Small-scale miner in Puno, Peru panning to extract gold

How can Peru transform artisanal mining after COVID-19?

The need for a change in artisanal and small-scale gold mining (ASGM) becomes even more visible in this pandemic

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As the top gold producer in Latin America, more than 250,000 artisanal miners and small-scale miners in Peru are deeply affected by the COVID-19 crisis. Although this labor force typically contributes up to 20% of the national gold production and has been in the process of being formalized, today it is very vulnerable. Thus, this pandemic makes evident the need for an inclusive policy that protects them and aims at transformating the sector.

The price of gold remains at the international level; however, the closure of the borders and the quarantine have restricted the extraction and trade of this mineral in the country. This has caused, on the one hand, an excess of gold volume that cannot be sold; and on the other, it has forced some to sell at very low prices. All of this influences the payment chain that directly impacts small-scale miners, artisanal miners and pallaqueras, women who manually select small bits of gold from material discarded by these miners.

Although before this crisis, artisanal miners and small-scale gold miners were advancing in their formalization with the Ministry of Energy and Mines, most of them are still informal. It is a vulnerable workforce with limited cash flow. Consequently, an artisanal miner can only stop working for the duration of one campaign, usually from 15 to 20 days, in which he will be able to live off the profits of the previous work.

Over the last year, the United Nations Development Program (UNDP) has been working with the country to strengthen an inclusive and responsible artisanal and small-scale gold mining sector. That is why in this crisis we reiterate our commitment to support all national efforts to include this mining workforce at the center of economic policies and promote a transformation of the sector.

An immediate response

To protect artisanal miners during this quarantine, an immediate priority is to ensure their access to subsidies and credits. For the credits, it is important to activate the Mining Fund, approved by Legislative Decree 1336, which would benefit almost 54,000 artisanal miners and small-scale gold miners registered in the Integral Registry of Mining Formalization. In turn, it is also fundamental to facilitate access to the line of credit that the Peruvian Government has allocated for micro, small and medium-sized enterprises (MSMEs). Although formalized miners are part of these MSMEs, those who are in the process of formalization should also access the credit.

On the other hand, those who dedicate themselves to the pallaqueo and cachorreo scavenging activities are a group with high vulnerability and very little visibility in the production of gold in the country, due to their informal status. One way to guarantee their direct access to the stimulus for vulnerable populations such as this is through the register of the Ministry of Energy and Mines where they are registered, and the registry of pallaqueras associations established in the National Superintendence of Public Registries in Peru.

Along with these measures, it is important to ensure the purchase of artisanal gold at fair prices. This could take place, exceptionally and temporarily, through the signing of express agreements with new gold trading companies, under the supervision of the national authorities, in order to give liquidity to these artisanal producers.

When the restrictions are gradually lifted and artisanal miners return to their activities, the GEF-funded planetGOLD initiative, implemented by the Ministry of the Environment, will launch the “ASGM without COVID-19” campaign in mining regions in alliance with various organizations related to this sector. Through this, we will join efforts with mining organizations to prevent the spread of this coronavirus, and we will also advise and accompany regional governments.

A sustainable transformation

Furthermore, we will move forward to a sustainable transformation for all artisanal and small-scale gold miners since, despite the fact that they produce approximately a quarter of national gold exports, this effort is overshadowed by the use of mercury that affects their health and contaminates the environment.

The first step is formalization, which, as we see today, is the main vulnerability of artisanal miners to this emergency. This formalization would be sustainable and would go hand in hand with the development of the capacities of the miners that allow them to use mercury-free methods, with better access to financing, incentives, and responsible markets.

Without a doubt, this coronavirus is much more than a health emergency, it is a crisis that puts the progress of all countries at risk. This is a unique opportunity to achieve a transformation in artisanal mining, so that formality transcends the future, making this sector sustainable, inclusive, and responsible.

This article was originally published on May 15, 2020 by UNDP Peru

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