The LatinNews Podcast | The Peruvian Government is Failing to Regulate Illegal Mining

Description

The biggest threat to Peru's efforts to further tap into its vast copper ore reserves is the growing number of informal and illegal mining activities. Conflicts between property owners and concession holders have become a critical issue, and the Peruvian government is striving to find a balance. Peru's rich copper and gold ore reserves have attracted hundreds of thousands of small-scale miners, most of whom operate in areas where they do not own mining rights. It is estimated that 40 per cent of Peru's gold exports come from informal mines.

Many use a temporary registration process called REINFO, which allows them to operate while going through the formal process. The program is set to expire at the end of 2025, but the industry generally opposes it, arguing that these licenses serve as a cover for illegal activities.

On The LatinNews Podcast this week, we discuss the complexities shrouding Peru's mining industry and what the government is and isn't doing to correct it with special guest Dr John Crabtree, research associate at the Latin American Centre at the University of Oxford, associate of the Politics Department at Brookes University in Oxford, and region head for Latin America at Oxford Analytica Ltd.

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Transcription

Speaker #0
Welcome to the Latin News Podcast, a fortnightly deep dive into key developments from across Latin America and the Caribbean. Here's your host from Bogota,
Speaker #1
Colombia, journalist Richard McCall. This is the Latin News Podcast. I am your host, Richard McCall, here in Bogota, Colombia. With us on the Latin News Podcast this week is Dr. John Crabtree, Research Associate at the Latin American Center at Oxford University and Associate at the... politics department at Oxford Brookes, also in the city of Oxford. Region head for Latin America at Oxford Analytica as well. Welcome back. This is not the first time that you've been on the Latin News podcast.
Speaker #0
Nice to see you again.
Speaker #1
It's an absolute pleasure because this time we get to delve into, well, the life and times in the Andean region. This is your expertise, but we're going to discuss... illegal mining and gold exportations in Peru. And of course, this is creating great political instability. It's either a cause or an effect of what's going on. But perhaps, perhaps before we delve into the Americas and South America in particular, John, perhaps you could put us into context a reason why gold, why this moment?
Speaker #0
Well, one of the things I think you have to take into account when discussing the question of informal gold is the price of gold. I mean, the price of gold is sky high at the moment. And I don't know with the political instability that's raging at the worldwide level, it'd probably go even higher. So, I mean, it's the price of gold has probably doubled in the running. It's three, roughly about $3,300 a troy ounce, which means that it's hugely attractive for any people who might be able to lay their hands on. on the natural resource. So I think one of the things that it's cared, we're going to talk about Peru, but this is a worldwide phenomenon. It's worldwide in certainly in Africa, it's certainly a present problem in the rest of many other countries of Latin America, all of which are quite substantial producers of gold. But Peru has always been an important producer of gold, and it's actually formal gold. represents the second largest mining export. So it's a major world producer, and I think sixth or seventh at the world level. So, I mean, for countries that produce gold, you know, both the state is, through formal sector mining, is doing nicely, but also informal mining is booming as a way in which ordinary people, often who have that much other source of income, can, you know... make it large, make it big.
Speaker #1
Now, you've recently authored a chapter on informal mining in Peru. Perhaps you could give us a little bit of an overview of your findings.
Speaker #0
Well, one of the things that's particularly notable about Peru is probably all the countries of Latin America, the informal sector as a whole, I mean, it's not just mining, it's many other activities as well, both legal and illegal. is probably larger than just about anywhere in the region. I think, according to the ILO, about 70% of the workforce work in one way or another in the informal sector. So it's huge. And this is not something that's new. This has been going on for the last 30, 40 years or so. But I mean, one of the characteristics of informality tends to be low income. I mean, most people who work in the informal sector do not earn a huge amount of money. So when something comes along providing an opportunity, which the case is the case of mining gold, this produces a huge attraction for people. And so a lot of people are looking to leave the other forms of employment and are moving towards places where they can extract gold, as I say, whether informally or illegally. And I think it's important, and perhaps you'll come on to this, is the fact that There's a sort of grey area between what is informal and what is illegal.
Speaker #1
That was actually where I wanted to go with this straight away, because informal doesn't necessarily mean illegal. But again, as you say, this fluid grey area, people wishing to move from their industries into the gold industry because of the returns. Perhaps we could talk a little bit about this.
Speaker #0
Yes, well, I mean, this is certainly the case. in impoverished, most of the gold, informal gold production, not all, but quite a lot of it is in the south of Peru, which has been typically an area of extreme poverty historically. So, I mean, a lot of people are finding that they are, you know, particularly in peasant economies, you know, that a huge amount more money is being made out of mining gold than trying to eke a living out of the soil. I mean, out of the agricultural soil, at least. So I think this provides, you know, a huge... The numbers of people, we don't know with any accuracy how many people are involved in informal mining in Peru. but One estimate is I've seen is about 300,000 or so. So if you think of that in terms of the families as well, I mean, people depend on informal gold mining. We're talking a million or upwards of a million people, which is a substantial proportion of the population, not to be sneezed at. So, I mean, there is a large number of people not dealing with a small problem here.
Speaker #1
I mean, I'm looking at figures here that I have. in front of me. And there has been an effort, of course, to formalize some of these informal miners. But it's saying here that only 2.4% of the 84,000 miners registered to the program have completed the formalization process. That suggests that it's just an incredibly laborious and, well, I guess it's... the gain isn't there for the informal miner to formalize.
