23 November 2014
For many, the idea of fair trade and gold mining in Peru seems like a contradiction in terms. But this is not necessarily the case, although examples of good practice may be few and far between. Sotrami is a gold mining company with a mine on the frontier between Ayacucho and Arequipa regions which is among two which have received Fair Trade certification from FLO, the international fair trade labelling organisation.
Sotrami was established in 1987, taking over an old concession previously in the hands of a US-based mining company. It has a 1,000 hectare concession at Filomena, in the arid coastal highlands up valley from the small town of Yauca on the Pacific coast. Its workers come from all over Peru, but most are from Ayacucho.
According to Julia Cuadros at Cooperacción, an NGO in Lima, the origins of this settlement coincided with a triple whammy that afflicted this part of Peru in the late 1980s and early 1990s: the effects of hyperinflation, the mass migration of people from war-torn Ayacucho and the privatisation of Peru’s main mines and with it the sacking of many mineworkers.
Like many other mining enterprises that have taken advantage of the boom in gold prices of recent years, Sotrami has been able to expand its operations, investing in new machinery and mining equipment. Officially, it is classified as a ‘small-scale’ enterprise (minería pequeña), but it will shortly be reclassified as a ‘medium-sized’ company (minería mediana).
Unlike most small-scale firms in the mining sector, it has opted to regularise its affairs, pay taxes and re-invest its profits both in the firm and in the local community. The FLO classification involves rigorous and regular checks over its relations with its workforce, the benefits it brings the local community and its impact on the local environment.
So far as the workforce is concerned, the involvement of Cooperacción stemmed from a campaign to stamp out child labour in the mining industry. It is common for artisanal miners to use their children as workers, a practice that the ILO has sought to eliminate. Sotrami employs about 300 workers, of which just over half work underground; most of the rest work in the processing of gold and in administrative capacities. There is a high degree of worker participation through a committee in which employees can hold the administration to account. Pay is good by industry standards, though discipline is ever-present. The company has suffered badly from theft in the past.
The town of Filomena stands cheek by jowl with the mine. It is peopled almost entirely of mineworkers – both employees and those who have migrated there from other parts of Ayacucho – and their families. Fair trade principles mean that a fixed proportion of profits go to the community, mainly in helping provide water and electricity to this otherwise barren location but also in contributing to healthcare and education. The last two involve close collaboration with the state, both at the regional and national level. Artesanal miners who live in the town are allowed to work in the concession so long as they sell their production to Sotrami which takes charge of all processing.
The environmental impacts of mining are usually negative, but Sotrami has made a real attempt to minimise these. It avoids the use of mercury to purify gold entirely, and its use of cyanide involves constant recycling so that this highly toxic chemical does not spread beyond the processing plant. Unlike many other mining operations, Sotrami does not have a problem with nearby farming interests. Filomena is situated in an area of zero rainfall where no agriculture is possible: even cactuses find it hard to grow there. While water is very scarce, it uses sources not used by farmers. The use of water is tightly controlled, with dirty water re-used to irrigate small patches of greenery.
The FLO certification means that Sotrami is able to charge a premium on what it sells through Fair Trade channels. Most of its Fair Trade gold production goes to Germany and Switzerland. But this is only a relatively small proportion of total output which currently amounts to around 30 kilograms a month. The rest is sold for non-Fair Trade purposes, though without the premium. Having invested heavily in Fair Trade principles, the company would very much like to sell more on the Fair Trade market.
It would also like to see others learn from its experience, thus counteracting the otherwise negative view that most of us have of mining practices in Peru, especially among smaller producers.