Criminal gangs in Peru are running gold mines where life is disease-ridden, desperate and dangerous – yet many corporate buyers don’t seem to care
scar was 16 when his cousin “sold” him to the owner of an illegal gold mine deep in Peru’s Amazonian jungle. Life in Madre de Dios – a huge encampment scarred by deforestation and mercury-filled pools – was dirty, desperate and dangerous: food and water were scarce; malaria and yellow fever were rampant; and trafficked girls as young as 12 worked as prostitutes in the surrounding bars.
Business, however, was booming. Fuelled by the huge global demand for gold, thousands of miners like Oscar trawled over the hills with wheelbarrows and pickaxes, finding metal that would eventually pass through various intermediaries – from criminal groups to corrupt exporters to Swiss refineries – before ending up in a jewellery shop, a smartphone or even a central bank anywhere in the world.
Gold is Peru’s primary export, worth an estimated $3bn (£2.3bn), yet violence, corruption, laundering and exploitation – including debt bondage, human trafficking and child labour – within the industry are rife across Latin America’s illegal gold mines, according to a report by fair labour NGO Verité. With global gold reserves nearly exhausted, and prices up by 360% in the past decade, this massive supply-and-demand imbalance has fuelled organised crime syndicates looking for new sources of revenue, researchers say, with the result that Peru and Colombia – the world’s top cocaine exporters – now earn more from illegal gold exports than cocaine exports.
Traceability is a major concern, says Verité’s CEO, Shawn MacDonald, as Latin America accounts for 20% of the global gold supply. Yet some of the world’s most active paramilitary and organised crime groups are directly involved in the production and sale of this illegal gold, from the Farc guerrilla group in Colombia, to Mexico’s Sinaloa cartel and Italy’s ’Ndrangheta mafia, as well as Chinese, Brazilian and Russian syndicates. Illegally produced gold is laundered and exported with the help of corrupt officials, sent to refineries, melted down with legally produced and scrap gold, mixed to make alloys, then exported worldwide. Verité’s research found that 90% of the Fortune 500 companies that filed conflict mineral disclosures last year – in industries from telecoms and IT to car makers and machinery manufacturers – had purchased gold from refineries linked to illegally mined gold from Latin America.