Formalizing the unknown – The stalemate over formalizing small-scale mining in Madre de Dios

The Peruvian region Madre de Dios is the scene of an enduring dispute between small-scale miners and the authorities over the use of land. In an attempt to formalize the small-scale mining sector, the Peruvian government has declared all small-scale mining in the protected non-mining areas illegal. While the plan is aimed at countering the environmental impact of illegal mining, the miners perceive the plan as a threat to their livelihoods and as violating earlier land agreements. Negotiations between the authorities and the small-scale miners have not produced a way out of the current impasse. This is largely due to the plan being given a low priority by the central government, as well as a failure to acknowledge the complex social dynamics that rule the remote Amazonian region.

In September 2013, small-scale and artisanal miners in the Amazonian region of Madre de Dios, Peru, again initiated a large-scale strike to protest against a punitive campaign launched by the government earlier this year. During the campaign, mining equipment was destroyed and many small-scale miners were arrested. The events are part of an enduring conflict between the miners and the authorities, which started in 2002 when the Peruvian government formally enacted a plan to regulate small-scale and artisanal mining. Despite threats to arrest them, the miners continued to protest and demand that the authorities formally recognize their operations. Yet, as many of the miners work illegally on land that has been designated as non-mining zones, the government is unwilling to comply with their demands and has reverted to firm action as a last resort to exercise control over this region far from its central authority in Lima.

The impasse is a clear result of internal divisions within the Peruvian government, which finds itself trapped between a large-scale extraction agenda that prioritizes large-scale over small-scale mining and a conservationist environmental agenda that aims to control both. These divisions have resulted in an inconsistent attitude towards small-scale miners on the part of the national authorities. Irregular repressive actions to combat illegal mining in environmentally protected areas alternate with lenient acceptance of the status quo. This acceptance derives from the fact that combating illegal small-scale and artisanal mining is not a top priority for the Peruvian government, despite the fact that it recently gained increased political significance due to extensive media coverage of the latest strikes. Pressures to formalize the small-scale mining sector mainly come from the international community and Peru’s environmental department. Yet, at the same time, the benefits of doing so for the national state are marginal as small-scale mining does not significantly contribute to Peru’s GDP. For the regional authorities in Madre de Dios and other affected regions in Peru, formalizing illegal mining is a priority but difficult, as small-scale miners represent an economically important yet fragmented group in the region. Moreover, the authorities are insufficiently equipped to grasp the complex societal dynamics underlying small-scale mining and to enforce the law.

Eleven years after initiation of the formalization programme, the process remain in deadlock. A large number of stakeholders are involved in the process, including regional and national authorities, associations of small-scale miners, large-scale miners and native communities, all with different and often clashing interests. Conflicts over access to natural resources, land rights, and environmental and social-economic impacts persist, leaving Madre de Dios as a haven of violence, exploitation, health damage, and environmental degradation. ¹

Formalizing small-scale mining

The formalization process began in 2002 when the Peruvian state implemented Law 27651 to formalize small-scale and artisanal mining. ² The law obliged small-scale miners to:

• comply with certain labour regulations
• obtain a tax number
• obtain a mining permit
• obtain a mining certificate
• carry out an environmental impact assessment (EIA)
• submit environmental management and closure plans

The process was furthermore promoted through a series of environmental regulations put into force by the national government to conserve the Amazon. The Economic Zoning Plan (EEZ), which prescribed mining and non-mining zones, was enacted in 2009. Two years later, the National Plan for the Formalization of Artisanal Mining (Plan Nacional de Formalización de la Minería Artesanal) was implemented. ³ The plan included a ban on mining outside the main mining areas in Madre de Dios (see figure). Yet it was only in 2012 that the government, through legislative Act 1100, declared all small-scale mining activities outside these areas illegal.

Despite this legislation the formalization process is anything but a success. Only a small group of small-scale and artisanal miners in the region have registered their mining activities and fulfilled the legal requirements. ⁴ A large group mine in official mining areas but who have not yet fulfilled the legal requirements. The majority of the miners continue to be illegal, mining outside the official mining areas.

Conflicting interests within the government

One of the reasons for the lasting stalemate is the clash of two agendas within the Peruvian state. Mainly as a result of pressure from the international (environmental) community, sustainability has gradually become integrated in Peru’s foreign trade policy. ⁵ For a long time, environmental scientists sounded the alarm about the environmental and health consequences of small-scale and artisanal mining, such as deforestation, acid mine drainage, and air and water pollution from mercury contamination. ⁶ This led the Peruvian government to develop a conservationist agenda to protect the Amazonian environment and its indigenous communities. Besides creating several nature reserves, it has gradually started to recognize the land rights of indigenous communities by granting communal titles (which, due to poor management and regulation, in some cases overlap with mining rights). Moreover, in 2008 the Peruvian government created a Ministry of Environment to give more leverage to the green agenda and zoning plans.