Speaker #0
Well, the process was introduced in 2017. In fact, they've been trying to do this for the last 20... it began in 2002, but I mean, the REINFO, which is known, the program is known, began in 2017 as a way of to try to encourage people to formalize themselves. The process that's involved in this is bureaucratic and difficult and hard for people to comply with. So, I mean, a lot of people have applied to want to become formalized because, I mean, being formalized means you don't have you don't have the law, the threat of the law. You may have to pay taxes, but I mean, you know, on balance, it's a it's a it's it's a good thing to be on the right side of the law. So a lot of people have applied to and that's why there's such a large number of applicants for this scheme but it's actually very difficult for people to comply with in the various reasons for that um one of is it's extremely bureaucratic um secondly it's very poorly funded so i mean i mean i was doing research in anikipa which is the area of peru where there's got the highest level of inform informal mining there are only three people three people in the in the local government which is responsible for registering people doing all the registration so people can spend no years doing it there is also a lot of people making money out of people trying to shortcut the system but one of the real real difficulties here is that to formalize yourself you have to have an agreement with the person on whose land has the concession now mining concessions have grown expanded enormously in peru in the last 25 years um and um a large number of uh um mining concessions are not used i mean the people acquired them for more or less for speculative reasons rather than anything else um and therefore it's very difficult to negotiate with uh um the owners of the concessions so without this piece of paper you can't do it so this has been this is a real a real real sort of obstacle to the whole process. Now, one of the reasons that the formal sector is mining in the formal sector is against the whole question of formalization of informal miners is that it runs, it endangers the whole notion of the sanctity of concessions. Now, in order to provide concessions, people, the concessions that were awarded ran for 30 years, which by any standards, I mean, comparatively speaking, is a long, long time. And particularly if those concessions are not being worked properly. So this has been a source of consternation for amongst others, the World Bank, who have been critical of the way in which, I mean, they like the idea of the concession system, but they don't like the fact that it's not being, it's being abused in this way. So, I mean, One of the reasons that informal miners are very much against the whole question of countering informality is precisely that it runs, it goes right through the whole sanctity of the notion of concessions and means redrawing the map so far as the original agreements are concerned. So this is a source of considerable concern amongst larger mining companies.
Speaker #1
And the concessions are held by international companies, would you say, for the most part or no?
Speaker #0
No, I mean, it's a mixture. I mean, it's a mixture of Peruvian companies and international companies. I mean, there have been there's been a lot of international investment in Peru over the last 25 years, particularly as a result of the kind of liberalizing reforms that took place and under the Fujimori government in the 1990s. So, I mean, most of the largest mining companies are invested in Peru. and in the gold sector i mean the likes of barrack which is you know newmont which big the big big gold producers and of course in other sectors as well i mean copper mining is probably bigger than gold mining but uh gold mining is important sure
Speaker #1
i just see the difficulty of of negotiating with the people or the entities that hold the concessions as being just a major impasse. And then you say that the three people in Arequipa responsible for formalizing, it also gives rise to obviously you could bumping yourself up on the list through certain degrees of corruption. I can just see everything opening up in the typical almost Latin American bureaucracy here. I can just see it.
Speaker #0
I mean one of the other things if you want to formalize yourself you have to comply with environmental standards which which is for small scale print producers is difficult. I mean, traditionally to purify gold people use mercury or cyanide to do so one of the things that you have to you have to sort of swear you won't do is doing that which is difficult because otherwise you have to you know you have to have a different sorts of employ different sorts of technology which has a which has a cost of course involved with and also i mean there are other restrictions like where you get dynamite from. and actually getting dynamite from officially registered sources is a whole bit again another bureaucratic procedure and it's much easier for people in southern peru for example to buy the dynamites from bolivian traders who are happy to to supply peru with with with dynamite so i mean there are a number of difficulties but it's not to say that people are uh um not wanting to formalize themselves i mean the work the research i was involved in suggested very strongly that they They were happy to do so. Now, one of the problems, of course, is that for those who criticize the system of the RAINFO, they see it as a way in which illegal miners can legalize themselves by going through this process. Because once you've applied to be a formal miner, you are assumed to, you know, the legal sanctions on you are lifted for the process. for the duration of it. Now, of course, one of the difficulties, again, is the difficulties that this has been, the system of the RAINFO has had to be continually extended. I mean, it was originally supposed to last two or three years. Now, the fact that very few people have been able to comply with the restrictions means that it has to be endlessly extended. It's supposed to finish on the 30th of June next week. but it's probably going to be extended again for another six months. But they are trying to pass legislation through the Congress, it's known as the Lei Mapi, on artisanals and small-scale mining, which has been the subject of a huge amount of controversy in the legislature and very vigorously opposed by a rather odd coalition of interests, on the one hand by the large-scale mining companies, they don't like it at all, and, of course, by environmental pressure groups and NGOs who see informal mining as a major problem in terms of deforestation, particularly in the Amazon area of the country.
Speaker #1
It creates a situation which is so very interesting, obviously very turbulent, but at the same time, you say, the government is obviously trying to incentivize a formalization, but of Of course, at the same time, there is opposition to this. I can see friction created on all sides here. Are we moving towards, you know, let's say... a lack of rule of law, blockades in the roads in the south? I mean, I've seen this on a number of occasions where the small mining communities blockade and burn tires on the highways and so on to protest.
Speaker #0
No, the rule of law is fairly relative outside major cities, but even within major cities in Peru. And the state is not a strong state in terms of its ability to impose the rule of law. and the way in which, of course, to have the rule of law, you need to have a judicial system that works. And of course, the Peruvian system is very deficient in many respects. There is a lot of corruption, but it's largely absent outside major urban cities. And even if you can access it, it tends to be very expensive for people. So it's not, the rule of law is, maybe you're right to say that, I mean, people tend to take matters into their own hands. and one of the ways in which they can do that is to organize demonstrations or to block roads or all these things which are you know arguable as to whether or not this is sort of uh um you know gross breaches of the rule of law but it's a way of of negotiating which is time-honored and and and likely to continue i think for lack of any other reason ways of of resolving problems because if you block a major highway you create mayhem very quickly. We're just seeing this recently in Bolivia. I mean, you know, Bolivia is a country that doesn't have many roads and, you know, you block them and you've got a real problem created in terms of the transit, transshipment of both goods and people.
Speaker #1
I think any one of us being observers or present in this part of the world has been at some point or another blocked on a Bolivian road. I certainly have on several occasions. I had to sort of pay my way through past the boulders and burning tires. Let's talk about President Boloarte in this moment, that in February of last year, 2024, she declared a state of emergency then in the provinces of Trujillo and Patas in response to illegal mining. Did this actually, I mean, has there been any effect of this measure?
