ILLEGAL GOLD MINING IN COLOMBIA AND PERU

APPLYING A COMPREHENSIVE TRACEABILITY APPROACH TO ENHANCE TRANSPARENCY AND CREATE SYSTEMIC CHANGES

THE PHENOMENON IN COLOMBIA AND PERU 

Illegal gold mining causes significant socio-environmental impacts in the Amazon region. Approximately 44% of Peru’s gold exports and 85% of Colombia’s are estimated to be of illegal origin, fueling deforestation, desertification, water contamination, harm to wildlife, threats to Indigenous peoples, human trafficking, sexual violence, and forced labor. These consequences are driven by high levels of informality, the involvement of criminal organizations, and insufficient enforcement by law authorities.

Meanwhile, demand continues to rise. Gold prices have reached a historic high of approximately $2,600.00 per ounce, further incentivizing both legal and illegal mining. Demand from the luxury goods sector, particularly jewelry, and the technology industry has remained steady despite rising costs. Since 2022, Central Reserve Banks have also increased their gold reserves, replacing the U.S. dollar as currency backing.

KEY GAPS IN THE SYSTEM

Traceability to establish the origin of gold on the international market is crucial to corroborate its legal status; however, it remains the main challenge. Countries such as Peru and Colombia have implemented systems to identify actors involved in the gold extraction, processing, and trade; yet these systems have not been effective enough to ensure its origin, and disparities persist between declared gold production and export volumes.

Processing plants are a critical link in the supply chain, where gold from various mining concessions is mixed, making its origin harder to trace thereafter. Supply lines for illegal mining, including mercury and fuel trade or the purchase of vehicles and machinery, also hold valuable data that can help identify the actors involved in these activities.

The illegalities surrounding the supply chain of gold are supported by a complex system of logistics and infrastructure that allows most actors to operate covertly and go unpunished—from artisanal miners who hide irregular large-scale operations behind family ties, to brokers and multinational corporations who purchase illegal gold knowingly or without proper due diligence.

OUR GOAL

CCCA’s goal in Peru and Colombia is to support efforts to protect the Amazon rainforest and local communities and Indigenous peoples’ rights and their territories. We believe we can achieve this by bringing transparency to the illegal gold mining supply chain and identifying actions to hold accountable those benefiting from this illegal activity.

OUR APPROACH

We aim to apply a comprehensive approach to traceability to address various aspects of the supply chain linked to illegal gold mining in Colombia and Peru.  The traceability of gold itself is a key element, though not sufficient, to understand the role of intermediaries and the routes through which illegal gold enters the legal market. In this context, the analysis of gold import and export flows, along with declared production, operational capacity, value, and amalgamation processes, as well as cross-referencing data on mining concessions and miners, will enable the identification of inconsistencies and irregular patterns associated with illegal gold mining.

Our methodology involves integrating diverse datasets on illegal gold mining and applying algorithm-based, large-scale data analysis to uncover irregularities and risk patterns in the upstream and downstream traceability of supply chains related to gold.

This will allow us to identify the actors benefiting from it in national and international markets; think strategically what legal and advocacy initiatives are the best suited to achieve the biggest impact; and support our partners, including law enforcement authorities, the media, and CSOs, in pursuing those strategic legal and advocacy initiatives against those responsible —to ultimately address environmental and social harm while promoting accountability and systemic change.