Videnza reveals study on informal gold mining in Peru

Last Thursday, during the Miner Thursday conference organized by the Peruvian Institute of Mining Engineers (IIMP), Luis Miguel Castilla, executive director of Videnza Instituto, presented a revealing study on informal gold mining in various regions of the country, including Pataz, Piura, Madre de Dios, Puno, and the southern coast, which covers part of Arequipa. In this event, the economist addressed the topic of financial inclusion and its relationship with illegal mining, highlighting the use of mobile wallets such as Yape, which has more than 14 million users in the country. In his presentation, Castilla put forward two fundamental conjectures. On one hand, he noted that there is a greater availability of money in informal mining areas, which drives the need to carry out financial transactions through digital wallets, thus generating a positive relationship between illegal mining activity and financial inclusion. However, on the other hand, he warned about a possible negative relationship, as these types of transactions could hinder the traceability of money movements. The former Minister of Economy explained that this difficulty in tracking the origin and destination of funds could be due to two main reasons. Firstly, there may be an attempt to avoid the detection of resources obtained illicitly, which could favor illegal practices. Secondly, he mentioned that the gold nuggets extracted in informal mining become a kind of currency exchange in these areas, further complicating the oversight of financial transactions. It is important to highlight that this analysis presented by Videnza is considered as an initial and exploratory study, so there is a need to delve deeper into the topic through further analysis of secondary data and the collection of primary information in the studied territories. Castilla also addressed the issue of productive linkages in the areas of informal gold mining, concluding that the economic impact in these areas does not depend so much on factors such as the employment rate, access to electricity, or coverage of asphalted roads, as is the case in formal mining. The regions of Pataz, Piura, Madre de Dios, Puno, and the southern coast, which includes part of Arequipa, were selected for this study due to the high concentration of mining rights registered in REINFO, both active and suspended, and the significant presence of illegal mining with high levels of insecurity. Castilla mentioned that, in addition to financial inclusion, variables such as demographic changes and insecurity in these informal mining areas were analyzed. Regarding demographic changes, the analysis was based on enrollment in Regular Basic Education between the years 2018 and 2023, given that the last available census is from 2017. The results showed a significant increase in enrollment in informal mining areas in Arequipa and Madre de Dios, unlike what was observed in Pataz, Piura, and Puno. Castilla pointed out that this could indicate a phenomenon of population migration to these areas linked to informal mining. In terms of insecurity, the executive director of Videnza highlighted that in the most representative districts of informal mining, there has been a considerable increase in reported crimes per 10,000 inhabitants. Areas such as Nicolás Valcárcel or Secocha (Arequipa), Pataz (La Libertad), Laberinto (Madre de Dios), Madre de Dios (Madre de Dios), and Ananea (Puno) have experienced a notable increase in criminal incidence, posing an additional challenge in the management and control of informal mining activity in the country. In conclusion, the study presented by Videnza Instituto sheds light on the complex relationship between informal gold mining, financial inclusion, demographic changes, and insecurity in various regions of Peru. This initial analysis raises questions about the need to strengthen supervision and regulation of informal mining activity, as well as to promote mechanisms that encourage responsible and transparent financial inclusion in these territories affected by illegal mining.