Speaker #0
No, the measures, I mean, the creation of a state of emergency in itself doesn't resolve much. I mean, it provides the military and the police with legal weapons to try and counteract things. But in the case of Batas, it's been conspicuous by its lack of success. And the government has been severely criticized for... its inability to bring, for what people want, law and order to a particularly lawless part of the country. I mean, this is Patas in La Libertad is one of those areas which has the highest productivity of gold mining of anywhere in Peru. I mean, the gold seams are much better than they are further south in Arequipa. So there is a lot of pushing and shoving to access the best. Petas, the company which has suffered the brunt of this is known as Poderosa, which is the second largest gold mining company in Peru. It's a Peruvian company and a very influential organization within the association of miners. which is a very important and powerful lobby group in Peru. And one of the reasons, of course, that the whole legislation of the Ley Mape has been so severely opposed. But the whole case of Patas brought this onto the agenda in a very dramatic way. 13 miners, there had been a sequence of attacks, but particularly the killing of 13... people subcontracted by Poderosa in Patas, the killing of them and the attempt to try and hide their bodies has created a particular furore over this. And it really was one of the reasons that the legislation that has been, the Lei Mapei, has been so controversial in the Congress. It's now been sort of pretty much kicked into the long grass in a recent vote and it's not been approved as yet. So I mean, Patas is particularly egregious. It's become very violent. And here again, you know, where the frontiers between informal minors, illegal minors, criminality of other kinds, it's also an area of transit of drugs. These have provided particularly... obnoxious cocktail of criminal activities, which the state is poorly placed to try and resolve these difficulties.
Speaker #1
This podcast is brought to you by Latin News, the leading source of political and economic news and analysis on Latin America and the Caribbean since 1967. Access Latin News's full portfolio of reports at www.latinnews.com. It's so far removed, as you say, from the from the major cities and and therefore of course the rule of law but what what brought about i quickly just put it into context what brought about this abduction and murder of the 13 miners oh how do you mean what um why why did this happen why
Speaker #0
did this happen it's the whole circumstances are not very clear um but i mean these these bodies were um They tried to hide them in the mine and eventually they were discovered. It cost the Prime Minister his job because he thought that this was an invented story when it was very far from being an invented story. He was sort of had over the coals for that and was obliged to resign shortly before he was going to be officially censored in the Congress. But the exact circumstances is not very clear. I mean, the 13 were people who were subcontracted for an organisation by Poderosa to involve themselves, and whether or not they ran up against what exactly the name of the... what exactly the nature of the dispute was. but most of the disputes are about access to the mining. and the best all sources.
Speaker #1
And like everything into this incredibly highly charged, but I would say economically viable industry, we obviously have the huge inroads of organised crime.
Speaker #0
Yeah, because the price goes up, the attractions get higher. And it's also, I mean, it's an industry that lends itself to... the laundering of other forms of drug money, basically.
Speaker #1
Yes.
Speaker #0
This is the case in the Republic of Colombia, I suspect.
Speaker #1
Very much so here, very much so. The best ways of laundering money, emeralds and gold are really untouchable in that respect. But do we know which organised crime groups? I mean, a lot is always made of the Tren de Aragua from Venezuela, but do we know who's primarily involved in these areas?
Speaker #0
No, I don't think that they have quite the same sort of nomenclature as they do in other parts of the world. I mean, these are probably smaller, smaller organizations. You know, they don't they're not sort of the Kali cartel or anything like which actually has a name. You know, I mean, I think these are they probably do have names, but I'm not sure what they are. But the relative these are we're talking about fairly small scale operations here, not not massive international drug traffickers. So, of course, I wouldn't be surprised if both Colombians and Mexicans are involved in one way or another. I don't have any data on that.
Speaker #1
No, but again, no surprise.
Speaker #0
Murky world of crime.
Speaker #1
And very fluid, of course, as you say. It goes where the cash is, where you can launder and so on. If we talk about some of the figures, because this is so very interesting and this short podcast does not do justice. for everything that we need to cover. But if we talk about some of the figures here as well of talking about the illegal exportations of gold and the Peruvian Institute of Economics saying that in 2024 there were 92 tons of gold illegally exported, that's an official figure. Surely it's much higher.
Speaker #0
I think that it's difficult to know what the right figures are. I mean, I think people try and put numbers on things which are basically not aren't possible to count with any accurate, often with a view to trying to sort of sound dramatic about it. And the IPE, the organization you mentioned, is very closely related to the Society of Miners. So it's, you know, these are the political debates that are going on. I mean, quite a lot of what is the gold that is produced is actually exported to Bolivia. And I think that explains partly how Bolivian gold exports have shot up in the last few years. Quite a lot of it is coming from Peru, but also there's quite a lot across the other side of the frontier, because we're talking very porous frontiers around the Madre de Dios. But they were talking largely about alluvial gold. But the kind of the gold we're talking about in the Sierra, in Patas and other places is underground mining. It's not alluvial gold. And these two things, I think, need to be distinguished quite clearly because the interests are different and the technologies are different. And even though the end product is much the same.
Speaker #1
Yeah, of course. The regions being very different.
Speaker #0
the impact of it. of gold illegal gold mining in in in the peruvian amazon is is increasingly uh uh dramatic i mean the madre dios is probably the most egregious case but it's now everywhere pretty much and it's a source of a great deal of of um problems with with indigenous peoples who whom whose lands gets get are invaded by both by drug traffickers by coca growers by illegal timber timber timber extractors, you name it. I mean, there are a number of nefarious organizations which are sort of moving in on the Amazon and which have a devastating effect on the ecology of the area. Of course, the use of mercury. The area where basically the state is largely absent.
Speaker #1
Absolutely. Of course, and the contamination with the use of mercury in the... Exactly,
Speaker #0
yeah. I mean, this is terrible for indigenous peoples. I mean, this is a real problem in Madrid, where all the... The rivers are very contaminated. And it's not only contaminated, but people live off the rivers. They eat the fish from the rivers and contaminate themselves.
Speaker #1
So just one effect after another, after another. Yes. All for this. And then we're looking at the IPA again. Here, the CEO, Carlos Gallardo, has said that unless things change, illegal exports will rise a further 40%. to 129 million tons in 2025. This is a huge jump. Again, as you said, this sounds dramatic or how close to the reality are we looking at?
Speaker #0
I think that those figures are difficult to be precise about. I mean, a lot of the informal gold, particularly from underground mining in in the highlands. is sold to the formal gold producers. I mean, it ends up in the formal channels. So, I mean, a lot of, a large chunk of Peru's gold exports comes from the informal sector. It also, I mean, comes from the formal sector as well. I mean, they probably are more productive and more profitable than the informal miners, but a large slice of it is being sold. I mean, one of the... One of the problems of the concessions is often when you have a concession holder, if you're going to have an agreement with a concession holder, they use it, the concession holders use it to extort a very low price for gold from the informal miners in return for use of their land, or at least the land, not their land, but the land to which they have a legal access.
