Case study

Problematic gold from Peru

Peru is the largest gold producer in South America. While industrial mining is predominant in the north, artisanal and small-scale mining is flourishing in the country’s south-eastern Amazon.

Photo : Daniel Schweizer

Gold mining in the Madre de Dios region © Daniel Schweizer Gold mining in the Madre de Dios region © Daniel Schweizer

The regions affected by the gold rush have become a lawless El Dorado with major social problems, violence, crime and misery. For this reason, the STP is focusing on efforts to ensure that no more dirty gold from these regions reaches Switzerland and supporting initiatives that improve the situation in the gold mining areas.

Problematic gold from the Madre de Dios region

Since 2015, the STP has spent several years visiting the Madre de Dios region, where many Indigenous peoples live. The expanding gold mining in the region is causing human rights violations and environmental destruction: On one hand, Indigenous communities are confronted with raids, land grabbing, prostitution, unclear land-use terms, health problems arising from gold mining’s heavy pollution of rivers, and the clearing of the rainforest. On the other hand, massive conflicts occur within the communities – between people trying to secure their livelihoods as gold miners and those resisting the ongoing destruction of the environment. In its reports, the STP has shown that such problematic gold has also reached Switzerland.

In a 2015 report, the STP revealed that gold from informal and illegal artisanal and small-scale mining in Peru was reaching Switzerland, among other countries. In January 2014, for instance, the Peruvian customs authorities had confiscated gold destined for the Swiss refining company Metalor. A report published by the STP in March 2018 suggested that Metalor, based in Neuchâtel, was very probably still purchasing Peruvian gold linked to illegal mining and trading, tax evasion and environmental destruction. The supplier of this gold was the export firm Minerales del Sur, which was delivering exclusively to the Swiss refining company as the main supplier of Peruvian gold.

According to Peruvian media outlets La República and Ojo Público, the Peruvian customs and tax authorities seized 92 kilograms of gold presumed to be of suspicious origins just days after publication of the report. It was the largest seizure since the authorities had begun taking stronger action against illegal gold mining at the end of 2013. As a result, the Peruvian Superintendency of Customs and Tax Administration (SUNAT) and the Peruvian public prosecutor’s office investigated Minerales del Sur on suspicion of tax evasion and trading illegal gold.

Even after the Peruvian gold was seized, Metalor initially declared that its purchasing policy in Peru would not change. It was not until the summer of 2019 that the refining company announced it would stop purchasing gold from Peruvian artisanal and small-scale mining (ASM), after the investigation into Minerales del Sur had been broadened, due to suspicion that it could even be a criminal organisation. In July 2020, Metalor then resumed ASM operations in Peru, purchasing around 500 kilograms of gold from ASM production annually, via the mining company Minera Yanaquihua S.A.C. in the highlands of the Peruvian region Arequipa.

Since 2019, Minera Yanaquihua S.A.C. has been supported by the ‘Better Gold Initiative for Artisanal and Small-Scale Mining’: the Swiss Better Gold Association’s Peruvian subsidiary organisation, which locally assists miners and verifies (or is meant to verify) compliance with standards. The company’s mine also holds a ‘Responsible Jewellery Council Chain of Custody Certificate’ and has been supported by the NGO Solidaridad since 2010 with regard to the formalisation process, as well as health and environmental aspects.

Transparency and a binding due diligence obligation are needed

The Society for Threatened Peoples (STP) is generally positive about Metalor’s decision to re-enter the ASM business through its partnership with Minera Yanaquihua S.A.C. In May 2023 though, a fire in this mine, of all places, cost the lives of 27 miners. This raises the question of the extent to which Metalor’s due diligence failed. Equally though, the question arises as to how much responsibility resides with the Yanaquihua mine, the Peruvian authorities, the Responsible Jewellery Council, the Swiss Better Gold Initiative or the inspection firm SGS, if such a devastating accident can happen despite these many players. Moreover, this case shows that voluntary efforts to make gold production environmentally sound, socially just and safe are not enough when it comes to very complex high-risk artisanal and small-scale mining.

For the gold business, particularly artisanal and small-scale mining, to be environmentally and socially acceptable, the origins of the gold must be made transparent and a legally binding due diligence obligation for companies must be implemented.

Problematic gold from the Cajamarca region

Since 2012, the STP has been addressing the human rights situation in the northern Peruvian province of Cajamarca, where, in the highlands, the company Minera Yanacocha S.R.L. runs South America’s largest gold mine. In 2012, protests against Yanacocha’s new Conga mine led to the deaths of five protesters. Yanacocha co-financed the operations of the national police, which rigorously repressed the population. In 2016, the STP published a human rights report on Yanacocha. Together with other organisations, the STP supported the small-scale farmer Máxima Acuña de Chaupe in her legal battle against Yanacocha. The conflict revolved around a plot of land, over which both the Acuña de Chaupe family and the mining company claimed ownership.

Peruvian tenants protest peacefully in the region of Cajamarca against the gold project Conga.

Peruvian tenants protest peacefully in the region of Cajamarca against the gold project Conga. Photo: Frente de Defensa Ambiental de Cajamarca (FDAC)

For Yanacocha, the plot was strategically important because it was located in the middle of an area where a new mine was planned. Due to massive protests on the part of the local population and various non-governmental organisations, the project was put on hold, which constituted a great success for Máxima Acuña de Chaupe and the supporting organisations, but the land-rights dispute continued unabated. In this context, the national police and employees of Yanacocha S.R.L. repeatedly harassed and attacked Máxima Acuña de Chaupe’s family, destroying their home and fields on multiple occasions, and sometimes killing animals. During the legal dispute, the farmer Máxima Acuña de Chaupe became world famous and received the Goldman Prize for her environmental commitment. In May 2017, she was acquitted by the Peruvian Supreme Court, after the gold firm Yanacocha S.R.L. had accused her of land grabbing.

Much of the gold from Yanacocha S.R.L. also finds its way to Switzerland. The Swiss refining company Valcambi S.A. was among the buyers of gold produced by Yanacocha, especially during the time of the major conflicts. It processed around 70 percent of the gold from Yanacocha. Today, the gold is processed by Argor Heraeus. In this case, the buyer of the gold is known, unlike with most gold producers. What is needed now is general transparency regarding the origins of gold and a legally binding due diligence obligation for companies, so that no more high-risk gold enters Switzerland.

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