Peru is experiencing a significant surge in illegal gold mining, driven by the global gold boom, which has led to severe environmental and economic consequences. This illicit activity was estimated to be worth $12 billion in 2025, accounting for approximately 4% of Peru's GDP. Alarmingly, informal gold exports have quadrupled since 2019, now nearing the value of legal exports for the first time. This boom is contributing to macroeconomic distortions, as Bank of America (BofA) notes that the Peruvian sol shows an 8% overvaluation in its real effective exchange rate and domestic prices are 10% higher than expected for its per capita income. The influx of dollars from illegal mining is pressuring the sol and fueling domestic demand, leading to higher prices and a phenomenon akin to the "Dutch disease."
Environmentally, the expansion of illegal gold mining is devastating the Amazon rainforest. In the Loreto region alone, over 700 mining dredges were identified between 2025 and 2026, nearly half of all detections over the past nine years, despite a ban on their use in Amazonian rivers. This activity has spread to 13 Amazonian rivers and is causing significant loss of riparian forests, exemplified by 421 dredge detections in the Nanay River, a crucial water source for Iquitos. In Saramiriza, in the Marañón river basin, around 800 hectares of forest have been affected by mining, with over 500 hectares destroyed between 2025 and 2026.
The illegal mining operations, which involve bulldozing forests and creating contaminated ponds, are not only causing deforestation but also widespread mercury pollution. This mercury contaminates waterways, wildlife, and even indigenous communities who rely heavily on fish for sustenance. Beyond environmental damage, the activity is associated with increased insecurity, violence, corruption, and human trafficking, exacerbating institutional degradation in Peru. The government has intensified its efforts, including raids targeting valuable equipment like $30,000 to $45,000 engines, to make it more costly for miners to resume operations, but these interdictions are considered insufficient without dismantling the financial networks that support illegal mining.
