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By Marco Aquino
LIMA (Reuters) – A dramatic and fatal attack at a gold mine in Peru on Saturday has shone a spotlight on illegal miners and criminal gangs attacking the mines, killing dozens of people in recent years and claiming billions of dollars in losses, according to industry and government officials.
Nine people were killed and 10 others seriously injured in the latest attack in which men armed with explosives attacked and took hostage a mine owned by Poderosa, one of Peru’s top gold producers. The government blamed illegal miners and criminal groups.
The attack has highlighted a growing risk for miners in the Andean nation, the world’s no. 2 copper producer and an important source of gold and silver.
“Security is now one of the main costs,” Poderosa corporate affairs manager Pablo de la Flor told Reuters after the attack. “Illegal miners and criminal groups represent a terrible alliance for the sector.”
Attacks on Poderosa last year left another seven people dead and ten transmission towers destroyed. In an event unrelated to Poderosa in June last year, a clash between artisanal gold miners in southern Peru left another 14 people dead.
The effect is being felt on balance sheets, a headache for businesses and the Peruvian government as it struggles to emerge from a recession by tapping into the country’s main economic engine.
A recent report by the local chamber of commerce, Peru’s National Mining, Petroleum and Energy Company (SNMPE), indicates that illegal gold mining is to blame for around $6 billion in annual losses, or about 2. 5% of the national GDP.
Poderosa itself has noted that profits and production have taken a hit this year, with operating prices rising by as much as a third, according to a corporate document, attributed to emerging “security and tracking prices. “
The mining company was the largest gold producer in Peru during the last two years, representing 10% of production, it fell to second position in the first nine months of 2023.
De los Angeles Flor said Saturday’s attack would impede the company’s operations.
BIGGER THAN THE DRUG TRADE
Illegal mining in Peru generates more than drug trafficking, between $3 billion and $4 billion a year, according to government data.
De la Flor says illegal mining has grown thanks to a program designed to formalize artisanal miners, called REINFO, that provides temporary licenses to small mines.
“It is the umbrella under which they protect themselves, because having a REINFO prevents the police from intervening in illegal mines,” he said.
The executive said initially artisanal miners hired “criminal gangs” to protect their operations but the groups then took over operations when they saw it was profitable.
Peru’s Ministry of Energy and Mines did not immediately respond to a request for comment on the matter. The ministry issued a statement on Sunday saying it would review REINFO to identify those benefiting from the program.
Poderosa said earlier this year that its mine in Pataz province had “been invaded by Peruvian and foreign criminals allied with illegal miners” in an effort to boost its operations. Thousands of trucks carrying illegal gold were evacuated, according to the statement.
While the main destinations for Peruvian gold are India, Switzerland and Canada, which account for nearly two-thirds of the country’s exports, experts say black market gold has been flooding into nearby Bolivia.
“There is a black market for minerals,” said Gustavo Ramirez, who studies illegal mining for SNMPE. “It is not that difficult to assume that the gold is Peruvian and that it leaves through the border.”
Peru’s gold production, which has been declining for a decade due to a lack of new operations, reached 97 tonnes last year, according to the Ministry of Energy and Mines. It is estimated that illegal miners produce about 30 tons more.
(Reporting via Marco Aquino Report; writing via Alexander Villegas; editing by Marguerita Choy)