An Issue of Mining and Gold

Madre de Dios is an area of land in the heart of the Peruvian Amazon that covers 85,000 square kilometers.

Due to its remoteness, much of the region can only be traversed by its main rivers and their tributaries. This network of rivers contains gold deposits, and in recent decades, the area has seen a boom in informal (sometimes called artisanal) and illegal gold mining along their banks. This mining boom has led Peru to become the sixth-largest producer of gold in the world. However, Peru's gold rush comes with a price far greater than what is paid in the store. As of 2016, over 60,000 hectares of land in Madre de Dios, have been destroyed by miners.

Much of this land is located within the protected Tambopata National Reserve, one of the most biodiverse places on the planet. Forty-four percent of total mining in Madre de Dios was located in the reserve's buffer zone and the area also saw a thirty-seven percent increase in illegal mining within the protected area.

Compared to other reasons for deforestation mining presents an ecological worst-case scenario that destroys the composition of the forest down to the mineral layer of the soil. In order to extract the gold from the soil, the miners use a combination of slash and burn deforestation, soil mining, and the use of liquid mercury. This method poses severe problems for Amazonian biodiversity, water quality, forest and soil carbon sinks, and human health.  The liquid mercury that is used by miners to separate the gold from the soil is dumped into the river after its use. The Amazon Aid Foundation estimates that over 100 tons of liquid mercury are dumped into Amazonian rivers each year causing significant health problems to miners and surrounding communities.

Mercury bioaccumulates in fish – a key source of food for those living in Amazonia. Long-term exposure can lead to damage of the lungs, kidneys and nervous system. Babies exposed to mercury in the womb can have brain and hearing and vision problems. The Peruvian government estimates that 48,000 people across 85,301 sq. kilometers have been poisoned – illegal mining has caused a public health crisis.

Human-rights abuses tied to illegal gold mining are also a major cause for concern. Evidence of young girls forced into sex trafficking, child labor, forced labor, hazardous working conditions, and murder have all been documented.

Gold mining is the most lucrative illicit activity in the country – surpassing cocaine. The State loses an estimated 450 million USD in tax revenue per year on illegally laundered gold. Causes of the Current Situation Multiple factors have enhanced the problems associated with gold mining. First, in 2008 a global recession boosted gold prices and 70% of Peru's international gold exports come from the Madre de Dios region. Second, the Interoceanic Highway opened through Madre de Dios making access to new mining sites deep in the jungle easily accessible. Third, most mining camps lack police presence and the Peruvian authorities lack the resources, and in some cases are fearful, to visit mines located deep within the dense Amazon. Lastly, there has been an increase in the organization among mining groups, which local and regional political leaders have been pressured to support for economic reasons.

Existing Policies The Peruvian government has dedicated time and money towards making legal mines more sustainable and stopping illegal mining. In 2012, the Peruvian government created the Permanent Multi-Sectoral Commission on Illegal Mining, which is responsible for supervising the formalization process of mining laws, making recommendations for improvements to existing laws, and drafting reports on the implementation of the laws. In addition, the Commission was tasked with developing social programs aimed at eliminating child labor and child prostitution in illegal mining areas. Peru also has a Multi-Sectoral Committee against Trafficking in Persons and a National Commission Against Forced Labor to help eliminate human rights violations associated with illegal mining.

One policy that attempts a form of hybrid governance is the requirement of a social license to operate a mine (SLO). A SLO is the level of acceptance or approval by the local communities and stakeholders of mining companies and their operations. Protests, often violent, occur when indigenous people do not want mining moving into their community. The unacceptance of mining by the local communities prevents many SLOs permits from being granted, thus turning many towards illegal mining.

Even though the government is willing to contest forced labor and illegal mining, its enforcement has been stalled. Due to the high level of danger associated with heavily armed and violent miners, authorities are unable to act without military support, which rarely happens. Moreover, national legislation efforts are often curtailed by local government corruption. In 2011, it was revealed that a Congressman from Madre de Dios owned many illegal mining operations as did multiple public prosecutors.

