Resumen de Challenging formalization in the Peruvian artisanal and small-scale gold mining sectors: the interconnection between licit and illicit economies in gold production network
A finite, non-renewable mineral, the existing gold on earth is estimated to be 244,000 metric tons. Approximately 57,000 of which are in underground reserves in a resource-hungry world. Increasing global demand and skyrocketing prizes of this metal partly explain the expansion of unregulated gold extraction sourced by artisanal and small-scale mining (ASM) operations. Nowadays ASM accounts for one-fifth of the mineral production and employs 45 million people in 80 countries. This development has gone hand in hand with the growth of illicit markets on a global scale, and with the interest in natural resources being shown by organized criminal groups (OCGs). OCGs have been diversifying their business portfolios to include the extraction and trade of minerals and other raw materials. In particular, they are focusing on gold, a commodity that is functional to them and whose attributes “conspire to make its chain of custody astonishingly complex and incredibly difficult to regulate” (Bloomfield & Maconachie, 2021, p. 57). For over forty years governments worldwide have conducted policies to formalize ASM, yet today up to 90% of the sector operates without a title or the legal authority to mine. Academia has explained the persistence of informality as per the normalization of a top-down approach defined by historical and structural limitations of resource-rich developing states more interested in promoting large-scale mining. This dissertation contributes to existing literature by examining the reasons why it seems to be so difficult for governments to regulate ASM. In answering this query, I question the extent to which OCGs infiltration in gold extraction, and the illegal practices that come with it, have impacted the regulatory experience. I take an illegal market approach to explore the Peruvian unregulated gold production; in particular, the embeddedness of illegal activities in the Madre de Dios mining camps. I argue that this presence and agency is already affecting the regulatory efforts of this country. As recent literature has pointed out, over time the Peruvian government policies have been influenced by a diversity of actors; ranging from smallscale miners; large-scale mining elites; and foreign institutions, which has led to a process of institutional hybridization of ASM governance. In this dissertation, I provide the reasons why I contend that groups that engage in illegal behavior, including OCGs, should be added to this list. To arrive at the conclusions of this thesis, I entered in dialogue with the disciplines of political ecology, criminology, and economic geography. I borrow analytical tools from the Global Production Networks (GPN) framework, and I base my findings in three peer reviewed papers that expose three nodes of the Peruvian gold supply chain. These three articles are cornerstones in the architecture of the dissertation. I examine how key stakeholders react to market, socioeconomic and institutional constraints inherent in a high-risk industry. In observing their behavior and relationalities, I find that a broad range of actors take advantage of the blur between the legal and illegal that characterizes irregular mining enclaves such as Madre de Dios. I trace different stages of the supply chain to identify specific nodes to providing an explanation for the expansion of the Madre de Dios phenomenon and the ways in which its mining culture has unfolded over time. I conclude that, to a great extent, this gold enclave’s extraordinary growth relates to the interfaces between the legal and the illegal economies. For many individuals, illegal engagement has emerged as a risk-management strategy to overcome what otherwise would be unsurmountable hurdles. This mechanism has allowed miners to gain economic and political power to leverage state policies, in the context of a precarious exploited workforce culture in a gold-hungry world. This agency has unfolded in local and global settings whereby OCGs converge and benefit from weak institutions. It is a situation that relates to failed formalization strategies, cultural settings, and the global expansion of illegal markets.
