Criminal Networks Choke Gold Output of Peru, World’s Sixth-Largest Producer

Peru’s formal gold production dropped 10.5% during the first quarter of 2025, according to the Ministry of Energy and Mines. The country extracted only 24.8 tons despite gold prices reaching historic highs above $3,300 per ounce.

Seven of Peru’s ten largest gold mines reduced output during this period. Only Yanacocha, the nation’s leading producer, increased production by 15.6%. Meanwhile, smaller mining operations suffered an 18.2% decline collectively.

The production crisis stems from escalating violence by illegal mining groups. These criminal organizations murdered 13 formal mine workers in May 2025, prompting the government to impose a 30-day total mining ban in affected regions.

The suspension will cost approximately $200 million in lost gold output. Peru’s Central Bank estimates the country will lose 60,000 ounces of production during the ban period.

This represents roughly 20% of Peru’s monthly gold output based on February 2025 figures. Illegal mining now accounts for an estimated 28% of Peru’s total gold production.

The Peruvian Institute of Economy projects illegal gold exports could reach 129 tons in 2025, representing a 40% increase from 2024’s estimated 92 tons.

High Commissioner Rodolfo García Esquerre revealed a staggering 75-ton gap between Peru’s formal production and actual exports. In 2023, formal mines produced 100 tons while exports totaled 175 tons, indicating massive illegal production flows.

The violence particularly affects the La Libertad region, where illegal miners have killed 39 workers linked to Compañía Minera Poderosa since 2022. These attacks target formal operations within legally-granted concessions.

Peru ranks as the world’s sixth-largest gold producer, making these disruptions significant for global markets. Gold accounts for approximately 15% of Peru‘s total exports, meaning production losses directly impact the country’s trade balance.

The crisis highlights how record gold prices paradoxically harm formal mining operations. Higher prices incentivize illegal extraction while creating territorial conflicts that formal companies struggle to manage.

Security concerns have also deterred new mining investments, with only the San Gabriel project in Moquegua currently under development.

Mining expert Marcial García Scheck notes that violence creates disincentives for developing new formal operations. The illegal economy now generates approximately 30 billion soles annually, operating parallel to legitimate mining activities.

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