BRASILIA - The Brazilian government must act to stamp out illegal gold mining that has caused a humanitarian crisis of hunger and disease in the Yanomami indigenous population, mining industry lobby Ibram said on Monday.

Ibram, which represents multinational and large domestic mining firms operating in Brazil, is asking the new government to take steps to break a network that launders illegal gold through the financial system for sale to jewelry makers and export to countries like Switzerland and Britain.

Illegal gold mining, which surged during the previous government and is known as "garimpo" in Portuguese, is destroying the environment and the Amazon rainforest, said Ibram President Raul Jungmann.

Around 20,000 wildcat gold miners are contaminating the rivers and fish that the Yanomami people - who live on Brazil's largest indigenous reservation, near the Venezuela border - rely on for water and food, leading to malnutrition and disease. Heavily-armed miners are blocking health workers from reaching the Yanomami, authorities say.

"It is an illegal and predatory activity and the main threat to the indigenous people, as we are seeing in the humanitarian tragedy of the Yanomami today," he told Reuters on Monday.

Half of the 100 tonnes of gold produced each year by Brazil, or about 52 tonnes, is illegally mined by the "garimpo," Jungmann said.

He urged the government of President Luiz Inacio Lula da Silva to put together a combined operation of police and military forces to expel the miners, whose numbers are almost at the level of the indigenous community itself.

But that would not stop the miners moving elsewhere, he said. Authorities need to attack the financial network that funds the expensive machinery and dredgers they use and launders the gold, said Jungmann.

Lula last week declared a medical emergency in the Yanomami territory. Environment Minister Marina Silva on Monday blamed Brazil's previous far-right government for the crisis.

"I have no doubt there was a genocidal attitude towards the indigenous communities," said Silva, the daughter of Amazon rubber tappers who still suffers from health problems caused by drinking water contaminated by mercury when a child.

Gold, legal and illegal, accounts for 75% of Brazilian exports to Switzerland, and 25% of exports to Britain, said Jungmann.

Ibram is seeking changes to rules that heavily tax gold used as an industrial input, including jewelry, by 27%, but only levy a 1% financial operations tax if used as a financial asset.

That has encouraged the laundering of illegal gold by specialized financial brokers known as DTVMs who then sell it to jewelry makers or for export.

According to the Instituto Escolhas, an NGO that has investigated the illegal gold trade, Brazil traded 229 t of gold between 2015 and 2020 that appeared to have illegal origins. It found that one third of the illegal trade was handled by just five brokerages that buy gold from the Amazon.

Jungmann has met with Brazil's central bank, its securities regulator CVM and with its internal revenue service to propose electronic fiscal receipts for the gold trade.

The lobby is also proposing the elimination of the "self-declared" system, which it argues means sellers just need to present a semi-plausible story about where they obtained the gold.