Speaker #1
Again, we just have this complexity that raises its head of the illegal, legal, informal, and formal. And I don't know how you possibly fully categorize each one. Because, of course, if you've got informal but legal working with legal concessions, but also on the side, probably illegal, informal working.
Speaker #0
Exactly. I mean, it's a very confusing area and it's not one in which I think many of the state authorities and particularly those in Congress who have to legislate on these things know very much about. I don't know how I'm on this issue of concern. And until a few years ago, nobody really nobody gave much attention to it. Yeah, I don't know. The concern is the price of gold has gone up and the number of people involved has gone up.
Speaker #1
And we expect the price of gold to increase, to continue increasing.
Speaker #0
Who knows? You never know. These are difficult imponderables. But certainly looking at sort of the mayhem of the global level at the moment, it seems quite plausible to think that it will continue to rise. Yes.
Speaker #1
And however many fractured parties in the Peruvian Congress and with elections to be called for April next year, you just don't expect people in Lima to understand what's going on in the regions at all.
Speaker #0
I think one of the problems with the discussion over the Lei Mapei, the law on ASM, is precisely that most of the people in Congress don't really know an awful lot about it. So it's an area of specialist knowledge and therefore tend to respond not because they know much about it, but because there are incentives to one way or another to approve or disapprove of it. I mean, having said that, there's pressure from the from the formal miners. Also, it's worth pointing out that the informal miners, partly because of the sheer numbers, are themselves an increasingly important pressure group. And there is a confederation of informal miners who can put a lot of people on the streets, who can block roads, etc., etc., as we said before, to bring pressure on the Congress. It might be worth noting that the President of Congress is the only legislator from Madre de Dios, who himself is, I mean, I don't know whether it's true or not, but he's certainly suspected of being sort of, you know, in the hands of mining interests in that part of the world. And the pressures go both ways and often in rather informal manners.
Speaker #1
It's a very nice way of putting that in informal manners. I wouldn't be surprised if there were some sort of links.
Speaker #0
Economic incentives involved.
Speaker #1
As you say, economic incentives. Do you feel that President Boloarte has any, as we said the word as well, incentive to push any laws through? for April of next year or was she just going to tread water until the elections?
Speaker #0
It's treading, I mean she's been treading water pretty much ever since she got the job but she's not, she does not have power. I mean her problem is that she has no support in the Congress and therefore has been the victim of endless machinations to increase congressional powers. at the expense of the executive. And I think one of the areas that's very clear in this is the way in which the Congress has managed to become increasingly powerful in terms of the whole macroeconomic policy. I mean, one of the complaints is that the Ministry of Economy and Finance, which used to be the sort of super ministry in Peru, I mean, you know, it was, you know... um they were very powerful in terms of their influence over policy making. It's no longer the case. And the Congress has got the numbers and the powers to push ministries around. And I think this is one of the deep-seated problems at the moment.
Speaker #1
Yeah, so we're in, you know, we're ending of middle of June, beginning of July, as this happens. There's no incentive, again, to force Bolo Arte out. before the elections because of the instability?
Speaker #0
Well, there have been moves, there are moves, continual moves afoot to try to impeach her. I mean, she is the subject of a number of sort of investigations by the Public Prosecution Service. it's unlikely i think on balance that to to to to to impeach a president you need to get 87 you need to go two-thirds majority in the congress and i think most of the majority of people in the congress know which side their bread is buttered and reasonably happy exercising the powers they do up until next elections their main concern is to perpetuate those powers beyond next next next april or next July, rather, when Bolo Arti steps down.
Speaker #1
It seems to me that everyone will be cementing their positions and, of course, their interests in the month leading up to the elections. Now, again, we say we don't even know. I mean, we do know 40-plus parties or so on and so forth. Fragmented coalitions will be required of everyone. We couldn't possibly predict, I don't think, anyone. being the front runner right now for the elections next year?
Speaker #0
I think it's difficult. I mean, probably among the front runners is Keiko Fukimori, who she hasn't actually, we don't know finally whether she's going to run herself. It should be a fourth time if she does. She narrowly, got narrowly beaten on three occasions, whether she'll try again, I'm not sure. I mean, but that's probably, I mean, the Fujimoristas are one of the more disciplined groups in the present Congress. I mean, they're the biggest single party, and they do operate in a fairly disciplined way, whereas the other parties tend to be very fragmented and factionalized. So, I mean, it's, I think, reasonable to assume that she will be among, I don't say necessarily get to the second, being one of the front runners, the two front runners. If she does run, I would think she's probably one of the possibilities. But, I mean, one of the problems, again, is that the level of public dissatisfaction with politics and politicians is so profound in Peru. I mean, the Congress is reckoned to have, you know, less than 5% people polled in Poland think it, you know, approve of Congress. And it's even lower in the case of the president. So, I mean, there's a level of... of public dissatisfaction, of disaffection from the whole political system, which gives the chance for outsiders to emerge in ways that are difficult to predict. I mean, nobody predicted in the last election that Pedro Castillo, you know, a rural school teacher, that nobody really ever heard, no, if you hadn't been involved in education trade unions, you probably would never have heard of it, and became a vehicle for this level of... of dissatisfaction. The dissatisfaction as anything has grown since then. So that is a powerful vector, I think, in the present circumstances. It makes it all very difficult to predict. I mean, you know, it's quite possible that somebody, I mean, this is rather parallel to the circumstances in which Fujimori, Alberto Fujimori, emerged in 1990. I mean, nobody ever heard, most people had never heard of him about three weeks before the election which he won
Speaker #1
you know remember people saying fuji who this is very true i just i see a situation as you said this is uh major discontent and lack of trust in any of the political class the political class will remain and as we've seen the peruvian government has extended the re-info system through december 2025 even though its initial objective has been subverted by illegal miners who use it to shield their activities and spread their influence in the the gold and copper sectors. The re-info was set up in August 2017 and was expected to last until August 2020. But there's, well, those of those who are now registered face little oversight and there are all sorts of problems. Eliminating the system is complicated by the lack of dialogue between key stakeholders like Congress, the Energy and Mines Ministry and other public entities. So all the debates end up. being postponed and this makes it impossible to properly regulate the system. Therein lays one of the key issues affecting the re-info system. Let me take this moment to say thank you very much to Dr John Crabtree who is a research associate at the Latin American Center at the University of Oxford, associate of the politics department at Brooks University in Oxford and region head for Latin America at Oxford Analytica Limited. I've been Richard McColl here, your host of the Latin News podcast here in Bogota. Thank you for listening. Do remember to subscribe and to come back in two weeks for further interviews and conversations about topics from the region. Goodbye.
