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PERU GOLD Informal Mining The organizers of the symposium reserved a session on the third day to discuss Peru's illegal mining problem, which has serious economic, environmental, social and pub- lic health implications. In the particular case of gold, it is estimated that 14% of Peru's total gold production (around 737,000 oz) comes from the region of Madre de Dios, where gold is exploited ille- gally causing tremendous environmental damage. Interestingly enough, while over- all Peruvian production has been decreas- ing, in this region it grew by 35% last year. Antonio Brack, father of the Ministry of the Environment created in 2008, gave a presentation on Peru's two parallel mining realities: formal mining, with more than 800 mines respecting the regulations (including environmental impact assess- ments and mine closure plans) and the uncontrolled illegal activity. Brack pointed out that the mercury dumped into the rivers of Madre de Dios pollutes 250 km of water, reaching the Brazilian town of Porto Velho. Peru's Minister of Energy and Mines Jorge Merino, who later closed the sympo- sium, assured that there would be "no steps backward" in the fight against illegal min- ing, although he differentiated between "illegal" miners and "informal" miners, the latter of which can enter a two-year process to join the ranks of the formal mining indus- try. Merino assured that this gradual process does not mean that the illegal miners are getting their way; however, critics accuse the government of being lenient with them on the grounds of promoting "social inclusion," one of the Humala administration's mottos. Merino highlighted the country's $53 billion mining projects portfolio and the high level of respect for the legal frame- work and contracts signed, unlike in other countries. He also announced the creation of an Institute of Mining Planning that, together with the private sector, should ensure the tidy and competitive develop- ment of the sector toward the future. Conclusion Peru's mining industry seems to be in a time of transition. In gold, its best moments pro- duction-wise have already been left behind. Copper offers great growth prospects, but the general competitiveness of the sector has decreased as other countries have joined the game. With higher taxes, higher costs and a stronger local currency than in the 1990s; and with the persistence of a number of social conflicts (the one against Xstrata at Tintaya being the latest case in point), the industry will have to work hard to assure the long-term sustainability of the industry. There is a lot at stake: the sector cur- rently provides 177,000 direct jobs and half a million indirect jobs, according to figures given by Roque Benavides. A further 1.9 million Peruvians rely on the wages earned by these workers. As the country's Finance Minister Miguel Castilla pointed out, the fact that mining represents such an impor- tant chunk of the country's revenue is an important weakness, due to the nearly per- fect correlation between the state revenue and the volatile international mineral prices. Considering only 1% of the Peruvian territory is under exploration or exploitation activity, Peru should be able to continue its success of the last 20 years and carry the economic benefits of the industry into the next decades. Alfonso Tejerina covers Latin America for Global Business Reports. He attended the Peruvian Gold Symposium on behalf of Engineering & Mining Journal. He can be reached at: alfonso@gbreports.com. www.e-mj.com JUNE 2012 • E&MJ; 99