Who’s to blame for Peru’s gold mining troubles?
The New Yorker | Stephanie Boyd
October 28, 2013
Thirteen years ago, I flew to the state of Madre de Dios, in Peru’s southeastern Amazon jungle, and was mesmerized by the view from my plane’s window: a vast forest canopy stretching to the horizon. The purpose of my visit was to check out the recently created Tambopata National Reserve, a two-hundred-and-seventy-five-hectare protected area and surrounding buffer zone, created to preserve one of the Amazon’s most biodiverse zones from gold mining and other destructive practices.
I travelled to Madre de Dios again in September, to see how the conservation efforts had panned out. From the air, the lush vegetation was broken by a giant patchwork of pus-colored toxic holes. A few days later, the Peruvian government released alarming statistics: illegal gold mining has devastated more than forty thousand hectares of Amazon forest in Peru, up from about six thousand hectares in 2000. Tambopata isn’t safe, either: miners are believed to have destroyed more than fifteen hundred hectares inside the protected area and six thousand hectares in the buffer zone—and park officials fear that the extent of the damage could be even greater.
Thirteen years ago, Puerto Maldonado, the capital of Madre de Dios, was a little town with a few low-key eco-tourist hotels, a couple of restaurants on the main square, and a smattering of unpaved avenues with single-story homes. Everyone rode motorcycles, or used rickshaw-like taxis powered by them, because there were hardly any cars. Now, Puerto is a boomtown. Picture the Alaska gold rush set in the jungle to the tune of electroniccumbia music: shopping complexes, brothels, violent crime, conflicts with indigenous groups, and abuse of alcohol and drugs. The Peruvian government estimates there are thirty thousand illegal miners in Madre de Dios. Some of them operate on land zoned for mining but haven’t carried out the required environmental studies and paperwork to become fully legitimate, while others have invaded indigenous lands, forestry concessions, or protected areas where mining is illegal—like Tambopata.
How did the Amazon’s promising conservation measures go so wrong?
Peru has become the darling of World Bank economists, with a growth rate last year of 6.3 per cent, making it one of the fastest-growing countries in Latin America. But the wealth is concentrated in a small upper class and hasn’t reached the Peruvian countryside, where fifty-three per cent of the population remains impoverished. The rising price of gold over the past decade, coupled with a lack of employment opportunities in rural areas, has brought an epidemic of gold fever, as peasants from the Andean mountains have come to the Amazon hoping to strike it rich. Meanwhile, the Interoceanic Highway opened a few years ago, linking the Peruvian coast to the ports of Brazil and handing illegal miners a smooth, modern transportation route. All this has been compounded by corruption, a system to launder gold, and a proliferation of international buyers willing to turn a blind eye. The result: a new gold rush in the Amazon.
Today, Peru is the largest gold producer in Latin America, and the sixth-largest worldwide, generating billions of dollars in exports each year. And these statistics don’t include the country’s illegal mining sector, which could make up fifteen to twenty per cent of its gold production, according to a report released in September by Verité, a U.S.-based research group.
“Gold surpasses cocaine—it’s Peru’s largest illicit export. It’s pretty staggering,” Quinn Kepes, one of the report’s authors, told me. “It’s important to look at the parallels and difficulties of combating drug trafficking: huge profits, bribing local officials, and greed, in an area that’s a ‘no man’s land.’”
The Verité report documents several human-rights abuses related to illegal gold mining in Peru: indications of forced labor, child labor, risks to workers’ health and safety, sex trafficking of young girls forced or coerced into servicing the miners, and massive damage to the environment. Meanwhile, gold is being illegally laundered and exported around the world, ending up in jewelry, watches, gold bullion, and electronics, according to the report.
Kepes has been tracking human trafficking and forced labor around the world for the past six years, covering hot spots like Liberia, Bangladesh, and Guatemala. But he told me that the “most troubling and worst conditions” he’s encountered have been in Madre de Dios.
The testimonies and interviews gathered by Verité paint a bleak picture: poor people, desperate for work, exploited by labor contractors and mine operators who make them handle mercury and other toxic chemicals without adequate safety measures. One worker was shot in the leg; another had his co-worker killed in front of him; multiple people have been threatened with guns; teen-age girls are working in brothels.
At the same time, many workers say the meager income they pull in from illegal mining allows them to feed their families. People who provide services to the industry, including selling equipment and repairing machines, make a decent living by Peruvian standards and have forged a rising middle class in Puerto Maldonado.
A young mechanic who is part of this middle class, and who works for illegal mining operations in Madre de Dios, spoke with me on the condition that he not be named. Born and raised in Puerto Maldonado, he is well-spoken and extremely knowledgeable about the industry’s exploitation of workers, its destruction of the environment, and the harmful effects of mercury on human health. “But there’s nothing I can do about it,” he said. “There’s nowhere else to work in Puerto; this is how I provide for my family.”