Speaker #2
You've been listening to the Latin News podcast. For more news and analysis on Latin America and the Caribbean, visit www.latinnews.com.

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Transcription

Speaker #0
Welcome to the Latin News Podcast, a fortnightly deep dive into key developments from across Latin America and the Caribbean. Here's your host from Bogota,
Speaker #1
Colombia, journalist Richard McCall. This is the Latin News Podcast. I am your host, Richard McCall, here in Bogota, Colombia. With us on the Latin News Podcast this week is Dr. John Crabtree, Research Associate at the Latin American Center at Oxford University and Associate at the... politics department at Oxford Brookes, also in the city of Oxford. Region head for Latin America at Oxford Analytica as well. Welcome back. This is not the first time that you've been on the Latin News podcast.
Speaker #0
Nice to see you again.
Speaker #1
It's an absolute pleasure because this time we get to delve into, well, the life and times in the Andean region. This is your expertise, but we're going to discuss... illegal mining and gold exportations in Peru. And of course, this is creating great political instability. It's either a cause or an effect of what's going on. But perhaps, perhaps before we delve into the Americas and South America in particular, John, perhaps you could put us into context a reason why gold, why this moment?
Speaker #0
Well, one of the things I think you have to take into account when discussing the question of informal gold is the price of gold. I mean, the price of gold is sky high at the moment. And I don't know with the political instability that's raging at the worldwide level, it'd probably go even higher. So, I mean, it's the price of gold has probably doubled in the running. It's three, roughly about $3,300 a troy ounce, which means that it's hugely attractive for any people who might be able to lay their hands on. on the natural resource. So I think one of the things that it's cared, we're going to talk about Peru, but this is a worldwide phenomenon. It's worldwide in certainly in Africa, it's certainly a present problem in the rest of many other countries of Latin America, all of which are quite substantial producers of gold. But Peru has always been an important producer of gold, and it's actually formal gold. represents the second largest mining export. So it's a major world producer, and I think sixth or seventh at the world level. So, I mean, for countries that produce gold, you know, both the state is, through formal sector mining, is doing nicely, but also informal mining is booming as a way in which ordinary people, often who have that much other source of income, can, you know... make it large, make it big.
Speaker #1
Now, you've recently authored a chapter on informal mining in Peru. Perhaps you could give us a little bit of an overview of your findings.
Speaker #0
Well, one of the things that's particularly notable about Peru is probably all the countries of Latin America, the informal sector as a whole, I mean, it's not just mining, it's many other activities as well, both legal and illegal. is probably larger than just about anywhere in the region. I think, according to the ILO, about 70% of the workforce work in one way or another in the informal sector. So it's huge. And this is not something that's new. This has been going on for the last 30, 40 years or so. But I mean, one of the characteristics of informality tends to be low income. I mean, most people who work in the informal sector do not earn a huge amount of money. So when something comes along providing an opportunity, which the case is the case of mining gold, this produces a huge attraction for people. And so a lot of people are looking to leave the other forms of employment and are moving towards places where they can extract gold, as I say, whether informally or illegally. And I think it's important, and perhaps you'll come on to this, is the fact that There's a sort of grey area between what is informal and what is illegal.
Speaker #1
That was actually where I wanted to go with this straight away, because informal doesn't necessarily mean illegal. But again, as you say, this fluid grey area, people wishing to move from their industries into the gold industry because of the returns. Perhaps we could talk a little bit about this.
Speaker #0
Yes, well, I mean, this is certainly the case. in impoverished, most of the gold, informal gold production, not all, but quite a lot of it is in the south of Peru, which has been typically an area of extreme poverty historically. So, I mean, a lot of people are finding that they are, you know, particularly in peasant economies, you know, that a huge amount more money is being made out of mining gold than trying to eke a living out of the soil. I mean, out of the agricultural soil, at least. So I think this provides, you know, a huge... The numbers of people, we don't know with any accuracy how many people are involved in informal mining in Peru. but One estimate is I've seen is about 300,000 or so. So if you think of that in terms of the families as well, I mean, people depend on informal gold mining. We're talking a million or upwards of a million people, which is a substantial proportion of the population, not to be sneezed at. So, I mean, there is a large number of people not dealing with a small problem here.
Speaker #1
I mean, I'm looking at figures here that I have. in front of me. And there has been an effort, of course, to formalize some of these informal miners. But it's saying here that only 2.4% of the 84,000 miners registered to the program have completed the formalization process. That suggests that it's just an incredibly laborious and, well, I guess it's... the gain isn't there for the informal miner to formalize.
Speaker #0
Well, the process was introduced in 2017. In fact, they've been trying to do this for the last 20... it began in 2002, but I mean, the REINFO, which is known, the program is known, began in 2017 as a way of to try to encourage people to formalize themselves. The process that's involved in this is bureaucratic and difficult and hard for people to comply with. So, I mean, a lot of people have applied to want to become formalized because, I mean, being formalized means you don't have you don't have the law, the threat of the law. You may have to pay taxes, but I mean, you know, on balance, it's a it's a it's it's a good thing to be on the right side of the law. So a lot of people have applied to and that's why there's such a large number of applicants for this scheme but it's actually very difficult for people to comply with in the various reasons for that um one of is it's extremely bureaucratic um secondly it's very poorly funded so i mean i mean i was doing research in anikipa which is the area of peru where there's got the highest level of inform informal mining there are only three people three people in the in the local government which is responsible for registering people doing all the registration so people can spend no years doing it there is also a lot of people making money out of people trying to shortcut the system but one of the real real difficulties here is that to formalize yourself you have to have an agreement with the person on whose land has the concession now mining concessions have grown expanded enormously in peru in the last 25 years um and um a large number of uh um mining concessions are not used i mean the people acquired them for more or less for speculative reasons rather than anything else um and therefore it's very difficult to negotiate with uh um the owners of the concessions so without this piece of paper you can't do it so this has been this is a real a real real sort of obstacle to the whole process. Now, one of the reasons that the formal sector is mining in the formal sector is against the whole question of formalization of informal miners is that it runs, it endangers the whole notion of the sanctity of concessions. Now, in order to provide concessions, people, the concessions that were awarded ran for 30 years, which by any standards, I mean, comparatively speaking, is a long, long time. And particularly if those concessions are not being worked properly. So this has been a source of consternation for amongst others, the World Bank, who have been critical of the way in which, I mean, they like the idea of the concession system, but they don't like the fact that it's not being, it's being abused in this way. So, I mean, One of the reasons that informal miners are very much against the whole question of countering informality is precisely that it runs, it goes right through the whole sanctity of the notion of concessions and means redrawing the map so far as the original agreements are concerned. So this is a source of considerable concern amongst larger mining companies.
