Utah delegation looks to private investment to solve Piura's informal mining challenges

- Thursday, January 6, 2011

Utah delegation looks to private investment to solve Piura's informal mining challenges

A delegation from Utah is working on a project to address informal mining challenges in Peru's northern Piura region with foreign private investment, mining consultant Oscar Frias told BNamericas.

The delegation, which is led by state senator Mark Madsen and includes Utah-based firm Great American Minerals, travelled to Piura in December as part of a mission to find commercial solutions for informal mining.

"The intent of the commercial mission was to help the regional government to develop some ways to better organize [informal mining]," said Frias, who accompanied the delegation.

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The initiative is focused on Piura's Suyo district. Suyo could be a "major" mining district in Peru although it is currently overrun with thousands of informal miners who extract gold resulting in mercury contamination of local water resources, Frias said. The water flows into neighboring Tambogrande district, an agricultural hub and important exporter of mangos and other fruits.

"The government of Piura has only three options," Frias said. "The first is to do nothing and pay the consequences for food contamination. The second is to call in the army to clear away the [informal miners], which is not recommended, and the third is to work towards a solution that is socially and environmentally responsible."

A successful model for Suyo could be local precious metals miner Poderosa's agreement with informal miners at its operation in La Libertad's Pataz province, Frias said. Poderosa allows informal miners to operate on its concession and process their ore at the company's plant, which makes it environmentally friendly.

"In Suyo, someone needs to build a plant," Frias said. "It could be a small one, it could be a large one, or it could be several. But it has to be authorized."

"[Informal miners] have to maintain their employment and we have to develop a way in which private capital can enter the area with low risk," he added. "We have to consider that there will probably be a combination of large mining and artisan miners."

Informal mining is found throughout Peru and produces approximately 20t of gold each year. About 80% of that production comes from Madre de Dios region.

At end-2010, Peru's health ministry identified 27 rivers that are contaminated by mining activity. Of these, 20 were polluted by formal miners, while the remainder are being contaminated by informal mining.