BRASILIA (Reuters):

Thousands of poor Brazilians with shovels and chain saws have scrambled to a site deep in the Amazon jungle dubbed New El Dorado in a gold rush that alarms authorities because of potential environmental and health damage.

Only a few weeks after residents found superficial gold deposits, an estimated 3,000 wildcat miners, or garimpeiros, set up camp in the forest some three hours by jeep and canoe from the town of Apui.

"They came from all over, it's created a mining frenzy," Admilson Nogueira, an Apui councilman, told Reuters by telephone.

Priests, politicians and peasants alike are trying their luck, he said.

With shovels and axes they dig garage-sized lots 6.5 feet (2 metres) deep into the heavy clay soil, panning the earth at a nearby branch of the Juma river, Nogueira said.

Environmental authorities say they fear deforestation and contamination from the toxic mercury that garimpeiros use to bind the gold into nuggets.

"They are devastating the area, there is a real risk of mercury contamination of the rivers," said Mario Jorge, interim inspection chief at the environmental protection agency Ibama in Manaus.

A delegation of environmental and mining authorities is to travel to the mine on Tuesday to determine whether they will grant an operating license or have the miners removed.

"If we don't control this now, it could turn into a Serra Pelada," Jorge said in reference to a wildcat mine in the Amazon that drew as many as 30,000 garimpeiros in the 1980s.

Slave-like working conditions

Images of the slave-like working conditions in which haggard, mud-drenched miners carried bags of earth on their shoulders at Serra Pelada became world famous through Brazilian photographer Sebastiao Salgado.

With the recovery of the price of gold, poor people throughout the region are again hoping to strike it big, said Walter Arcoverde, head of inspection at the Mining Ministry in Brasilia.

"It's not as big as the rush of the 1980s, but the number of garimpeiros is on the rise again," Arcoverde said.

He added that Apui lies in the heart of a region with large potential alluvial gold deposits.

Some people mined as much as 500 grams over the past month, according to Nogueira, making around 19,500 reais (US$9,112). By comparison, a salary as a farm hand is 350 reais a month.

The environmental protection agency prefers to keep the mine open under supervision, but Jorge warned of several risks, including an outbreak of malaria.

As the mine pit fills with stagnant water, mosquitoes carrying the disease multiply quickly and infect the miners, he said.

But authorities may be spared a tough decision. "Garimpeiros go as quickly as they come, it all depends how much gold they find," Nogueira said.