Speaker #1
And the concessions are held by international companies, would you say, for the most part or no?
Speaker #0
No, I mean, it's a mixture. I mean, it's a mixture of Peruvian companies and international companies. I mean, there have been there's been a lot of international investment in Peru over the last 25 years, particularly as a result of the kind of liberalizing reforms that took place and under the Fujimori government in the 1990s. So, I mean, most of the largest mining companies are invested in Peru. and in the gold sector i mean the likes of barrack which is you know newmont which big the big big gold producers and of course in other sectors as well i mean copper mining is probably bigger than gold mining but uh gold mining is important sure
Speaker #1
i just see the difficulty of of negotiating with the people or the entities that hold the concessions as being just a major impasse. And then you say that the three people in Arequipa responsible for formalizing, it also gives rise to obviously you could bumping yourself up on the list through certain degrees of corruption. I can just see everything opening up in the typical almost Latin American bureaucracy here. I can just see it.
Speaker #0
I mean one of the other things if you want to formalize yourself you have to comply with environmental standards which which is for small scale print producers is difficult. I mean, traditionally to purify gold people use mercury or cyanide to do so one of the things that you have to you have to sort of swear you won't do is doing that which is difficult because otherwise you have to you know you have to have a different sorts of employ different sorts of technology which has a which has a cost of course involved with and also i mean there are other restrictions like where you get dynamite from. and actually getting dynamite from officially registered sources is a whole bit again another bureaucratic procedure and it's much easier for people in southern peru for example to buy the dynamites from bolivian traders who are happy to to supply peru with with with dynamite so i mean there are a number of difficulties but it's not to say that people are uh um not wanting to formalize themselves i mean the work the research i was involved in suggested very strongly that they They were happy to do so. Now, one of the problems, of course, is that for those who criticize the system of the RAINFO, they see it as a way in which illegal miners can legalize themselves by going through this process. Because once you've applied to be a formal miner, you are assumed to, you know, the legal sanctions on you are lifted for the process. for the duration of it. Now, of course, one of the difficulties, again, is the difficulties that this has been, the system of the RAINFO has had to be continually extended. I mean, it was originally supposed to last two or three years. Now, the fact that very few people have been able to comply with the restrictions means that it has to be endlessly extended. It's supposed to finish on the 30th of June next week. but it's probably going to be extended again for another six months. But they are trying to pass legislation through the Congress, it's known as the Lei Mapi, on artisanals and small-scale mining, which has been the subject of a huge amount of controversy in the legislature and very vigorously opposed by a rather odd coalition of interests, on the one hand by the large-scale mining companies, they don't like it at all, and, of course, by environmental pressure groups and NGOs who see informal mining as a major problem in terms of deforestation, particularly in the Amazon area of the country.
Speaker #1
It creates a situation which is so very interesting, obviously very turbulent, but at the same time, you say, the government is obviously trying to incentivize a formalization, but of Of course, at the same time, there is opposition to this. I can see friction created on all sides here. Are we moving towards, you know, let's say... a lack of rule of law, blockades in the roads in the south? I mean, I've seen this on a number of occasions where the small mining communities blockade and burn tires on the highways and so on to protest.
Speaker #0
No, the rule of law is fairly relative outside major cities, but even within major cities in Peru. And the state is not a strong state in terms of its ability to impose the rule of law. and the way in which, of course, to have the rule of law, you need to have a judicial system that works. And of course, the Peruvian system is very deficient in many respects. There is a lot of corruption, but it's largely absent outside major urban cities. And even if you can access it, it tends to be very expensive for people. So it's not, the rule of law is, maybe you're right to say that, I mean, people tend to take matters into their own hands. and one of the ways in which they can do that is to organize demonstrations or to block roads or all these things which are you know arguable as to whether or not this is sort of uh um you know gross breaches of the rule of law but it's a way of of negotiating which is time-honored and and and likely to continue i think for lack of any other reason ways of of resolving problems because if you block a major highway you create mayhem very quickly. We're just seeing this recently in Bolivia. I mean, you know, Bolivia is a country that doesn't have many roads and, you know, you block them and you've got a real problem created in terms of the transit, transshipment of both goods and people.
Speaker #1
I think any one of us being observers or present in this part of the world has been at some point or another blocked on a Bolivian road. I certainly have on several occasions. I had to sort of pay my way through past the boulders and burning tires. Let's talk about President Boloarte in this moment, that in February of last year, 2024, she declared a state of emergency then in the provinces of Trujillo and Patas in response to illegal mining. Did this actually, I mean, has there been any effect of this measure?
Speaker #0
No, the measures, I mean, the creation of a state of emergency in itself doesn't resolve much. I mean, it provides the military and the police with legal weapons to try and counteract things. But in the case of Batas, it's been conspicuous by its lack of success. And the government has been severely criticized for... its inability to bring, for what people want, law and order to a particularly lawless part of the country. I mean, this is Patas in La Libertad is one of those areas which has the highest productivity of gold mining of anywhere in Peru. I mean, the gold seams are much better than they are further south in Arequipa. So there is a lot of pushing and shoving to access the best. Petas, the company which has suffered the brunt of this is known as Poderosa, which is the second largest gold mining company in Peru. It's a Peruvian company and a very influential organization within the association of miners. which is a very important and powerful lobby group in Peru. And one of the reasons, of course, that the whole legislation of the Ley Mape has been so severely opposed. But the whole case of Patas brought this onto the agenda in a very dramatic way. 13 miners, there had been a sequence of attacks, but particularly the killing of 13... people subcontracted by Poderosa in Patas, the killing of them and the attempt to try and hide their bodies has created a particular furore over this. And it really was one of the reasons that the legislation that has been, the Lei Mapei, has been so controversial in the Congress. It's now been sort of pretty much kicked into the long grass in a recent vote and it's not been approved as yet. So I mean, Patas is particularly egregious. It's become very violent. And here again, you know, where the frontiers between informal minors, illegal minors, criminality of other kinds, it's also an area of transit of drugs. These have provided particularly... obnoxious cocktail of criminal activities, which the state is poorly placed to try and resolve these difficulties.
