Formalization of artisanal miners in Peru approaches deadline
In an attempt to mitigate the risks associated with the increasing prevalence of informal mining – including inadequate environmental management, poor health and safety provision and escalating security challenges – the Peruvian government has stepped up its efforts to formalize the sector by April 2014.
Initially required to register themselves with the government by December 2012, artisanal and small-scale miners (ASM) now have until October 2013 to achieve environmental certification (Corrective Environmental Management Instrument – IGAC) and obtain exploitation agreements with landowners before the final steps of Formalization can be concluded.
The Formalization process and associated engagement with ASM will reduce current investor companies’ exposure to reputational risk by proximity. As part of their community development strategy, these companies could additionally seek to transfer technical expertise, enhancing ASM compliance with environmental and health and safety legislation, such as the global Minamata Convention (a Mercury Treaty scheduled to be signed in October 2013), and establishing a longer-term and more durable ‘social license to operate’. This is turn would also aid longer-term mine closure planning, improving the legacy of large-scale investors.
ASM associations and cooperatives in Peru are largely supportive of large-scale mining activity and have encouraged improved communication between the two to establish areas for potential mutually beneficial collaboration. Such collaboration could further involve the parties signing exploitation contracts, thereby granting formalized ASM miners land usage agreements, or agreements to purchase and refine minerals from formalized ASM miners.
While the Formalization process offers opportunities to both large- and smaller-scale miners, the methods of their engagement will be of key importance to establishing a positive relationship. Failure to adequately review the type of ASM activity undertaken, including the legality of the activity, its commercial model and the extent of socio-economic dependencies associated with it, could result in the adoption of an ill-matched engagement strategy and limit its eventual efficacy. Full incorporation of ASM groups into projects’ stakeholder mapping, social impact assessment and geological surveying should help mitigate such risks.
Question-marks in the Formalization process’s regulatory framework – including the delivery of environmental studies prior to the granting of concessions and a complex administrative bureaucracy – will also need to be ironed out to avoid significant protest from ASM miners unable to achieve formalized status. For example, a lack of legislation or supporting mechanisms governing ASM miners’ negotiations over land usage has already prohibited many from achieving Formalization, with some landowners demanding implausible returns on the value of the gold extracted by ASM miners from their property or refusing to negotiate outright.
In a climate of frequent social protest against large-scale mining operations, largely attributed to the perceived lack of concomitant social gains created by the sector and its detrimental environmental impact, engagement with ASM miners could provide opportunities for its more sustainable and consensual development.