SOTRAMI MINING ORGANISATION, PERU

Fairtrade is going to help us to sell our gold at the right price, so we will be better paid. It will also help the environment and our community. Gina Davila, SOTRAMI Womens Group IN BRIEF Established: February 1989 Fairtrade certified: TBC 2011 Fairtrade and Fairmined sales: TBC Total workforce: 300 Type of mine: hard rock tunnel mine Mining activity dependents: 500 families Population of Santa Filomena: 2,000 people Total area: 1,000 hectares

Fairtrade Foundation

BACKGROUND The mining organisation Sociedad de Trabajadores Mineros S.A. (SOTRAMI) was established in 1989 by informal artisanal miners working in an abandoned mine in the Atacama Desert, Central Peru. SOTRAMIs miners work in a hard-rock mine which tunnels into the side of a mountain 2,000m above sea level. There are 13 horizontal levels below the entrance with narrower vertical tunnels with ladders between them. Miners need to be physically fit to enter the mine and get to the deeper levels. Miners use dynamite to blast out an area of rock which they then dig further with hand or pneumatic drill for ore. The ore is then placed into sacks which are loaded into a small cart which is winched by hand to the surface. The ore is sorted, ground down and mixed with cyanide or mercury to extract the gold. Air is pumped from the surface to the deeper levels of the mine to ensure miners can work safely. There is an electricity supply in the mine and a phone system for communication from the different levels to the surface. The work, as well as entering and leaving the mine, is physically demanding. Artisanal and small-scale mining attracts an economically weak and vulnerable rural and urban workforce such as the miners at SOTRAMI. The miners and their families live in the nearby village of Santa Filomena, which was established by small-scale agriculturalists, unemployed and landless people displaced by violence in other regions of Peru, who took to informal mining. This shows how ASM is opportunity driven as it is an important alternative to less attractive or less profitable activities, and a chance to improve peoples economic situation. The area mined by SOTRAMI was owned and operated by an American mining company. In the 1970s the price of gold dropped and the Peruvian government nationalised mining to end increasing control of Peruvian natural resources by foreign investors. This meant the American company left the area which was then informally mined by the miners who established SOTRAMI so that they could attain a mining concession (legal right to mine). They were the first ASM company in Peru. SOTRAMI is now owned by the workers and has its own ore processing plant. There are 88 shareholder workers in two groups and an additional 30 self-employed miners working in the mine plus the womens group and five engineers who manage the mine and processing plant.

PERUVIAN GOLD ECONOMY BACKGROUND 1 Peru is a leading exporter of expensive mineral resources including copper, gold, silver and oil but 53% of

Bury, 2004, Livelihoods in Transition: Transnational Gold Mining Operations and Local Change in Cajamarca, Peru, in, The Geographical Journal, vol. 170, no. 1, pp. 78-91

Peruvians, including many ASM miners, live below the poverty line as a result of corruption and failure of the government to remedy social and economic inequality. Political power struggles have caused a neglected economy and infrastructure, and minimal foreign investment. In the 1980s, the economic crisis in Peru saw large-scale migration from rural to urban areas. There has been recent economic growth but the 3 rural poor have seen little improvement. The average Peruvian ASM miner earns $US3,000 annually, well 4 above most other unskilled jobs , however wages differ from mine to mine and are subject to interpretation 5 by middlemen and traders who exploit miners . Although higher, this is still well below the annual Peruvian national minimum wage of $US4,000 annually. Peruvian exports in 2007 totalled $US33bn which accounts for 30% of Perus GDP . Gold is an important export in Peru and in 2003 accounted for 23% of the nations total exports of which 17% is extracted by 7 ASM miners , which shows the huge socio-economic potential of ASM in the nation. Transnational mining operations are the largest and most influential land-owners in Peru and bring change in regions plagued by 8 high rates of poverty and unemployment . Decreased land rights of ASM miners combined with poor access to credit adds to the immediate need for the capital that miners require, which leads them to using environmentally harmful and dangerous techniques to earn money quickly. SOTRAMIS PARTNERSHIP WITH FAIRTRADE AND FAIRMINED As a result of economic crisis in Peru during the 1980s many people migrated to gold mining areas like the Atacama Desert in search of work. After the formation of the company SOTRAMI the group began working towards the elimination of child labour and working towards international labour standards, which today form the basis of the Fairtrade and Farimined standard for gold. Victor Juan Hurtado Padella (pictured), 67, Deputy Mayor of Santa Filomena, explained, until conditions were made Photo Fairtrade Foundation safer the women and children were unable to live with the miners. We have learnt that children should not work but should be in school. SOTRAMI secured funding from a Spanish NGO to install an electric winch system which carries ore in small carts on a track to the surface from the mine which, Victor explained, has reduced injuries for miners as they were no longer carrying heavy ore. Miners working in the area live in the community of Santa Filomena and have recently moved their homes from on top of the mine entrance away from the mine site, which is much safer for not only adults in the community but also children who stray into dangerous work areas. At first our houses were made from rocks and plastic, but now we live in houses made of wood, we also now have a pre-school and health centre. As there was no one to help us when someone was injured or sick we all had to help one another. (Victor Juan Hurtado Padella, June 2010) The miners work in shifts and get paid at the end of each month, but as Victor explained before Fairtrade miners had to borrow money to pay their bills and buy food until they were paid . The community, through democratic organisation not just between the miners but the wider community, has helped to resolve some social challenges. For example, a police cell has been built and alcohol can now only be purchased at weekends to limit consumption. Environmental impact The Atacama Desert suffers high daytime temperatures and receives little rainfall in an area with elevations above 2,000m which makes the supply of clean safe water unreliable. SOTRMAI now have permission to use a spring which is drying up to supply the community and processing plant. SOTRAMI used to exchange partially processed ore containing small amounts of gold for water, however this is no longer common practice. Sometimes the water supply, which is delivered in weekly rations in barrels, is not always purified properly causing sickness. Victor explained that miners used to carry five gallon barrels of water for cooking but there was not enough to wash in. They had to leave when the water ran out, but since then a road as been built and we now have buses which transport water to us . SOTRAMI use chemicals (mercury and cyanide) to process the gold they mine as they cannot use water
2 3

