Gold is a toxic lure in the world’s highest settlement

Three miles up in the Peruvian Andes, La Rinconada is the highest settlement on the planet, a place whose bleak existence depends on the high price of its most coveted resource—gold. 

As the price of the precious element more than quintupled over the past two decades, what was once a small town in the shadow of snowcapped Mount Ananea has transformed into an uncontrolled sprawl of corrugated metal shacks packed around artisanal mine entrances and a refuse-choked lake. The biting cold and lack of oxygen at 16,732 feet above sea level leave even the locals gasping for breath, and it smells like what it is—a settlement with a transient population of some 30,000 to 50,000 people and no garbage collection or sewer system.

Fatal accidents in the labyrinth of mines deep inside Mount Ananea are common, as are lethal brawls. Miners have been robbed or even murdered after selling their gold, their bodies left in mine shafts. Some murder victims have been women and girls lured from larger cities in Peru and Bolivia by human traffickers who confiscated their identity papers and put them to work in La Rinconada’s dingy bars and brothels.

Several small companies have claims in Mount Ananea, and one contracts out sections of its claim to around 450 members of cooperatives who are among its shareholders. 

Most of the mines operating under those contracts are considered informal—meaning they have substandard labor, safety, and environmental conditions but are allowed by the government to continue operating as long as they register with a program that’s aimed at bringing them into compliance with higher standards.

The conditions in La Rinconada harm workers’ health and poison the Andean landscape, but that hasn’t stopped buyers and refiners in the United States, Switzerland, and other countries from purchasing La Rinconada’s gold, processing it, and turning it into bullion and brilliant jewelry. By that time, the gold bears no indication of its origin in poorly regulated Peruvian mines. International efforts to fetch better prices for gold from mines that meet higher standards have made no inroads in La Rinconada. 

The irony of La Rinconada’s modern gold rush is not lost on Víctor Hugo Pachas, a Peruvian anthropologist who studies unregulated gold mining in Peru and other South American countries.  

“Small-scale mining like that in La Rinconada has always existed in the Andes as a secondary activity—farmers or ranchers would go to the mines periodically to supplement their farm income,” Pachas says of a practice that dates to at least the early 19th century in Peru’s Puno region, where La Rinconada is located. 

Miners always complain that the mines are playing out, he says, “but there’s still gold. If there comes a time when there is less gold, mining will again become a complementary activity for farmers, as it was before.”

The contractors who operate the informal mines often live outside of La Rinconada, leaving day-to-day operations to a trusted overseer. That person manages laborers who mine the ore with nothing more sophisticated than dynamite and pneumatic drills. Small-scale processing plants crush the ore and mix it with mercury or cyanide to extract gold. Then a chain of brokers buy and sell the gold and, in some cases, export it.

Labor agreements generally are verbal, with a foreman hiring workers for a week to several months, depending on the gold vein being worked. The laborers may receive food and lodging but no benefits or wages. Instead, for roughly a day or two a month they are allowed to work in the mine and keep what they find, a system known as cachorreo. If they find nothing, it means they’ve worked for free. 

Miners grumble about the system, but no one really wants to change it—it’s cheaper for the contractor, and it’s easier for a laborer to leave if he decides he’s had enough. Many stay, however, lured by the possibility of a lucky strike.

Luck comes to miners in dreams and in more insidious ways, says Maria Eugenia Robles Mengoa, a Peruvian-Bolivian anthropologist. 

When Robles first traveled to La Rinconada in 2016, she found a machista world in which women nonetheless are omnipresent. For the miners, even Mount Ananea is female, she says. They call it awicha, which means “grandmother” in Quechua.

If a miner is lucky, the legend goes, a female spirit—la gringa—will visit him in dreams and guide him to a rich ore vein. But la gringa is considered jealous, and local belief holds that she will not give up her gold if another woman enters the mine. Even now, few women venture into the mountain.

There’s also a disturbing belief that luck comes to miners who drink heavily and have sex with young women. In La Rinconada, some 2,000 young women, some of them minors, work in bars that double as brothels.

“When I first saw these girls and the violence they suffer, I felt a combination of rage and desperation,” Robles recalls. At the time, she was 27, and all of these women she saw in La Rinconada were younger.

Conditions also are harsh for pallaqueras—women, often wives of miners, single mothers, or widows—who scavenge through piles of waste rock outside the mine entrances, collecting gold-bearing chunks. Although they perform an essential task for the claim holder by clearing away debris, the pallaqueras, who inhale rock dust and poisonous fumes as they search for whatever gold they can eke out of the discard pile, are among the most vulnerable workers in the chain.

