Peru Makes Progress Against Illegal Mining

Peru Makes Progress Against Illegal Mining

By Dialogo
June 19, 2013

LIMA, Peru – The Peruvian government has deployed reinforcements in the fight against illegal mining, which causes the Treasury losses of $500 million Peruvian soles (US$183 million) annually, more than three times the $159 million soles (US$58 million) the Interior Ministry invests in equipment and upgrades for the country’s National Police.
The activity is more profitable than narco-trafficking. Illegal gold mining generates US$1.8 billion, while drug trafficking generates US$1.2 billion a year, according to the 2012 report by the consulting firm Macroconsult titled “The Economics of Illegal Gold Mining in Peru.” Gold accounts for a majority of the illegal mining in Peru, yet copper, silver and non-metallic minerals such as coal also are illegally mined, according to the Ministry of the Environment.
To continue the process of formalizing all forms of mining nationwide, which began in February 2012, Peruvian authorities appointed retired Col. Wilfredo Álvarez Mendoza as the high commissioner for mining formalization, illegal mining interdiction and environmental remediation.
Álvarez Mendoza also will coordinate a team focused on closing illegal mines throughout the country.
“It is estimated that in Peru there are 100,000 informal miners, including more than 70,000 of whom are interested in taking part in the formalization process,” Juan Jiménez Mayor, the president of the Council of Ministers, said during Álvarez Mendoza’s appointment on May 6.
Illegal mining is present in 21 of Peru’s 25 departments, according to the report “The Management of the State versus Informal and Illegal Mining in Peru,” which was presented in February by the Office of the Ombudsman. In addition to economic losses, there are serious social and environmental impacts, particularly in the Amazon region.
“It’s most likely there [in the Amazon], particularly in the departments of Madre de Dios, Cusco and Puno, where the worst effects have been seen,” said Ernesto Ráez Luna, an adviser to the Ministry of the Environment’s senior management. “It is the main enclave of illegal gold mining in Peru.”
New dangers

“The risk we run is that to protect itself, illegal mining will begin to be used to finance armed groups, which we have seen in Colombia,” said Environment Minister Manuel Pulgar-Vidal in a May 11 interview with El Comercio newspaper’s Somos magazine. “We’re close to having this happen.”
To date, the illegal alluvial mining of gold has destroyed 18,000 hectares of a total of about 77 million hectares of the Peruvian Amazon – 57.6% of the country – largely as a result of the use of mercury, according to Ráez Luna.
The fish in Madre de Dios – the region most affected by illegal gold mining in Peru – have mercury levels above those permitted by the Word Health Organization, according to a study carried out in 2009 by the Carnegie Institution for Science. In some cases, levels have reached 1.12 ppm (parts per million), well above the 0.5 ppm limit.
“Methylmercury has been detected in the waters contaminated by illegal mining,” Ráez Luna said. “This compound is highly toxic and easily enters into living organisms such as plants, animals and human beings. It mainly affects the nervous system, with serious consequences for the mental development of children.”
The damage caused will not immediately result in a hospital visit, Ráez Luna added, but it leads to children’s “having an IQ that is five, 10 or 15 points lower than they would have had in optimum environmental conditions.”
Ráez added underground mining also generates a significant environmental impact, particularly when it comes to water pollution.
Illegal miners extract minerals using picks, sort through the material and grind it using traditional mills. The material undergoes a process of amalgamation that uses large amounts of water, mercury, cyanide and coal. In most cases, these waters are discharged into surrounding farmland, rivers and the Pacific Ocean.

“This mainly happens in mountainous and coastal areas (the departments of Ayacucho, Arequipa, Ica and Piura), with the mining of gold and copper, and somewhat less in cases involving coal and other nonmetallic minerals, such as limestone that is used for construction,” he said.
Proactive enforcement
Ráez said proactive enforcement must be included in the strategy to formalize illegal mining.
Illegal miners argue they are not criminals because they are engaged in an activity of subsistence. “[Nevertheless,] there are crimes being committed and rights that are being violated,” Ráez said. “But you can’t prosecute or arrest 100,000 people,” he added.
The government’s plan seeks to stop the extraction, sale and export of minerals that have been taking place for decades in Peru without any official oversight.
The ministries of Energy and Mines, the Environment, the Interior and the Economy and Finance, as well as regional and local governments, among other institutions, have worked together to combat illegal mining.
Formalization includes six steps and will be completed by April 2014.

The first step involves a “statement of commitment,” which includes declarants’ providing basic personal information, acknowledging they’ve been mining illegally and agreeing to comply with all of the requirements to mine legally.
Subsequent stages include obtaining mining rights and authorization to use surface areas and bodies of water – a requirement known as the Corrective Environmental Management Instrument – before legally starting or resuming operations.
From February to December 2012, which was the deadline for meeting the initial requirement, a total of 77,723 “statements of commitment” were received, according to the Ministry of the Environment.
“If we take into account that there are 100,000 (illegal) operators, there are approximately 30,000 that we need to turn down because they have not shown a willingness to present a statement of commitment,” Pulgar-Vidal said.
José de Echave, an expert in mining issues and former deputy minister of Environmental Management, said illegal mining in Peru is “the other side of the boom” in formal mining that has taken place in recent decades in Peru.
The country is the world’s third-largest producer of copper and eighth-largest producer of gold, with five million ounces exported in 2012, according to Macroconsult.
With 4% of the world’s gold reserves, Peru could climb as high as fifth in production if the country eliminates illegal mining, Peruvian Minister of Energy and Mines Jorge Merino said during a symposium held in Lima in May 2012.
Mining accounts for 14.5% of Peru’s gross domestic product (GDP) and 59% of Peruvian exports, according to figures from Macroconsult. In 1994, mining accounted for only 4.7% of the GDP.
“Formalizing an activity that has grown explosively, while also trying to prevent its continued growth, is a fundamental first step,” Echave said. “We need a multisector intervention to ensure that illegal miners gradually enter the formal economy and carry out their activities in accordance with Peruvian law. But without question, we also need eradication [of illegal mining centers].”