World Bank, 2008, Peru at a Glance, http://devdata.worldbank.org/AAG/per_aag.pdf (20-06-09) BBC News, 2009, Country Profile: Peru, http://news.bbc.co.uk/1/hi/world/americas/country_profiles/1224656.stm (20-06-09) 4 McMahon, G. et al, 1999, An Environmental Study of Artisanal, Small and Medium Mining in Bolivia, Chile and Peru, World Bank Technical Paper 429 5 Echavarria, C., 2007, Project Engage: Getting to Fair Trade Gold and Jewellery, https://diamonds.net/fairtrade/Docs/FT_JCK_ARM_getting_to_FT_gold.pdf (31-05-09) 6 World Bank, 2008, Peru at a Glance, http://devdata.worldbank.org/AAG/per_aag.pdf (20-06-09) 7 MBendi, 2008, Gold Mining in Peru, http://www.mbendi.com/indy/ming/gold/sa/pe/p0005.htm (20-06-09) 8 Bury, 2004, Livelihoods in Transition: Transnational Gold Mining Operations and Local Change in Cajamarca, Peru, in, The Geographical Journal, vol. 170, no. 1, pp. 78-91

and gravimetrical methods (where water is mixed with crushed ore and gravity used to separate the gold from the rock) to extract pure gold from ore. SOTRAMI have also built their own processing plant which means they can now more efficiently process ore for higher quality gold and better prices. The miners pay to use the processing plant but by organising into groups as Fairtrade and Fairmined requires, they are able to combine their ore for processing and spread the cost. This also means that the mercury and cyanide is only used by workers who are trained in using those dangerous chemicals. Mining operations can pollute and deplete water sources if not properly managed in agreement with their local community. Chemical usage can have an impact on quality of water used by others including agriculturalists. SOTRAMI must ensure drainage of effluents from processing areas must not be disposed of into water bodies, tailings (sands or mud left over from processing) must be contained in impermeable ponds, and neutralised to remove toxic substances. Safety provisions to prevent leaks and the safe disposal of fuel residues and containers are also necessary and they must meet national environmental laws to sell under Fairtrade and Fairmined terms. The environmental impacts of ASM depend on where it occurs, but can include deforestation, land degradation through air, water and soil pollution from dust, mud or toxic substances, as well as impact on local wildlife. SOTRAMI has demonstrated that their activity can reduce these impacts with the proper support and incentives. Their activity is not significantly dirtier per unit of output than other mining activity, and as they process much less ore than large-scale mining per ounce of gold, the magnitude of its impact on the land is much smaller. The use of pollution control technology with good environmental management has brought significant improvements. Fairtrade and Fairmined environmental requirements are designed to manage, reduce and mitigate the use of toxic substances, to control emissions of dust to air, and mud effluents into water systems, and to ensure proper water management, enhance ecological restoration practices, including protection of biodiversity, whilst taking into account their human and capital resources in the short and longer term. The Fairtrade premium can be invested in this area to implement cleaner processing technologies and to improve the environment for the miners, their families and communities, as well as for local wildlife. Fairtrade and Fairmined recognises that it is not always possible to produce gold without the use of chemicals due to geology and a lack of water resources, like at SOTRAMI. The poorest miners depend on mercury as this allows them to process ore to gold in a day and earn money from it quickly in small volumes. Victor explained, we had to sell our gold as soon as it left the mine to pay bills but that way we were at risk of being swindled and not processing the ore safely. Cyanide is used in areas where water supplies are limited but larger volumes are produced by mining organisations (groups of individuals) and processed over a longer time. SOTRAMIs miners receive regular health check -ups and training on how to use these chemicals in a safe way and have established an internal safety committee to manage this. Mercury can be recycled, which reduces costs. To continue selling their gold as Fairtrade and Fairmined SOTRAMI in the coming years must work towards chemical-free processing or as near to it as they can. Where this is not possible Fairtrade and Fairmined aims not to exclude the most marginalised and poorest miners, who could use their Fairtrade premium to invest in environmental improvements. Womens group Although no women work inside the mine, they work on the surface sorting ore containing gold for processing. Gina Davila (pictured) aged 29, is married to a miner and has two children aged four and five. She moved to Santa Filomena as her relatives lived there. Gina is a mineral sorter, which means she sorts the ore by selecting pieces which contain gold with a tool called a manito (little hand), which is sold to the mining company SOTRAMI, who then process it to release the gold and sell it on with their total gold volume. 