Speaker #1
This podcast is brought to you by Latin News, the leading source of political and economic news and analysis on Latin America and the Caribbean since 1967. Access Latin News's full portfolio of reports at www.latinnews.com. It's so far removed, as you say, from the from the major cities and and therefore of course the rule of law but what what brought about i quickly just put it into context what brought about this abduction and murder of the 13 miners oh how do you mean what um why why did this happen why
Speaker #0
did this happen it's the whole circumstances are not very clear um but i mean these these bodies were um They tried to hide them in the mine and eventually they were discovered. It cost the Prime Minister his job because he thought that this was an invented story when it was very far from being an invented story. He was sort of had over the coals for that and was obliged to resign shortly before he was going to be officially censored in the Congress. But the exact circumstances is not very clear. I mean, the 13 were people who were subcontracted for an organisation by Poderosa to involve themselves, and whether or not they ran up against what exactly the name of the... what exactly the nature of the dispute was. but most of the disputes are about access to the mining. and the best all sources.
Speaker #1
And like everything into this incredibly highly charged, but I would say economically viable industry, we obviously have the huge inroads of organised crime.
Speaker #0
Yeah, because the price goes up, the attractions get higher. And it's also, I mean, it's an industry that lends itself to... the laundering of other forms of drug money, basically.
Speaker #1
Yes.
Speaker #0
This is the case in the Republic of Colombia, I suspect.
Speaker #1
Very much so here, very much so. The best ways of laundering money, emeralds and gold are really untouchable in that respect. But do we know which organised crime groups? I mean, a lot is always made of the Tren de Aragua from Venezuela, but do we know who's primarily involved in these areas?
Speaker #0
No, I don't think that they have quite the same sort of nomenclature as they do in other parts of the world. I mean, these are probably smaller, smaller organizations. You know, they don't they're not sort of the Kali cartel or anything like which actually has a name. You know, I mean, I think these are they probably do have names, but I'm not sure what they are. But the relative these are we're talking about fairly small scale operations here, not not massive international drug traffickers. So, of course, I wouldn't be surprised if both Colombians and Mexicans are involved in one way or another. I don't have any data on that.
Speaker #1
No, but again, no surprise.
Speaker #0
Murky world of crime.
Speaker #1
And very fluid, of course, as you say. It goes where the cash is, where you can launder and so on. If we talk about some of the figures, because this is so very interesting and this short podcast does not do justice. for everything that we need to cover. But if we talk about some of the figures here as well of talking about the illegal exportations of gold and the Peruvian Institute of Economics saying that in 2024 there were 92 tons of gold illegally exported, that's an official figure. Surely it's much higher.
Speaker #0
I think that it's difficult to know what the right figures are. I mean, I think people try and put numbers on things which are basically not aren't possible to count with any accurate, often with a view to trying to sort of sound dramatic about it. And the IPE, the organization you mentioned, is very closely related to the Society of Miners. So it's, you know, these are the political debates that are going on. I mean, quite a lot of what is the gold that is produced is actually exported to Bolivia. And I think that explains partly how Bolivian gold exports have shot up in the last few years. Quite a lot of it is coming from Peru, but also there's quite a lot across the other side of the frontier, because we're talking very porous frontiers around the Madre de Dios. But they were talking largely about alluvial gold. But the kind of the gold we're talking about in the Sierra, in Patas and other places is underground mining. It's not alluvial gold. And these two things, I think, need to be distinguished quite clearly because the interests are different and the technologies are different. And even though the end product is much the same.
Speaker #1
Yeah, of course. The regions being very different.
Speaker #0
the impact of it. of gold illegal gold mining in in in the peruvian amazon is is increasingly uh uh dramatic i mean the madre dios is probably the most egregious case but it's now everywhere pretty much and it's a source of a great deal of of um problems with with indigenous peoples who whom whose lands gets get are invaded by both by drug traffickers by coca growers by illegal timber timber timber extractors, you name it. I mean, there are a number of nefarious organizations which are sort of moving in on the Amazon and which have a devastating effect on the ecology of the area. Of course, the use of mercury. The area where basically the state is largely absent.
Speaker #1
Absolutely. Of course, and the contamination with the use of mercury in the... Exactly,
Speaker #0
yeah. I mean, this is terrible for indigenous peoples. I mean, this is a real problem in Madrid, where all the... The rivers are very contaminated. And it's not only contaminated, but people live off the rivers. They eat the fish from the rivers and contaminate themselves.
Speaker #1
So just one effect after another, after another. Yes. All for this. And then we're looking at the IPA again. Here, the CEO, Carlos Gallardo, has said that unless things change, illegal exports will rise a further 40%. to 129 million tons in 2025. This is a huge jump. Again, as you said, this sounds dramatic or how close to the reality are we looking at?
Speaker #0
I think that those figures are difficult to be precise about. I mean, a lot of the informal gold, particularly from underground mining in in the highlands. is sold to the formal gold producers. I mean, it ends up in the formal channels. So, I mean, a lot of, a large chunk of Peru's gold exports comes from the informal sector. It also, I mean, comes from the formal sector as well. I mean, they probably are more productive and more profitable than the informal miners, but a large slice of it is being sold. I mean, one of the... One of the problems of the concessions is often when you have a concession holder, if you're going to have an agreement with a concession holder, they use it, the concession holders use it to extort a very low price for gold from the informal miners in return for use of their land, or at least the land, not their land, but the land to which they have a legal access.
Speaker #1
Again, we just have this complexity that raises its head of the illegal, legal, informal, and formal. And I don't know how you possibly fully categorize each one. Because, of course, if you've got informal but legal working with legal concessions, but also on the side, probably illegal, informal working.
Speaker #0
Exactly. I mean, it's a very confusing area and it's not one in which I think many of the state authorities and particularly those in Congress who have to legislate on these things know very much about. I don't know how I'm on this issue of concern. And until a few years ago, nobody really nobody gave much attention to it. Yeah, I don't know. The concern is the price of gold has gone up and the number of people involved has gone up.
