Bolivia has emerged as the fourth-largest gold producer in South America, trailing only behind Peru, Brazil, and Colombia. The nation’s ascent to this rank is remarkable, with gold production soaring from less than 10 tonnes in 2010 to 46 tonnes in 2023.
Unlike the major producing nations that rely on organized mining, almost all of Bolivia’s gold comes from artisanal sources. The Bolivian government has issued licenses to hundreds of cooperatives that employ artisanal tools to mine gold.
A 2022 Reuters report highlighted significant environmental damage caused by wildcat mining in the region, including severe pollution from the use of mercury in metal extraction. This has led to conflicts with local indigenous communities, as small-scale miners not only pollute water sources but also encroach on indigenous lands. The contamination has rendered the Beni River, once a vital resource for local communities for fishing, unsuitable for bathing or drinking.
The rise in gold prices has further motivated artisanal miners to expand their activities.
Environmental Risks
Insight Crime, a think tank and media organisation focused on organised crime and citizen security, has also pointed out the environmental risks in Bolivia and the broader Amazon region, such as deforestation and threats to indigenous communities.
They attribute these issues to mining through cooperatives and a ‘loosely’ regulated national industry, where co-operatives often exploit their economic and political power to mine in remote and protected areas.
The Mining Administrative Jurisdiction Authority (AJAM), the statutory mining authority, in Bolivia asserts that it has taken steps to combat illegal mining, including conducting raids, confiscating equipment, and taking arrests in 2023. It claims to have prohibited mining activities in geologically sensitive areas. However, the cooperative mining model – rare globally – presents significant challenges for law enforcement, especially in remote regions.
The refining industry’s growth in Asia, including the Middle East, has created a robust market for gold sourced from artisanal or alluvial deposits in South America and West Africa. Over the past decade, both India and the UAE have developed significant refinery capacities due to the substantial physical market for the metal in these regions. This development is evident in how Bolivia has found markets in India and the UAE for its gold exports, sometimes exceeding known production levels, suggesting that unauthorised gold might be entering the supply chain.
The UAE government has made considerable efforts to establish a strong precious metals value chain, including implementing the UAE Good Delivery Standard and enforcing responsible sourcing guidelines based on the OECD model. Conversely, India has yet to establish a due diligence principle for mineral sourcing, relying instead on a ‘country of origin’ rule. Indian refiners typically import gold from overseas suppliers who collect from aggregators, a process fraught with risks. A due diligence audit could potentially address these concerns.
The ongoing environmental degradation in Bolivia, exacerbated by the use of mercury in gold extraction, underscores the urgent need for more organised and mainstream mining practices as production continues to grow dramatically.
