New strategy to manage illegal mining

28 January 2017

The government is implementing what is being described as a ‘carrot and stick’ policy with respect to illicit mining operations.

First, the ‘stick’: the cost of illegality is to be increased. Illegal mining and ‘associated activities’ (we have yet to see if these include the purchase of minerals) will now come under the Organised Crime Law, according to the Minister of Justice and Human Rights. Under this, for example, the authorities will be able to hold an accused person for up to 36 months. They also will have new powers of investigation, such as the use of undercover agents.

Second, the ‘carrot’: this is to be offered to those wishing to become formalised. This involves a blend of administrative simplification, economic incentives and a bigger role for central government, possibly through the OEFA (Organismo de Evaluación y Fiscalización Ambiental). Regional authorities are seen as being sometimes cooperative in this regard, but sometimes not. A number of the decrees introduced in the last month will be used to regulate the detail here.

The effort to help firms formalise is, of course, to be welcomed. Large numbers of informal enterprises want to have nothing to do with the illegal trade in gold. They want to be clearly distinguished and labelled as legitimate. However, they need support to become formal. We know that of the 70,000 applications made for formal status in the mining sector, only 161 were successfully completed. The aim of including 60,000 more over the next three years is ambitious, to say the least. Are reductions in bureaucracy and economic incentives enough?

Other government measures, however, appear to drive in the opposite direction. For instance, a common problem is that a small informal outfit cannot get the required ‘regular’ contract with the owner of the resource, and so acquire the necessary papers. A useful weapon in the armoury of the little guy is the fact that a concession expires after 15 years if not worked. However, a decree in December increased the life of a concession to 30 years.

Thorough research into the reasons why virtually all the 70,000 applicants failed would be insightful, providing the basis for a ‘structural’ effort to solve what holds the process back.

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