Gold prices could drive Peru's illegal mining exports to US$4bn this year

Illegal mining in Peru could produce exports worth as much as US$4 billion this year, driven by rising gold prices and the State's inability to curb these activities.

Gold exports from illicit operations in the Andean nation are currently estimated to amount to around US$3bn per year.

Elmer Cuba, an economist and partner at consultancy Macroconsult, highlighted these figures in an interview with Peru's institute of mining engineers (IIMP). He said that while gold prices have historically been below US$1,000/oz, they have surged and reached US$2,500/oz this year.

"Gold is a much more 'liquid' mineral, easy to smuggle, and can be sold to any buyer" unlike other metals, Cuba said.

In terms of combating illegal mining, Cuba underlined that it is cheaper and more effective to target illegal miners through financial intelligence units and the judicial system, as this approach is less dangerous than attempting to destroy their machinery and operations.

"Today, Peruvian prosecutors are focused on investigating politicians rather than eradicating major criminal organizations," he added.

Legal issues

Illegal miners in Peru are currently shielded from prosecution to some extent through a government-created mechanism intended to formalize their activities: the comprehensive registry for mining formalization (Reinfo). 

According to the Reinfo database, which contains 84,588 registered miners, only 19,200 are actively undergoing the process of formalization. The program was established in 2017, but overall progress has been minimal.

The energy and mines ministry (Minem) has criticized the program, expressing its intention of abolishing it and promoting a new law to cover the problem and creating a registry for small and medium-scale mining. However, this proposal has sparked a backlash from miners, who have planned mass protests in capital Lima on September 9-10.

Besides calling for the resignation of minister Rómulo Mucho, representatives of the national confederation of small-scale and artisanal miners of Peru (Confemin) demand the approval of bill 7462, which would extend the registration period for Reinfo until end-2027.

“There is already a clear decision by Minem to cancel Reinfo, whether or not registrants are active. We cannot allow this. The nearly 90,000 people registered with Reinfo provide employment to a total of 500,000 individuals,” Confemin president Máximo Franco said in a press conference.

Approximately 100,000 miners are expected to travel to the capital to demonstrate on the scheduled dates.