About one-fifth of the gold exported from Peru is illegally mined, with forced labor extracting much of the precious metal that ends up in cellphones, computers and jewelry, according to US non-profit Verité.
Peru's Andean mineral wealth has made it the world's sixth-largest gold producer and boosted it into the ranks of middle-income countries, but some miners have paid for the boom with their freedom – or their lives.
Each year, between 16 and 20 metric tons of gold come out of unregulated "informal" mines, where concession holders pay no taxes and workers labor without contracts, benefits or safety gear. Many are held in near slavery, forced to repay ever-increasing debts to labor brokers, according to a new Verité report.
"There's an incredibly high risk of forced labor in illegal gold mining in Peru," said Quinn Kepes, Verité's research program manager and one of the authors of the study. "About one-fifth of the gold exported from Peru is illegally mined," and the country's role as a leading gold exporter makes it a source of "a good percentage of the gold that's making its way into our wedding rings or cellphones".
The Peruvian government could do more to protect its people, but responsibility lies with business, consumers and regulators in developed countries as well, according to Verite. The group says the US government should require companies to disclose whether gold in their supply chains is produced with forced labor and prosecute those companies that "launder" informally mined gold to make it appear legal.
There are precedents for such a requirement. Under the Dodd-Frank Act, manufacturers must report any use of "conflict minerals" from the Democratic Republic of Congo or neighboring companies. And the California Transparency in Supply Chains Act, which took effect in 2012, requires large retailers and manufacturers operating in that state to disclose efforts to eliminate forced labor and human trafficking from their supply chains.
Verité also urged companies that buy gold to participate in certification or corporate-responsibility programs like those sponsored by the Responsible Jewellery Council, an industry group, or the No Dirty Gold campaign. Some high-end jewellers, such as Tiffany & Co, and some mass marketers, such as Walmart, have signed on with No Dirty Gold, but many other retailers have not.
High gold prices in recent years triggered the labor problems in Peru's small mines. The Amazonian Madre de Dios region became the epicenter of a gold rush, with migrants – mainly poor farmers or laborers from the Andean highlands – drawn by promises of payment in gold.
For many who talked with Kepes, the dream of riches vanished when they found themselves in remote, squalid camps and were told that they would receive no wages until they repaid a supposed debt to the labor broker who hired them. Meanwhile, they continued to rack up debts for food or other items in bonded labor that sometimes continued for several years.
Estimates of the number of workers in the Madre de Dios gold camps range from 15,000 to 50,000.
Workers fell trees to clear the mine site or operate huge motorized suction hoses that send a cascade of mud over a sluice. When the heavier, gold-bearing sediment settles to the bottom, the miners use their hands or feet to mix it with mercury, which clings to the gold, separating it from the sand. Then they heat the amalgam, sometimes with nothing more than a blowtorch, vaporizing the mercury and leaving behind a chunk of gold.
The moonscape-like deforestation caused by the mining has grabbed national and foreign media attention, but the forced labor, violence, mercury exposure, disease and death in the camps has been largely ignored, except for occasional reports of underage girls rescued from brothels.
Informal miners also operate in hard-rock mines in the Andean highlands, said Kepes, who interviewed workers in the Cusco and Puno regions. Some are self-employed, but others are in debt bondage to the brokers who recruited them.
The Peruvian government has formed a multi-agency commission to tackle the problem, and has passed laws to bring the miners into the formal economy, but the effort has bogged down amid bureaucracy and conflicting land claims. Even Cabinet ministers admit that corruption is the biggest obstacle to "formalizing" informal mining.
Peru's Labor Ministry lacks labor inspectors and funding, Kepes said. Even if the ministry had inspectors in Madre de Dios, it would be dangerous for them to go into the camps, where miners have been known to physically attack authorities, he said.
Given the obstacles facing regulators in Peru, Kepes said, companies that buy gold should take steps to make sure they are not contributing to exploitation of the poor.
Ideally, he said, companies should buy gold directly from a mine, and auditors should visit to ensure that environmental, labor, tax and other regulations are respected. The Association for Responsible Mining certifies gold from small-scale mines as "fair-mined" if the miners meet a series of social and environmental standards.
For example, Santa Filomena, a hard-rock mining community in the southern Peruvian highlands, won certification after eliminating child labor, establishing strict safety requirements, upgrading miners' housing and building a cyanide processing plant to replace open-air mercury amalgamation.
Some refiners and other buyers will seek certification to protect their reputations, said Fiona Solomon, director of standards development for the Responsible Jewellery Council. Large mining companies such as AngloGold Ashanti and jewelers such as Cartier International are members of the council.
But gold from "informal" mines in the Amazon, Africa and Asia is often bought by small-scale brokers in a parallel system susceptible to corruption and organized crime, Solomon said.
Standards and certifications are only effective if they're verified at the source, said No Dirty Gold campaign director Payal Sampat.
"For the informal mining sector, the direct involvement of miners and community members in verification and auditing is central to legitimacy and transparency," Sampat said.
"Workers and community members have to be interviewed by auditors, and there has to be transparency in the way reporting is done."
Barbara Fraser is an independent journalist based in Peru