Peru
Peru’s national gold production holds first ranking in Latin America with Peru being the sixth highest producer of gold globally behind China, Australia, USA, Russia & South Africa.
Peru ranks in first position in respect of silver, copper, lead, molybdenum, tin, and zinc.
Peru now boasts arguably the most stable political and economic climate of all South America and under former president Alan Garcia (2006–2011), Peru experienced a notable reduction in poverty accompanied by high levels of economic growth driven by private investments.
Peru is a member of the World Trade Organization, and a signatory party of TRIPS (Trade-Related Aspects of Intellectual Property Rights).
What is Toll Milling?
Toll milling has likely existed as long as there has been mining. A milling company buys ore from a miner, processes it and makes a profit by selling the finished product. It can be done with nearly any metal, but gold is the most common.
This means that today, if a toll miller can assay, purchase, process and transport ore at a cost of $1,000 per ounce and sell it for $1,200 per ounce he’s making a $200 (20%) profit. Simple.
So simple that Canadian juniors, unable to raise cash and desperate for a good story, have flocked to the space over the past two years.
Like most things in the industry, toll milling is a lot more complicated than it appears at first glance. To understand how toll millers work, you first need to understand their clients: The Artisanal Miners
Formalisation Process
The Peruvian government in 2012 began an amnesty program to try to encourage the thousands of small and medium sized miners to “formalize” themselves with the right permits with the intention of gaining access to the estimated billions of missed tax revenue from small mines and informal miners who have been exporting below the radar for hundreds of years.
Recently instituted “formalization” process requires all mines to process materials through a recognized permitted mill facility.
All investment grade gold and industrial application gold comes from rough mineral referred to as gold ore and must be processed through the milling regimen such as our plant in order to bring it to the required level of purity.
Many informal miners have been identified and have applied for "Compromiso" formalization, and will need to ship their materials to an approved mill, presenting an outstanding opportunity for our Yuramayo Processing Plant.
79% of the miners who have recently formalized or began the process of formalization are in Southern Peru and almost 15,000 miners are in the region of Arequipa. The Yuromayo processing facility is situated in the heart of the Arequipa region, just 2kms off the Pan American Highway, and because many of these small / medium sized miners do not have a licensed processing facility, ours is a perfect solution.
In addition to providing the government with millions in tax dollars, legalization has several enormous benefits for the country and the miners. Small-scale mining is not going away in Peru; legalizing it legitimizes and regulates the work being done. Legitimizing provides clear environmental guidelines miners must follow and the increased transparency helps push out corruption and criminal elements such as the drug cartels.
Convincing hundreds of thousands of people who have been working illegally, often for decades, that they should declare themselves to a government that has spent years trying to shut them down is no easy task. Add to this the expensive bureaucratic nightmare that is the registration process and the fact that many of the would-be participants live in extremely remote areas, often possessing little to no formal education, and you begin to see the challenges.
It should come as no surprise that the government has had to extend the deadline for registration, and it is widely believed that they will have to do so again.
However, the government has been offering support and taking steps to simplify the registration process. To date, 70,000 of the miners have been coaxed out and registered; meaning they are now taxpaying citizens who must sell their ore to legal, licensed milling operations.
Artisanal miners – who are they?
An artisanal or small-scale miner is essentially a subsistence miner; someone who is not employed by a company but rather works a plot of land that he may or may not own, mining or panning by hand. The practice is common throughout the developing world, and it’s been estimated by the ICMM (International Council on Mining and Metals) that as many as 100 million people worldwide rely on ASM for their livelihood.
Artisanal, or informal mining as it’s often referred to in Peru, has been a common practice in South America since the Inca began pulling gold out of the rivers and Andes hundreds of years ago.
In Peru small-scale miners work individually or in small groups to mine relatively small claims by hand. The more advanced groups have formed collectives working together to mine claims, sharing the profits and expenses. Typically this style of mining involves using minimal equipment such as hand-held pneumatic drills, dynamite, picks, shovels and wheelbarrows. The more advanced miners, often those with outside backing, may utilize crushers, skips and other mechanized equipment to improve production and recovery.
Generally these miners will pan for gold or mine by following narrow veins into the bedrock. Mining these veins often involves excavating a tunnel so narrow that miners enter crouched and in single file. It would be uneconomic to mine these veins by conventional methods.
In many ways artisanal miners are similar to farmers in the sense that they generally own, rent or simply take a plot of land and live off what they can pull out of the ground. They’re independent and sometimes desperate; having operated outside the law for so long, they can be wary of authority and government. Small-scale miners can range from being quite wealthy to barely subsiding, depending on the property, their skill at extracting ore, and where they sit in the mining process (owner vs. laborer).
Unlike farming, artisanal mining is an industry that has been repeatedly tied to corruption, narcotics, child labor, environmental devastation and human rights abuses.
*Some of the above text - although it has been redacted and edited heavily - is credited to Jamie Keech reporting for ceo.ca and the full article can be viewed here.