Here, illegal gold mining is destroying the Peruvian rainforest

Small-scale gold mining has destroyed thousands of hectares of tropical forest in Peru in the past. Although this form of mining has since been curbed, new illegal hotspots are still popping up in areas where mining is not authorized. Exclusive satellite images show this.

“Economy from above” is a collaboration between WirtschaftsWoche and LiveEO. This is a translation of the original article (written in German by Camilla Flocke and Frank Doll. Access the original article here.

For a few years La Pampa was a real modern gold mining town. However, it was an illegal one, dominated by criminals and gangs. Only a few people dared to enter the former village, which grew enormously within a few years due to the gold rush.

When the price of gold skyrocketed just over a decade ago, it aroused covetousness. For some Peruvians it was a lucrative business. To get at the fine gold dust in the ground, local gold miners had only to use simple equipment to collect the silt and mix in mercury, which binds the gold. Even these small amounts brought in quite a bit of money. To profit from the gold rush as well, shopkeepers, tavern keepers and brothel operators settled around La Pampa. A veritable mini-ecosystem was created.

However, nature in the form of the Peruvian rainforest was left behind. Tree by tree, hectare by hectare, the gold miners cleared the forest to gain access to the land. LiveEO’s exclusive satellite images clearly show how many hectares of rainforest had to give way to gold mining.

The reputation of gold mining is basically lousy, not only when it is done illegally. The accusations are well known: Mining ruins the environment, inhumane working conditions often prevail in mines, large mining corporations procure mining rights in conflict areas through corruption. To extract one gram of gold, mines today have to extract, transport and process an average of one ton of rock. This consumes enormous amounts of electricity and water. The eco-balance is therefore poor anyway.

Particular environmental risks arise when gold is separated from the rock using mercury and cyanide lye. This happens mainly in mines with low gold concentrations. Modern mines treat the wastewater and dispose of tailings water properly. The large listed mining companies adhere to international environmental and social standards, if only out of concern for their reputation and shareholder lawsuits. More problematic are the conditions in unregulated and sometimes illegally operated small-scale mines such as those in the Peruvian Amazon.

At some point, it became too much for the Peruvian government in La Pampa and set up “Operation Mercury 2019.” Some 1,200 police, 300 soldiers and 70 prosecutors moved into the town in 2019 as part of the operation, destroying equipment, evicting gold miners and arresting offenders. To prevent the evicted gold miners from continuing directly elsewhere in the rainforest due to a lack of future prospects, the government offered to relocate them to an official mining corridor. And the action seems to have had an effect, because the deforestation of the rainforest has decreased significantly – at least in the region around La Pampa.

Because as the satellite images show, gold miners have become active elsewhere. This time near the Pariamanu River. Several hectares of forest had to give way to gold mining. The Monitoring the Andean Amazon Project of the NGO Amazon Conservation Association logs these illegal gold hot spots with the help of satellite images and passes on these indications to the Peruvian government.

For miners trying to do it the legal way, there are some initiatives that have made it their mission to improve the working and living conditions of small-scale mining. The Fairtrade International organization, for example, has now transferred its standards, once designed for growing and trading food, to precious metals.

Fairtrade supports small-scale mining cooperatives in Peru, among other countries, and guarantees them a minimum purchase price of 95 percent of the world market price. This is significantly higher than the purchase price of other commercial gold buyers. Buyers of Fairtrade gold must also pay a premium of $2,000 per kilogram. In return, they are allowed to advertise with the Fairtrade logo. The premium is paid to the mining organization to finance social projects and the economic development of the region.

More and more investors are also aligning their investment criteria with ecological, social and ethical principles. They are turning their backs on stock corporations that do not fit this pattern. Sustainability is in demand, also in gold mining.