Brazilian children as young as five are working in unregulated mines, helping to produce talcum used by international companies including the British-based ICI paints, according to a report by a Sao Paulo group.
The non-governmental Social Observatory, which specialises in labour issues, carried out an undercover investigation in the state of Minas Gerais (General Mines) focusing on the deprived community of Mata dos Palmitos near the tourist town of Ouro Preto.
About 300 people live in the cluster of slum housing around Minas Talco (Talc Mine) where soapstone - a mixture of talc and other minerals - is extracted in rock form. Despite categorical denials from directors of Minas Talco that child labour is used, the team estimate about 20 children from five to 17 years old work informally to assist in the haulage of unprocessed talc ore rocks, each weighing roughly 18kg.
Working for an average of 25 hours a week, the children in the impoverished community help their families, who survive on an average of less than £2 a day, by gathering talc rocks spread around the mine areas. When they have collected enough, locals claim they call Minas Talco which sends a truck to pick them up, paying R$250 (£70) for 12 tons.
In the tiny community where child labour has been an accepted fact of life for many generations, the lead researcher, Marques Casara, and his team witnessed children loading the large talc deposits from the mine into wheelbarrows.
After collection the talc is processed and sold to multi-nationals for use in the production of paints, ceramics, coloured pencils, medicine, soaps and cosmetics.
The report - called The Age of Stone - claims that ICI paints, the German chemical company Basf and the German crayon manufacturer Faber-Castell have purchased processed talc from the mine. The 1990 conservation of the world-famous Christ the Redeemer statue in Rio de Janeiro was also completed with soapstone extracted from the same mine, researchers discovered.
Using child labour is not only a violation of the Brazilian statute but of international codes on child rights of which Brazil is a signatory. But the region, which is approximately the size of France, has only six inspectors, making enforcement of the code is extremely difficult.
The research team also found children employed as "artisans" carving sculptures and dishes with soapstone from the same mine, which they sold to local companies for about 25p. The products are then marked up by as much as 1,000 per cent and exported.
"The children go to school in the morning and in the afternoons many work in the extraction of ore from the mines, helping their families earn the money they need to survive," said Mr Casara. "Minas Talco know that children work in the collection of rocks because this happens within their land - it is impossible that they do not. It is a fairly direct use of child labour by this company."
The companies contacted by the Social Observatory all reacted with horror to the claims and pledged to cut links with the supplier pending a full investigation.
In a statement, Tintas Coral, the Brazilian arm of ICI paints which uses the talc, denied it had any knowledge of the practice. The company, which achieved sales of £5.6bn in 2004, is best known in Britain for its Dulux range
"As a socially responsible company Tintas Coral is checking the facts and if the charge is proven will no longer purchase any type of product from this supplier," a spokesman said in response to the report. The company has cancelled its contract with the supplier.
Both Basf and Faber-Castell said they were appalled by the Social Observatory's findings.
The report also found that, despite a commitment to eradicate child labour by President Lula da Silva, who worked as a shoeshine boy at the age of eight, only 10 of 30 children were receiving the support of the government programme for the eradication of child labour which pays children R$25 (£7) a month to go to school rather than work.