Industry Trend Analysis - Unregulated Mining To Escalate Tensions - APR 2016

BMI View: Illegal gold mining will continue to create tension among local communities, governments and sanctioned gold mines in Latin America, weighing on formal gold production growth and investment.

Illegal mining will remain a drag on formal gold production growth across Latin American countries, including Brazil, Peru, Colombia, Venezuela and Suriname. In Colombia - the country with the most prolific artisanal gold mining sector along with Peru - some estimates put the amount of illegal gold mined at 80% of total the country's total output, while the government official estimate approximately half of all gold mining operations are illegal. Although the respective governments increasingly seek to integrate these artisanal gold miners into the formal sector, the widespread and unregulated nature of illegal gold mining continues to exacerbate tension, between local communities and the mining sector, by contaminating water supplies, and attracting violent criminal activity. For instance, on March 15 2016, Venezuelan authorities reported the discovery of 14 murdered artisanal gold miners, believed by relatives to be the work of gang members looking to control a new gold deposit.

Besides raising operational risks in these countries, illegal gold mining will force governments to step up efforts to regulate and enforce environmental protection policies as degradation and pollution become increasingly dire. For example, in March 2016, a joint study reported 90.0% of indigenous people from 19 different communities in one region of the Brazilian Amazon to be severely affected by mercury poisoning from illegal gold mines. Previously, in January, satellite images revealed illegal gold mining edging dangerously close to Peru's protected Tambopata National Reserve.

Widespread Artisanal Mining To Heighten Operational Risk
Latin America - Countries With Significant Artisanal Mining Sector
Source: BMI, The Global Initiative Against Transnational Organized Crime

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