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BRIEF

How Much is Peru's Illegal Mining Worth?

ILLEGAL MINING / 5 SEP 2014 BY DAVID GAGNE EN

A Peruvian research institute stated that the country's illegal mining industry pulled in $3.4 billion worth of profits over the past seven years, although it's possible the actual profits are much higher.

According to business research institute the Center for Studies of Penal and Business Economic Rights (CEDPE), Peru's illegal mining industry earned $3.4 billion in profits from June 2007 to June 2014, as Peru 21 reported. According to the research institute's analysis – which was presented during a local conference on money laundering, and isn't yet publicly available as a downloadable report – illegal mining cost the Peruvian government over $300 million in lost tax revenue in 2011 alone.

There are other crimes interrelated with illegal mining, as branches of Peru's government have previously observed. Earlier this year, Peru's banking regulatory authority noted that money laundering via illegal mining increased 50 percent from late 2012 to January 2014.

InSight Crime Analysis

Due to the complexities involved with illegal mining, it is difficult to know exactly how widespread the industry is in Peru. In contrast to CEDPE's figures, a top Peruvian official has stated the industry is worth close to $3 billion annually. If these figures are accurate, illegal mining would earn more than double that of the drug trade. For comparison, Colombia's National Association of Businesses has estimated that illegal gold mining is worth over $400 million in the country.

Unlike in Colombia, heavily armed criminal groups do not dominate the unlicensed gold mining trade in Peru. That has not stopped some government officials from campaigning for unlicensed mining to be included in Peru's new organized crime law. And at least one Peruvian security analyst has claimed there's an "undeniable link" between drug trafficking and illegal mining, asserting that illicit mining is used launder profits from drug sales.

Although mining is often not viewed in the same light as drug trafficking, there are a number of damaging consequences as a result of its activities. For one, illegal mining fuels deforestation. According to a researcher from the Carnegie Institution for Science, "the gold rush in Madre de Dios, Peru exceeds the combined effects of all other causes of forest loss in the region."

Due to the high volume of men in mining towns in the Madre de Dios region, the industry also faciltates other illicit activities such as sex trafficking. In addition, reports of slave-like work conditions have been reported by non-governmental organizations.

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