Large amounts of ore often are processed with cyanide to extract the gold, but the smaller amounts gleaned by pallaqueras and by miners on their cachorreo days usually are crushed with mercury, which binds to the gold, forming a lump of amalgam. This may be done in a tumbler-like drum or with huge rocks in a tool called a quimbalete.

The miner or pallaquera then takes the amalgamated lump to a buyer who blasts it with a blowtorch to vaporize the mercury, leaving the gold behind.

Some gold shops use devices to capture the mercury, but shopkeepers and miners are still exposed to toxic mercury vapor, which also drifts over the glacier above La Rinconada, condensing on the ice and poisoning the drinking water supply. Globally, this kind of gold processing is the top source of anthropogenic mercury in the Earth’s atmosphere.

By the time gold from informal mines in La Rinconada or other parts of Peru ends up in wedding rings or watches, it bears no traces of the harsh conditions in which it was produced. 

Some of the gold is sold through legal channels, but to avoid paperwork and taxes, some miners sell theirs on the black market.

Black market gold may be laundered, with paperwork to make it appear legal. As long as the papers appear legitimate, exporters may not inspect a mine to see whether it complies with regulations. 

Eventually, most gold from Peru is exported to refineries abroad, with about one-third of exports going to Switzerland, which refines as much as 70 percent of the world’s gold.

High gold prices have allowed once modest Peruvian brokers to become top exporters quickly. But pressure from environmental and human rights organizations and several high-profile cases have led to efforts to clean up the supply chain. 

Those cases include Peruvian customs agents’ seizure of a 200-pound shipment bound for Switzerland and arrests in the U.S. of refinery employees on money-laundering charges.

Cleaning up the supply chain means requiring miners to comply with regulations and enabling buyers to trace the gold to its source and verify the conditions there. 

The task has been complicated by a surge in the number of unregulated mines in Peru as gold prices rose from less than $300 an ounce two decades ago to about $1,700 an ounce this spring. Unable to comply with regulations designed for large corporate mines, small-scale operators often have paid no taxes and received little official oversight.

During the past two decades, Peru’s government has made various attempts to bring those miners into compliance with administrative, labor, and environmental regulations, but that process—known as formalization—takes time. 

Of the more than 60,000 informal miners registered with the government, only some 1,600 have finished the process, which obliges them to pay taxes, obtain necessary permits, and manage environmental impacts.

The tens of thousands of other informal miners can sell gold legally as long as they declare that they are working toward compliance. The deadline for formalization has been extended several times, however, allowing the sale of gold that has been produced under harsh and dangerous conditions like those in La Rinconada or in placer mines that have left moonscape-like craters across Amazonian lowlands.

That’s how gold that may have been chipped away by a miner on his cachorreo day, with all the health and environmental risks that implies, could end up in a wedding ring or a Swiss watch.

If anything can clean up informal gold mining, it’s consumers who insist on knowing that their jewelry is untainted by pollution or abusive labor practices, says Pachas, who is now country manager for Peru and Bolivia with the nonprofit Alliance for Responsible Mining (ARM).

ARM is one of three main organizations—the others are Fairtrade International and the Responsible Jewellery Council—that certify gold from miners who meet a series of legal, social, and environmental standards and link them with jewelers who want to be able to trace their supply to its origin. In addition to the market price, certified gold fetches a premium, which the miners reinvest in the mine or use for community projects, depending on their agreement with the certifying organization. 

The Nobel Peace Prize medal has been cast from ARM-certified “fairmined” gold since 2015, and the Zurich Cantonal Bank sells Fairtrade International-certified bars made of gold from Peru. Ensuring traceability is labor-intensive, however, and because of a shortage of buyers willing to pay extra, the amount of gold certified as “fairtrade,” “fairmined,” or “ecological”—meaning that it was processed without toxic chemicals—is still just a tiny fraction of the total mined each year. 

The Better Gold Initiative, a public-private association involving Switzerland’s government and the gold industry, is trying to connect miners directly with large-scale jewelers and other manufacturers and increase demand among buyers.

Although 18 mines in Peru have been certified, the complex system of contracts and cachorreo in the underground mines of the world’s highest settlement makes certification there especially difficult.

Even so, “it’s not impossible,” Pachas says. “It’s a matter of the miners having the will to do it. And a matter of trust.”