180 women work in shifts and at the end of each month they share income made between them to raise additional money for their households. The women are all members of the Pallaqueras (mineral sorters) Womens Association which was established in 2003 in response to the need to arrange shift work which allows women and single mothers to work in a safe and organised way. They are organised into two collecting groups who work from 2pm to 6pm daily, which is a time that fits around childcare demands and their domestic responsibilities. Through Fairtrade and Fairmined Gina has met other women who mine in South America and received training on health and safety in the workplace. This network provides support and has inspired the women to establish a crche so that childcare can be shared and women can work without taking their Photo Fairtrade Foundation (2010) children to the mine site. Gina explained, it was very awkward taking our children to work and it was very bad for the children, breathing in all that dust .

SOTRAMI produce the largest volume of gold of all the mining organisations Fairtrade and Fairmined are working with and it is expected that their gold will be sold in Fairtrade and Fairmined certified gold products across the UK from spring 2011. FAIRTRADE PREMIUM PROJECTS The mining organisations who Fairtrade and Fairmined are working with have already began benefiting from just entering into the Fairtrade and Fairmined system particularly in the areas of health and safety and democratic organisation. As Victor explained, there have been so many changes since we have organised ourselves into a company. However with the global launch of Fairtrade and Fairmined gold products in early 2011 they will begin to trade their gold and receive a Fairtrade minimum price and Fairtrade premium for their gold, which can be invested in cleaner technology, improving working conditions, health and safety (including chemical usage), child-care facilities or to develop community projects in education, health, ecological restoration and economic diversification. The Fairtrade premium and minimum price will enable mining organisations to obtain a fair price for their gold. Specific challenges which the miners could use the Fairtrade premium to tackle: improved access to public services, improving technology and working conditions by expanding their mineral processing service and in the long term export gold themselves. Victor explained, before we used to mine the gold and sell it to an intermediary who paid for it, then he sold it to someone else and so on until it was exported. But now since the arrival of Fairtrade to support us, we already have better prices and people cannot cheat on us so easily. The community in Santa Filomena has established a pre-school for 140 local children, which means not only do children have access to education but also have somewhere safe to be looked after while their parents are working. With Fairtrade premium the teachers could hire someone to maintain the building and secure a reliable water supply for the children. As the number of children attending is increasing more teachers also need to be recruited. Gina from the womens group really likes having the pre-school but explained, Im not totally happy with the state of the crche. Id like more things suc h as someone specialised in childcare so we do not have to look after the children ourselves. When I got married I hoped to give my children a better life, education and the opportunity to go to university the pre -school and crche opens up these chances to my children. Gina hopes that Fairtrade premium will be used to arrange workshops for women to learn skills outside of mining such as tailoring and to buy sewing machines to make better sacks for the ore. She also explained, weve had lots of improvements in our community but our great aim is to install electricity pylons. Gina believes, if we sell through Fairtrade well be able to receive the premium and this could be a great help for the whole community. Victor would like to use Fairtrade premium to re-connect the community to the internet so that they can monitor the international gold prices and sell directly to customers as well as allowing children to study ICT.

Fairtrade Foundation / Alliance for Responsible Mining January 2010