However, this conservationist agenda is overshadowed by the large-scale extraction agenda that has largely dominated Peruvian governments since the 1990s. ⁷ This agenda sees the Amazon as a resource-rich region to be exploited for national economic development. The recent global economic crisis has led to a dramatic increase in the price of gold, as investors see the purchase of this precious metal as a safe way to hedge against market risks. The rise in the price of gold has made possible increases in Peru’s GDP, and thus provided the national state with an additional incentive to prioritize large-scale gold-extraction programmes. The potential revenues of formalizing small-scale mining, which only accounts for a small proportion of Peru’s national gold revenues, do not outweigh the revenues stemming from national large-scale extraction programmes, which account for some 85% of Peru’s total gold production. ⁸ Hence, for a long time, formalizing the small-scale mining sector was not a priority for the Peruvian central government.

Limited institutional capacity

Due to this lack of national prioritization, the regional authorities in Madre de Dios have not been properly equipped to legally enforce the formalization plan. They lack the informational, financial and technical resources needed to implement the formalization plan and the EEZ, especially since the illegal mining population increased significantly during the 2009 Peruvian gold rush. Due to these shortcomings, mining permits have been granted without proper verification of the data provided by the miners or of the environmental assessments. This has made the regional authorities also subject to corruption. ⁹

Moreover, negotiations between the regional authorities and the miners are hampered by the fact that the miners do not represent a coherent group. They are organized in a heterogeneous web of mining federations, and have widely varying cultural backgrounds, socioeconomic positions, territories, land property rights, working relations and extraction techniques. The most important division is between ‘old’ miners, who came to the region in the early 1980s or are indigenous people recently occupied in mining, and a large group of ‘new’ miners who migrated to the region to benefit from gold rush in the last decade. As dealing with fragmentation  requires considerable efforts and human resources, the regional authorities have a hard time in negotiating with the miners.

A powerful group in the region

Despite this fragmentation, small-scale and artisanal miners hold a relatively powerful position in the region. ¹⁰ Mining has become the main economic activity , which has increased the power of miners  vis-à-vis large agricultural producers, farmers and native communities. ¹¹ This particularly applies to informal and illegal miners, as they are responsible for extracting the majority of the gold mined in Madre de Dios. Moreover, many other economic activities in the region are closely linked to small-scale and artisanal mining. Agricultural and forest concession holders informally invite miners to work on their land and a number of indigenous communities are now involved in small-scale and artisanal mining. This powerful position has further complicated the negotiation processes, as it gives the regional authorities a clear stake in maintaining the status quo.

The varying implications of formalization

For the vast but still divided group of small-scale and artisanal miners, the formalization plan has different meanings and implications. For the ‘new’ miners, the plan predominantly means a threat to their household income as they are largely  dependent on the illegal mining operations. The costs of formalization are perceived as high, due to the extensive environmental requirements, use of more expensive sustainable techniques and having to pay taxes. These costs push many of these ‘new’ small-scale miners into illegal activities, which assure them higher returns. Also, as the risk of being arrested is small, due to the regional state’s poor institutional capacity, there are no incentives for them to obey the law.

For the ‘old’ miners however, the formalization plan means much more than just a loss of household income. They regard the land on where they work not only as an extraction area with economic profits, but as their natural habitat. The have lived on the land for a long time and therefore have long-term commitments to the region. As a result, they do not contest the state authority and are more willing to be formalized, as they see this as implying that their right to mine, and thereby their right to live on the land, is being recognized. Many of these old miners have started the formalization procedure, but for the ones that live in the protected non-mining areas this is fruitless as their activities have been made illegal.

An example of such a group of ‘old’ miners is by the Malinowski Association of Farmers and Artisanal Gold Miners (Asociación de Pequeños Agricultores y Lavadores de Oro del río Malinowsky, APAYLOM), one of the oldest mining associations in Madre de Dios. The APAYLON miners, who mine in the lower basin of the River Malinowski – a protected area in the non-mining zone –  started the registration procedure in order to guarantee their land and mining rights. Yet, this process was interrupted by Act 1100, which declared that all mining in this area was illegal. During the punitive state campaigns, their machinery was destroyed and the miners stopped working. Negotiations between the authorities and APAYLON have reached an impasse, as the miners are convinced that they have the right to mine because they settled on the banks of the river before the national park was created.

Regional solutions?

Up till now, the Peruvian authorities have not been able to grasp the complex social and territorial dynamics that rule small-scale and artisanal mining in Madre de Dios and adjust legislation to the regional context and past land access agreements. To an important extent, the solution to the current stalemate should be sought at regional level, where authorities need to involve small-scale miners in finding solutions to their specific problems, based on these different customary practices. For some miners, this implies a solution to their territorial claims, while others seek compensation for perceived losses of income by investment in more sustainable techniques. This requires above all institutional empowerment of the regional authorities, who need to be provided with sufficient resources to legally enforce the central formalization agenda and invest in a negotiation strategy that takes into account the variety of practices and discourses among miners. For their part, miner’s organizations should be assisted in developing an overarching institutional structure, so that regional authorities have legitimate counterparts to work with.

At the same time, such a transfer of capacities to the regional level is highly unlikely when small-scale mining continues to have no economic priority for the central state. Yet, the stakes might now have been reversed for the government. The national media have reported extensively on the latest protests and related casualties, and are in need of a ‘success’ on the issue. Whether this will create light at the end of the tunnel remains to be seen. For all parties, it is necessary to come to grips with contradictory agendas and discourses in order to break the vicious circle, in which the status quo is more profitable than countering environmental degradation and the civil unrest in the region.

Footnotes