Many other workers I spoke with, like him, don’t want the industry shut down. They want improved labor, safety, and environmental practices, but don’t dare to agitate or protest for fear of losing their jobs.
Along with the alarming social and environmental impacts of the illegal gold-mining industry, the government says it’s losing millions of dollars in unpaid taxes. In response, Ollanta Humala, Peru’s President, has enacted a series of regulations. Those operating in areas where mining is allowed will be able to continue as long as they obtain permits, pay their taxes, and follow environmental laws.
The government set a September deadline by which illegal miners were supposed to complete the legalization process, but by August not a single one had done so, so the date was pushed to April of 2014. Meanwhile, the military has carried out thirteen commando operations against illegal mines so far this year, destroying or confiscating seventy-two machines and other equipment. The Ministry of Defense has said that it’s trying to bring the area back under government control—clearly an important step.
But the tactics appear to have only strengthened the illegal miners’ resolve. At the end of September, Peru’s unions of illegal miners declared a nationwide strike protesting the laws. The epicenter of the protest was Madre de Dios. About twenty thousand miners took to the streets and shut down transportation routes for five days, leading to food shortages and violent clashes with police. Six people were injured during the protests, including two miners who sustained bullet wounds and a police officer who suffered a broken leg after he was allegedly stoned. The strike ended with the government agreeing to formally negotiate with the miners. Union leaders say they want the laws rewritten to make the legalization process easier.
“The Peruvian government needs to develop a concerted plan to tackle the problem of illegal mining,” José de Echave, Peru’s former vice minister for the environment, told me. “But the government lacks an effective plan and is completely inefficient in terms of action. They also lack resources.”
Madre de Dios is now so dependent on illegal mining that few people speak out against it in public. A local restaurant owner, who spoke on condition of anonymity, told me that the real problem is the price of gold. “If people from your part of the world didn’t value gold so much, and put such a high price on it, then we wouldn’t be having this problem,” he told me.
There is, undoubtedly, truth in that statement. A decade ago, a coalition of U.S. activists, led by Earthworks and Oxfam, launched a campaign called “No Dirty Gold” to inform consumers about abuses in the gold-mining industry. This year, the group reported that seventy per cent of gold is used in jewelry, and eleven per cent in electronics. About ninety jewelry companies—including eight of the ten largest U.S. retailers—have signed the campaign’s “Golden Rules” pledge, promising not to buy gold from companies associated with human-rights and environmental abuses.
Faced with mounting consumer pressure, and fears that gold might become as taboo as elephant tusks or sealskin coats, the jewelry industry also set up a certification standard called the Responsible Jewellery Council. Launched in March of 2012, the program claims to trace gold from its origins to consumers. Its members include major gold and jewelry companies. The catch is that the code is voluntary: there’s no enforcement mechanism if companies don’t comply. Last year, the Responsible Jewellery Council faced an embarrassing scandal when one of its members, a Swiss metal-refining firm called PAMP, was accused of buying illegal Peruvian gold. An investigation by the Peruvian business newspaper El Comercio said that PAMP purchased gold from Universal Metal Trading, an alleged gold-laundering outfit owned by a top official, at the time, in Peru’s Ministry for Energy and Mines, who left the Ministry because of the resulting public outcry. (MKS SA, PAMP’s parent company, didn’t immediately respond to my requests for comment, nor did officials at the Responsible Jewellery Council and Universal Metal Trading.) And earlier this year, Earthworks and other environmental groups published a report called “More Shine than Substance,” alleging that the Responsible Jewellery Council has used weak standards, failing to insure that its members behave themselves and not including local communities and other stakeholders on its board and other decision-making bodies.
Human-rights groups say that smaller, community-based approaches to tracking the origins of gold are having more success. The Alliance for Responsible Mining, a coalition of nonprofits, jewellers, traders, and community associations, has set-up the world’s first certification system for small-scale mining. The system allows buyers to trace where their gold comes from to insure that it is “fairmined,” meaning that it follows the group’s environmental, social, and labor standards.
The ethics of gold mining in the Amazon remain complex. Do North Americans and Europeans have the right to tell Peruvians that they can’t mine there? Are some areas so crucial for our planet’s survival that we need to band together and preserve them? On a personal level, what responsibility do we have as consumers? Do we cash in our gold stocks? Buy only fairmined gold? What about laptops and cell phones? If the real cost of gold is environmental destruction, teen-age prostitution, and forced labor, maybe the gold wedding band isn’t such a great symbol of love and trust.