Speaker #1
And we expect the price of gold to increase, to continue increasing.
Speaker #0
Who knows? You never know. These are difficult imponderables. But certainly looking at sort of the mayhem of the global level at the moment, it seems quite plausible to think that it will continue to rise. Yes.
Speaker #1
And however many fractured parties in the Peruvian Congress and with elections to be called for April next year, you just don't expect people in Lima to understand what's going on in the regions at all.
Speaker #0
I think one of the problems with the discussion over the Lei Mapei, the law on ASM, is precisely that most of the people in Congress don't really know an awful lot about it. So it's an area of specialist knowledge and therefore tend to respond not because they know much about it, but because there are incentives to one way or another to approve or disapprove of it. I mean, having said that, there's pressure from the from the formal miners. Also, it's worth pointing out that the informal miners, partly because of the sheer numbers, are themselves an increasingly important pressure group. And there is a confederation of informal miners who can put a lot of people on the streets, who can block roads, etc., etc., as we said before, to bring pressure on the Congress. It might be worth noting that the President of Congress is the only legislator from Madre de Dios, who himself is, I mean, I don't know whether it's true or not, but he's certainly suspected of being sort of, you know, in the hands of mining interests in that part of the world. And the pressures go both ways and often in rather informal manners.
Speaker #1
It's a very nice way of putting that in informal manners. I wouldn't be surprised if there were some sort of links.
Speaker #0
Economic incentives involved.
Speaker #1
As you say, economic incentives. Do you feel that President Boloarte has any, as we said the word as well, incentive to push any laws through? for April of next year or was she just going to tread water until the elections?
Speaker #0
It's treading, I mean she's been treading water pretty much ever since she got the job but she's not, she does not have power. I mean her problem is that she has no support in the Congress and therefore has been the victim of endless machinations to increase congressional powers. at the expense of the executive. And I think one of the areas that's very clear in this is the way in which the Congress has managed to become increasingly powerful in terms of the whole macroeconomic policy. I mean, one of the complaints is that the Ministry of Economy and Finance, which used to be the sort of super ministry in Peru, I mean, you know, it was, you know... um they were very powerful in terms of their influence over policy making. It's no longer the case. And the Congress has got the numbers and the powers to push ministries around. And I think this is one of the deep-seated problems at the moment.
Speaker #1
Yeah, so we're in, you know, we're ending of middle of June, beginning of July, as this happens. There's no incentive, again, to force Bolo Arte out. before the elections because of the instability?
Speaker #0
Well, there have been moves, there are moves, continual moves afoot to try to impeach her. I mean, she is the subject of a number of sort of investigations by the Public Prosecution Service. it's unlikely i think on balance that to to to to to impeach a president you need to get 87 you need to go two-thirds majority in the congress and i think most of the majority of people in the congress know which side their bread is buttered and reasonably happy exercising the powers they do up until next elections their main concern is to perpetuate those powers beyond next next next april or next July, rather, when Bolo Arti steps down.
Speaker #1
It seems to me that everyone will be cementing their positions and, of course, their interests in the month leading up to the elections. Now, again, we say we don't even know. I mean, we do know 40-plus parties or so on and so forth. Fragmented coalitions will be required of everyone. We couldn't possibly predict, I don't think, anyone. being the front runner right now for the elections next year?
Speaker #0
I think it's difficult. I mean, probably among the front runners is Keiko Fukimori, who she hasn't actually, we don't know finally whether she's going to run herself. It should be a fourth time if she does. She narrowly, got narrowly beaten on three occasions, whether she'll try again, I'm not sure. I mean, but that's probably, I mean, the Fujimoristas are one of the more disciplined groups in the present Congress. I mean, they're the biggest single party, and they do operate in a fairly disciplined way, whereas the other parties tend to be very fragmented and factionalized. So, I mean, it's, I think, reasonable to assume that she will be among, I don't say necessarily get to the second, being one of the front runners, the two front runners. If she does run, I would think she's probably one of the possibilities. But, I mean, one of the problems, again, is that the level of public dissatisfaction with politics and politicians is so profound in Peru. I mean, the Congress is reckoned to have, you know, less than 5% people polled in Poland think it, you know, approve of Congress. And it's even lower in the case of the president. So, I mean, there's a level of... of public dissatisfaction, of disaffection from the whole political system, which gives the chance for outsiders to emerge in ways that are difficult to predict. I mean, nobody predicted in the last election that Pedro Castillo, you know, a rural school teacher, that nobody really ever heard, no, if you hadn't been involved in education trade unions, you probably would never have heard of it, and became a vehicle for this level of... of dissatisfaction. The dissatisfaction as anything has grown since then. So that is a powerful vector, I think, in the present circumstances. It makes it all very difficult to predict. I mean, you know, it's quite possible that somebody, I mean, this is rather parallel to the circumstances in which Fujimori, Alberto Fujimori, emerged in 1990. I mean, nobody ever heard, most people had never heard of him about three weeks before the election which he won
Speaker #1
you know remember people saying fuji who this is very true i just i see a situation as you said this is uh major discontent and lack of trust in any of the political class the political class will remain and as we've seen the peruvian government has extended the re-info system through december 2025 even though its initial objective has been subverted by illegal miners who use it to shield their activities and spread their influence in the the gold and copper sectors. The re-info was set up in August 2017 and was expected to last until August 2020. But there's, well, those of those who are now registered face little oversight and there are all sorts of problems. Eliminating the system is complicated by the lack of dialogue between key stakeholders like Congress, the Energy and Mines Ministry and other public entities. So all the debates end up. being postponed and this makes it impossible to properly regulate the system. Therein lays one of the key issues affecting the re-info system. Let me take this moment to say thank you very much to Dr John Crabtree who is a research associate at the Latin American Center at the University of Oxford, associate of the politics department at Brooks University in Oxford and region head for Latin America at Oxford Analytica Limited. I've been Richard McColl here, your host of the Latin News podcast here in Bogota. Thank you for listening. Do remember to subscribe and to come back in two weeks for further interviews and conversations about topics from the region. Goodbye.
Speaker #2
You've been listening to the Latin News podcast. For more news and analysis on Latin America and the Caribbean, visit www.latinnews.com.

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