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Peru Has a Conflict Brewing over Illegal Gold Mining

The country exports more illegal gold than it does cocaine, and it's the world's leading cocaine producer

by Jason Koebler
Oct 1 2013, 6:40pm
About 20 percent of Peru's gold exports come from illegal mines. Photo: Verite

Peru is the world's leading producer of cocaine. But there's another illicit good it produces even more of: illegal gold.

About one-fifth of the country's gold is produced illegally, and the sector is propped up with forced labor and child labor, according to a new report by Verite, a Massachusetts-based fair labor organization. Much of the illegal mining occurs in the southeastern region of Madre de Dios, along the Brazilian and Bolivian borders. In that region, Verite "detected the largest number of indicators of unfree recruitment, work and life under duress, and impossibility of leaving employers."

The situation is quickly coming to a head in Madre de Dios: Monday, more than 2,000 police officers were called into Puerto Maldonado, the region's capital, where illegal miners have been striking and blocking roads in an attempt to improve conditions there. In other regions, such as Puno, illegal miners have joined those striking in Madre de Dios.

Tuesday, Jorge Merino, Peru's minister of energy and mining, told reporters that the government has been essentially powerless in trying to stop illegal mining.

"We're facing powerful groups and mafias that have corrupted all levels [of government]. For the first time, we've made the decision to solve this probably by creating a legal framework that separates the artisanal from the illegal," he said. 

Many of the gold mines in Madre de Dios are deep in the Amazon Rainforest, which makes access by government officials difficult, and escape by workers nearly impossible. Verite says that they also found "evidence of child and juvenile labor in peripheral services, serious risks to worker health and safety, severe environmental damage, indications of sex trafficking of adults and minors, and the 'laundering' of illegally produced gold to facilitate exportation."

Quinn Kepes, one of the authors of the report, said in an accompanying interview that "conditions were much worse than [he] expected." He has worked in Guatemala, Bolivia, Liberia, and Bangladesh and said conditions in Peru are by far the worst.

"I haven’t seen anything this bad. Especially in Madre de Dios, there is extreme physical isolation, so it is very difficult to leave without employer permission," he said. "Many workers are extremely vulnerable because they are 'undocumented'—unable to obtain identification documents, either because they never received a birth certificate, or because they are on the run from the law."

Though the Verite report focuses on Peru, the country's cocaine and gold problem are not unique in the Andean region. As the largest country in Northwest South America, policing it is tougher. Bolivia and Colombia closely follow Peru as exporters of cocaine, and illegal mining is rampant in Colombia, Ecuador, and Bolivia. 

Even in legal mines, conditions are atrocious. In 2009, I visited a silver mine in Potosi, Bolivia. Miners there worked 12 hour days with poor ventilation in one of the world's most extreme environments (Potosi is the highest-altitude large city on Earth). Many miners died within a few years due to lung cancer or other complications. They drink solutions of 97 percent alcohol and smoke black-tar cigarettes to make it through the day.

Despite the ubiquity of illegal mining in Peru, there are small indications that things are beginning to improve. Since 2005, gold exports from Peru have declined each year. Still, the illegal gold industry is worth roughly $1.8 billion dollars. Cocaine trafficking is worth about $1.2 billion. Eventually, much of that gold makes its way to Switzerland, which Verite calls a "global clearinghouse for gold." It eventually makes its way into jewelry, electronics, and watches around the world. 

Besides being a human labor nightmare, gold mining is also disastrous for the environment: Mining has caused vast stretches of the Amazon to be cut down, and mercury used in mining has poisoned waterways and fish, which eventually makes its way back into the human population living there. 

The most recent strike isn't the first time gold miners have tried to strike to improve conditions: Last year, three people died in demonstrations that turned violent. Luis Otsuka Salazar, president of the Madre de Dios Mining Federation, told El Comercio that progress has been slower than they'd hoped: "It's been 19 months and there hasn't been a single miner legalized by the government, so we're hoping for more dialogue."