EDITOR'S NOTE: Don’t Miss a Beat! Kitco News is launching a weekly Newsletter highlighting  our most popular features, articles and videos! Sign Up by clicking on the Kitco Newsletter Box.

Illegal Mining Severely Impacting Peruvian Environment

By Alex Létourneau of Kitco News
Friday July 4, 2014 10:35 AM

(Kitco News) - Far from a cut and dry issue, illegal mining in Peru has layers of problems ranging from organized crime to political corruption to black market trading and more, which is all linked to the search for the yellow metal.

While each issue holds out its own long, twisted branch, the environmental impact of Peru’s illegal mining activity is much easier to frame; the environment is suffering. Now.

Juan José Córdova, audit partner, leader of the energy sector at KPMG, Peru, told Kitco News that information on the environmental impact of illegal mining is abundant and available for all to see.

Photo by Rodrigo Abd -AP
In this May 4, 2014 photo, a miner melts an amalgam of gold and mercury to burn off the mercury, in La Pampa in Peru's Madre de Dios region. This rudimentary process of extracting the gold from the amalgam, releases mercury vapors, adding to the contamination that is resulting in the deforestation of thousands of acres of the Amazon rainforest.

Photo by Rodrigo Abd -AP
In this May 3, 2014 photo, Prisaida, 2, sits in the shallow waters of a polluted lagoon as her parents mine for gold nearby, in La Pampa in Peru's Madre de Dios region. The lagoon emerged as a result of miners bombarding the earth with jet streams of water in search of gold.

“The illegal miners have pushed deep into the Amazon jungle to pan in rivers and creeks, most notably in the wildlife-rich Madre de Dios region,” said Córdova. “It is estimated that 30 to 40 (metric) tons of mercury are dumped into the environment annually and burned off after amalgamation – generally without even using rudimentary technology to protect workers’ health or capture waste or fumes.”

Liquid mercury is most commonly used to extract gold particles but there is a lack of formality to the process illegal miners are using, which allows the toxic metal to contaminate local ecosystems.

William Tankard, research director, precious metals mining, GFMS, sees this as the leading issue regarding illegal miners in Peru.

“You have some producers operating illegally without any rehabilitation plan, or intention to rehabilitate their workings,” Tankard said. “You’ve got the use of mercury and cyanide which may, or may not be, undertaken with adequate controls in place.

“That’s likely the biggest issue, a lack of rehabilitation and unregulated use of beneficiation chemicals common in gold extraction.”

Córdova noted that mercury is finding its way into fish species that are being consumed by humans, as well as predators. According to some medical reports, mercury poisoning can cause neurological damage and can even cause changes in a person’s bone marrow, which can affect the body’s ability to produce blood cells, infertility and heart problems.

“It is known that 9 of the 15 most consumed fish species for sale in markets have mercury levels exceeding the safe limit set by the United States Environmental Protection Agency,” he said. “And 78% of the residents of the capital of this region have dangerously high levels of mercury in their bodies, with women of childbearing age the most affected.”

The Madre de Dios region relies heavily on its agricultural products: cotton, coffee, sugarcane and cacao beans, are just some of the raw materials produced in the area.

Deforestation, and in the process, the destruction of local animal habitats is also a part of the illegal mining issue.

Naturally, due to the illegality of the operations, specific figures aren’t easy to come by on the volume of illegal miners in the country and the amounts of gold they’re pulling out of the ground.

“In terms of the scale it’s hard to put your finger on it,” Tankard said. “As an estimate, Peru produced 182 (metric) tons of gold in 2013, of which well over 10% we ascribe to informal activities, likely more towards 15%.”

Córdova agrees that it’s difficult to pin-point an exact figure with the volume of illegal miners.

“It is uncertain because there are more than 550,000 illegal miners operating in 24 out of Peru’s 26 regions and it is estimated that between 18% and 22% of the $10 billion Peru exports in gold comes from illegal mining,” he said. “Regarding this, only in the Amazon jungle more than 30,000 miners are estimated to be operating without permits and violating state regulations.

“In this region, this business also encompasses 300,000 other workers, either directly and indirectly and represents up to 50% of their economic output,” Córdova added. “The scale of illegal mining in the Andean state has grown five times in the past six years.”

While the mining ministry of Peru has instilled and continues to look for formal ways to regulate mining with informal miners - and deter illegal miners from operating, most recently by dynamiting illegal gold operations and confiscating illegal gold - Tankard suggested that educating the workers in terms of the environmental damage they’re doing is an option that should be looked at.

“There are initiatives in place but ultimately it will come down to governments finding ways to add formality to the process,” Tankard said. “I would argue that further work by official bodies to better educate communities at the less formal end of the mining spectrum on the negative effects of mercury in the food chain and even cyanide in the water system would be well placed.”

Tankard also cautioned that these issues are not unique to Peru, but stretch beyond the country’s borders into neighboring South American countries.

Related Stories:

By Alex Létourneau of Kitco News aletourneau@kitco.com
Follow Alex Letourneau @alex_letourneau




Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.
kitco news

Precious Metal Charts

Click to see this Precious Metal chart
  1. 24h
  2. 30D
  3. 60D
  4. 6M
  5. 1Y

Interactive Chart