Peru Thinks 'Ethical Gold' Can End the Misery of Amazonian Mining

Peru’s gold mining industry is rife with child labor, shady international drug ring connections, and horrific working conditions. But, finally, there’s some evidence that the country is getting serious about cracking down on an industry where roughly one-fifth of all exports are produced illegally.

The government has placed a renewed focus on shutting down illegal mining activities, closing 14 in the first two months of 2014, with raids planned through at least June. They’ve destroyed mining tools in Madre de Dios, taken down a combination mining and cocaine ring in Puno, and prosecuted more than 1,200 people involved in the industry in 2013. This week, the government seized 388 pounds worth of illegally-produced gold bars, and then deposited it into its bank account.

Over the past six months, there’s been increased attention on the working conditions in Madre de Dios, an Amazonian region where illegal mining is particularly rampant. Last fall, thousands of miners were involved in mass protests and strikes to improve working conditions and legitimize the industry. In October, more than 2,000 police officers were called in to the region’s capital to quell the protests.

In September, Quinn Kepes, lead author of a report on the conditions in some of Peru’s worst mines, said the working conditions there were some of the worst he’s ever seen.

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 …We spoke to at least five workers whose employers threatened them with guns. Workers spoke of people who had “disappeared.” We spoke with one person who had witnessed a murder, another who had been shot at, and another who grabbed a shotgun from a guard’s hands and threw it into the river so he could run away.

Jorge Merino, Peru’s minister of energy and mining, said at the time that the government was essentially powerless to stop an industry rife with corruption and is affiliated with international crime rings, but that it would try to build the framework to do so.

"We're facing powerful groups and mafias that have corrupted all levels [of government],” he said. “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.”

Peru’s government finds itself in a tough place when it comes to figuring out what to do about gold mining. Gold makes up about a fifth of Peru’s total exports and provides jobs for people in some of the poorest areas of the country. At the same time, it’s an industry that is devastating to the Amazon Rainforest, fueled at least partly with child labor, and, even at its best, is one of the more dangerous industries to work in. Despite what Merino said back in October, there’s evidence that the Peruvian government has made the choice to more aggressively target illegal mining.

There’s also evidence that it’s working—if “working” means that the industry as a whole suffers. In 2013, gold exports from Peru fell six percent. So far this year, gold production has fallen another 3 percent due to a lack of new mining projects and the closure of some mines, and, Tuesday, Roque Benavides, president of Buenaventura Mining, said the industry is hurting because the government is becoming stricter about issuing mining permits.

“Peru can not turn its back on the mines, which is where most of the minerals are,” he told the Peruvian newspaper El Comercio. “The cause of the [gold mining decline] is the long time it takes to get permits for exploration.”

At least some of those permits have gone to a new breed of mining operations that produce so-called “ethical gold.” A Reuters article tells the story of Aurelsa, a Peruvian company where miners “work in well-lit tunnels and take home regular paychecks.” Compare that to what Kepes described at some of the Madre de Dios mines, and you can see why it’d be attractive to workers.

But right now, “ethical gold” makes up less than a drop in the bucket: All four South American ethical producers sold just a combined 790 pounds of gold in 2013, while Peru exported 33,969 pounds of gold last year. As you might expect, ethical gold costs about 10 percent more than its traditionally-produced counterpart, and it’s not yet clear if the country is going to be able to retrofit existing mines to have better working conditions or if mining companies will be willing to do it, when so few of them are being caught. For now, the conflict rages on.