where Alcoa has its bauxite mine, the jungle is
dotted with mahogany, Brazil nut trees and marble-textured
angelin-pedra trees. These hardwoods can grow to almost 50
meters.

Under the thick canopy of that timber are giant ferns and
palms. This Amazonian vegetation, which has long absorbed the
world's carbon dioxide, is now shrinking at a rate of 163 square
kilometers a week, exacerbating the global warming that
threatens to wreak havoc worldwide.

Lima, Alcoa's community relations manager, a heavyset man
with thinning hair, drives a pickup truck on the freshly cleared
land for the mine. The rain forest gives way to a 700-meter-wide
muddy pit that steams in the sun after a cloudburst.

Jungle topsoil and clay have been stripped away, exposing
bauxite 15 meters down. Dump trucks are lined up, waiting for
work to begin.

Lima points to the pit, saying that beginning in late
August, excavators will fill trucks with 90-ton hauls of bauxite
once mining starts. Bulldozers will move ahead, clearing the
rain forest to make way for heavy machinery to advance in a
mining trench 50 meters wide.

Train Sits Empty

In a clearing a few kilometers away, conveyor belts lead to
a tower where clay and other waste material will be washed from
the ore. Not far from the pit, a train sits empty, ready to be
loaded with bauxite.

Alcoa has already torn down 900 hectares of rain forest,
Lima says. Within 30 years, the mine will consume more than 10
times that much jungle, according to the company.

Bentes and his family show where Alcoa workers strip the
rain forest.

"We don't know many things, and we are very simple
people," Bentes says, adding that he does understand the value
of economic development in Brazil. "But they should find a way
to do that without destroying the rain forest," he says. "That
is not right."

• 106 Money & Politics
• 116 Human Rights
• 183 Environment
• 185 Corruption