From the Field:

Behind the Scenes of the Gold Report


 


Quinn Kepes, Program Manager at Verité, has written in this space in the past about his experiences conducting research into illegal gold mining operations in Peru. Here, he discusses the full report, Risk Analysis of Indicators of Forced Labor and Human Trafficking in Illegal Gold Mining in Peru, just released, and his hope for future change in the sector.

 

“Verité has done research on forced labor in places like Bangladesh, Guatemala, Bolivia, and Liberia. I haven’t seen anything this bad.”

 

Verité Vision: What was the impetus to write this report? Why focus on gold, and why Peru?

Quinn Kepes: Commodity exploitation carries the potential for massive vulnerability for workers and serious risks for companies involved. We are lucky to have the support of Humanity United, with whom we identified gold and palm oil as two of the commodities with the highest risk of worker exploitation. Our research on these largely hidden problems is intended to encourage action on the part of stakeholders, including industry associations—the Responsible Jewelry Council in the case of gold—to raise awareness of the vulnerability to forced labor, as well as actions companies can take to improve their ethical performance.

We chose to study Peru because it’s one of the largest gold producers in the world—the fifth largest, if you take into account illegally produced gold. And there are a number of factors that make the gold sector in Peru vulnerable to forced labor: primarily, the prevalence of illegal gold mining. Its illegality results in a black hole, in which miners operate in areas that are not fully under the control of the government. Illegal mining is much like the cocaine trade, in that organized crime and prospectors from other countries, such as China, Russia, and Brazil, are heavily invested, and that breeds corruption.

What was your process?

We started, as we always do, by reaching out to local partners—organizations in Peru that had worked with the mines, or in the areas where mining occurs. At the time, I was working out of Verité's Guatemala office; my partner in field research was Natali Kepes, who is the Founder and Director of REACH (Research Education, Action, CHange), a Guatemalan NGO focused on human rights abuses. We found great partners on the ground, including in Madre de Dios—an area of Peru I can only liken to the Wild West.

How did you conduct worker interviews in such dangerous conditions?

We had to be very careful about finding places where workers felt safe answering our questions. We did not ask their names; we even asked them not to reveal their names to us. We found that the best place to talk was often in the multiple forms of transport from one mining site to another. For example, to access the remote mining camps in Madre de Dios, we would take a car, then a boat to cross a river, then another car, and another boat. We found that these settings provided a level of intimacy and anonymity, and workers were able to disclose their experiences without fear of being overheard by owners or their agents. We also interviewed workers in so-called “sending communities”— their hometowns. In some neighborhoods in rural villages in the Department of Cusco, it seemed that almost every male between ages 17 and 40 had worked in the mines. We only interviewed workers who had been in the mines within the last two years. People were understandably more reluctant to talk in the camps themselves.

What were your impressions of the conditions on the ground?

Conditions were much worse than we expected. Verité has done research on forced labor in places like Bangladesh, Guatemala, Bolivia, Liberia, and the U.S. I haven’t seen anything this bad. Especially in Madre de Dios, there is extreme physical isolation, so it is very difficult to leave without employer permission. Many workers are extremely vulnerable because they are “undocumented”—unable to obtain identification documents, either because they never received a birth certificate, or because they are on the run from the law. And of course the actors involved in illegal mining are inherently untroubled by the notion of breaking the law, so adhering to labor laws, or fair treatment of workers, is not a concern. We spoke to at least five workers whose employers threatened them with guns. Workers spoke of people who had “disappeared.” We spoke with one person who had witnessed a murder, another who had been shot at, and another who grabbed a shotgun from a guard’s hands and threw it into the river so he could run away. The workers are at risk, and there is very little they can do once they are in the mining camps. There are no police or authorities to speak of in the more isolated camps.

Madre de Dios is like the television show “Deadwood.” As silly as it sounds, it is a similar environment. There is a lot of money to be made, and very little to prevent people in power from using force to get what they want. Those who don’t have power have little to no leverage, and they get exploited. The state is simply not present in many areas.

Do you see any encouraging signs? Do you expect things to improve for these workers?

Peru is a relatively wealthy country with a relatively stable government, and has relatively well-trained armed forces. But Peru is a large country with many areas that are difficult to access, so it is difficult for the government to obtain and maintain control or the monopoly on violence in the most isolated areas. No one is in control in these black holes.

But we were encouraged by our meetings in Lima with government officials. There is a huge problem in Peru, but the will does exist to make changes. There was no denial of the extent of the problem in gold mining—and that candor is a big step in the right direction. There is not a ton of capacity, but there is awareness and intent to make significant changes. Recent movement includes the Minister of Labor centralizing the labor inspector’s office, making it less vulnerable to corruption, and developing a new plan to combat forced labor that includes many steps in the right direction.

Do you have any advice for consumers who want to avoid buying gold that was produced with forced labor?

Gold has recently surpassed cocaine as Peru’s largest illicit export, and that is especially troubling given that Peru is the largest cocaine producer in the world. But unlike cocaine, gold goes on to become a legitimate consumer product. Illegally produced gold is sent to Switzerland, and is melted down along with legally produced gold, and then is exported around the world. Billions of dollars in illegally produced gold has made its way from Peru to Switzerland. Once it is melted down, we have no way of tracing it back to its country and region of origin.

Stakeholders, such as Solidaridad and Red Social, have been working with a handful of small scale mining operations to produce “fair trade gold.” They are being taught about tax law and labor law, promise to pay the minimum wage, and adhere to health and safety standards. They are then connected with international buyers who buy the gold at a higher price. Though I see potential for improvement with the current system, the higher the demand for “fair mined gold,” the better. That said, this system will likely not work in areas in which there is a high level of illegal mining, such as Madre de Dios, and action is needed from the government, supported by a variety of stakeholders, in order to ensure that the most vulnerable workers are protected.

Consumers—and jewelers, and electronics companies—have to know that there is no simple answer. When you buy a gold ring, and it’s not “fair mined,” consumers should be aware that there is no way of knowing where it’s coming from. Was the gold mined by a 17-year-old held against his will, suffering from yellow fever in the middle of the jungle, and then not getting paid for his work? Or is it sourced from a big Canadian mine, which is held to labor laws? We simply don’t know. Everyone who buys, sources or uses gold has to put in more effort, or the exploitation will continue.