Policy Proposal In response to the lack of government enforcement, a number of sustainability certification schemes (SCS) have begun to develop standards to promote more sustainable and ethical gold mining, such as the Alliance for Responsible Mining (ARM), the Better Gold Initiative, and the London Bullion Market Association. SCS is a tool that can leverage market demand for sustainability to help improve environmental and societal conditions and outcomes. SCS can enhance consumer knowledge of the negative impact gold mining has on the environment and the human rights violations that accompany illegal mining operations. SCS can also help miners access to larger markets, get a better price for their product, and facilitate the importance of sustainable mining on future generations. However, with many initiatives voluntary rather than mandatory, the benefits of SCS aren't reaching enough of the population to make a significant impact in the sustainability realm. A primary reason for this lack of significance is that there is a lack of demand for responsibly-sourced gold. There could be multiple factors for this, however the most salient being that consumers are unaware of the negative impacts of the gold mining industry, therefore there is no incentive for businesses to seek out sustainable options. Additionally, SCS only include a small percentage of mining operations with the resources to meet certification requirements. In fact, SCS can reinforce inequality by only being achievable for the wealthiest miners. The intended audience for this policy brief is those involved in the design and implementation of sustainability certification schemes (SCS).

The policy brief does not include the role of the State; however, it should be acknowledged the government plays an important role in the legalization, regulation, conflict resolution, and implementation of SCS. The policy proposes a number of ideas to be considered to improve scheme designs to increase demand for sustainably mined gold from SCS and to encourage the inclusion of small-scale mining operations in SCS. Discussion Increasing Demand A business demand needs to exist for implementation of SCS – either by consumers, retailers, investors, or governments. Without businesses purchasing SCS, there is little reason for funders to back SCS, governments to take an interest, or for banks and traders to support certification. As mentioned previously, there is currently minimal consumer demand for sustainably sourced gold, so it is proposed that SCS focus their efforts directly on businesses. Two existing SCS, Fairtrade and Fairmined, have found some success in taking this business first approach. They aim to create consumer awareness and demand for SCS-mined gold through market development with jewelry brands and retailers and consumer campaigns – highlighting sustainable and ethical jewelry during peak purchasing times, such as Valentine's Day and other gift-giving holidays. An additional focus of SCS advertising should target the already ethical consumer that views recycled gold as the solution to the mining issue.

While recycled gold is a sustainable option, it has not had an impact on reducing current destructive and unethical mining practices. Changing Performance Criteria and Standards The environmental and social standards set by SCS can be challenging for resource-limited small-scale miners to meet. The following are suggestions that can help SCS improve their accessibility to small-scale miners. SCS can modify their standards and criteria to allow small-scale mining operations to improve sustainability over time. SCS should lower the initial standards and implement a series of steps toward sustainability. This will encourage mining operations that lack the resources necessary for certification to pursue certification as long as they demonstrate progress over time. This approach could have greater overall impacts for sustainability than systems that require strict standards to be met before certification, which don't work for the majority of small-scale mining operations and that don't incentivize those who are far from meeting standards to move towards more sustainable practices in the future. SCS should adapt their certification standards to meet local needs and conditions. It is unrealistic to assume that what works for small-scale mining in South Africa will work just as well for small-scale mining in Peru. Creating standards that are better suited to the unique challenges of specific geographic regions, yet still, meet the requirements of international standards will help create effective certification schemes. It is important to incorporate collective choice when designing criteria and standards.

This means including small-scale miners and stakeholders in the formation of SCS standards. Once criteria and standards are determined a pilot program should be implemented. There should be the flexibility for adaptation of standards and feedback from participants throughout the pilot, revision process, and implementation of the SCS. Enlist the Help of the Supply Chain Retailers, traders, investors, and the government can all play an important role in helping small-scale mining operations become certified. The following are suggestions for including supply chain support to aid small-scale mining operations in acquiring certification. Retailers can provide financial support to small-scale mining operations to help them obtain and remain certified. In return, they are assured sustainable and ethically mined gold for their stores. Ethical agencies can be included to assess and suggest improvements for community well-being. They can also help facilitate sustainability education and training. Work with the State to put the legislative framework in place for the sucess of SCS. This could include registering miners, tax breaks for sustainable and ethical mining, and enforcement of illicit mining laws.

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