## 1. Legal Gaps in the Fight Against Illegal Mining

## Source details

**Canonical URL:** [1. Legal Gaps in the Fight Against Illegal Mining](https://www.imf.org/-/media/files/publications/cr/2026/english/1perea2026002.pdf)

## Other formats

- [Markdown version](/-/media/files/publications/cr/2026/english/1perea2026002.pdf.md)
- [Structured JSON version](/-/media/files/publications/cr/2026/english/1perea2026002.pdf.json)

---

### The macroeconomic and socioeconomic threat
- Recent record-high mineral prices led to a notable escalation of illegal mining in South America; some estimates suggest that about 51 percent of gold exported in recent years was illegal (IPE 2024).
- Peru is the largest exporter of illegal gold in the region; illegal gold production in 2025 reached levels similar to legal gold production (IPE 2025a).
- Illegal mining affects an estimated US$12 billion pipeline of mining projects (IPE 2025b), threatening private investment, growth, and Peru’s position as a reliable destination for mining investment.
- Broad repercussions: environmental damage, threats to citizen security, undermining the rule of law, impacts on labor markets and socioeconomic development, and risks of permanent entrenchment in the economy.

### Scope and recent trends in Peru
- Illegal mining historically concentrated in gold; small and artisanal miners contribute about 19 percent of official gold production (MINEM 2025).
- In 2024, the share of Peru’s gold exports not accounted for by domestic production reached 48 percent of total gold exports, equivalent to 2.5 percent of GDP.
- Illegal copper is emerging: staff estimated illegal copper accounted for up to 5 percent of copper exports in 2024.
- Administrative indicators, 2020–2024:
  - Environmental complaints to OEFA almost tripled.
  - Illegal mining cases with public prosecutorial offices, including FEMA, doubled.
  - The value of suspicious transaction reports related to illegal mining received by SBS’s UIF-Perú averaged 1 percent of GDP each year.
- Between 2018 and 2024:
  - The median probability of illegal mining increased 7.8 pp, with 4 pp of that occurring between 2023 and 2024.
  - In 2024, 47 percent of districts were above 50 percent probability of illegal mining.
  - 56 percent of districts experienced an increase in probability; 59 percent of districts that were below 25 percent probability in 2018-2020 saw increases.
  - Over 80 percent of districts with legal mining production as reported by MINEM were above 50 percent probability of illegal mining.
  - The median probability of illegal mining increased 9.8 pp in districts with legal copper production (2018–2024).

### Links to organized crime and laundering
- High profits incentivize organized crime involvement; illegal production and income are laundered by investing in the legal economy.
- Financial investigations with illegal mining as the predicate crime accounted for almost 60 percent of all investigations’ value over 2021-2025, compared to 8 percent for drug trafficking and 4 percent for tax crimes.
- New registrations of businesses for the processing, marketing, and export of gold tripled in 2020-2024 compared to 2015-2019 (IPE 2025a).
- Media and surveys indicate links to political corruption and expansion into other illegal activities (illegal forestry, coca cultivation, human trafficking, child labor, transnational organized crime).

### Legal and regulatory gaps
- Peruvian law distinguishes illegal miners (operating in violation of law) from informal miners (artisanal or small scale in non-prohibited areas); illegal mining is prosecuted under Legislative Decree 1100 and Penal Code articles 307 A through F as an environmental crime.
- The Comprehensive Mining Formalization Registry (REINFO), introduced December 2016, was intended to incentivize formalization but created a prolonged grey zone:
  - Repeated deadline extensions: 2019, 2021, 2024, June 2025, and December 2025.
  - Weak oversight and lax control at processing plants have allowed illegal operators to shield themselves behind REINFO registrations, which exempt registered miners from criminal, civil, and administrative liability.
  - At end-2024, almost 80 percent of the existing 84,318 REINFO registrations had been suspended, while only about 2,200 miners had fully formalized and held a mining concession.
- The botched formalization process has distorted incentives, fostered public distrust toward artisanal miners, and made adoption of a new Artisanal and Small-Scale Mining Law (Ley MAPE) extremely contentious.

### Detection and measurement using remote sensing and machine learning
- Illegal mining is inherently hard to detect; available sources capture partial dimensions (environmental complaints, unlawful acquisition of heavy machinery and chemical inputs, suspicious financial transactions, violations of concessions, use of violence).
- Staff compiled a training set of 218 districts (109 districts with reported illegal mining matched to 109 similar districts without reported illegal mining) and trained a random forest model to predict annual, district-level illegal mining probability for 2018–2024 using satellite-derived and administrative covariates (including nitrogen dioxide levels, land cover, night-time lights, enhanced vegetation index, normalized difference vegetation index, aerosol optical depth, and legal mining activities).
- Model performance and validation:
  - Model explains approximately 71% of the out-of-sample variance.
  - Mean Absolute Error (MAE) of 0.23 and RMSE of 0.28 on a normalized [0,1] target range.
  - High precision at threshold probabilities of illegal mining greater or equal to 0.75.
  - A sample of high-probability district-year pairs were externally validated using an orchestrated AI-assisted workflow to curate publicly available supporting or contradicting evidence.
- Caveats: results rely on indirect detection methods and may partially capture informal mining; other economic activities can generate similar land use and pollution patterns; a single model was used across mountain and forest areas despite differing mining methods.

### Economic and operational impacts on formal mining
- Illegal miners invade existing concessions, damaging production sites, equipment, and infrastructure, sometimes leading to direct confrontations with employees.
- Reported firm-level effects include higher security costs, reduced incentives for exploration, delays in environmental impact evaluations, and modified investment plans to reduce exposure—weakening property rights and potentially affecting companies’ risk ratings.

### Empirical and administrative statistics (selected)
- Small and artisanal miners contribute about 19 percent of official gold production (MINEM 2025).
- Between 2001 and 2024, official gold production was recorded in 181 districts across 18 of 25 departments; official copper production recorded in 116 districts.
- SUNAT data: Over 2018-2022, the number of taxpayers registered in mining extraction grew by 78 percent; those involved in the wholesale of minerals and metals grew by 18 percent.
- Example of criminal violence linked to illegal mining: in spring 2025, 13 miners were kidnapped and murdered in the province of Pataz during a state of emergency.

### The economic and social impact of illegal mining (empirical approach and findings)
- Analytical approach:
  - Year-to-year change in illegal mining for district i: ∆p_i,t = p_i,t − p_i,t−1.
  - Local projections estimated: y_i,t+h − y_i,t−1 = α_i + δ_t + β_h ∆p_i,t + X_i,t + ε_it.
  - Controls X_i,t include the logarithm of the per capita level of canon transfers, the lagged change of the outcome variable, and the lagged change of the illegal mining shock.
  - District and year fixed effects: α_i and δ_t. Standard errors clustered at the district level.
  - At horizons h = {0,1,2,3}, β_h measures the difference in outcomes after an illegal mining shock.
  - In impulse response charts, coefficients correspond to the impact of a one standard deviation increase in the probability of illegal mining (one SD = 11.9 p.p. increase in the probability of IM).
- Impact on formal mining investment:
  - In the three years following an illegal mining shock, mining investment responds negatively: 0.11-0.24 pp decrease in response to an 11-12 pp increase in illegal mining probability.
  - Negative impact observed across nearly all components of mining investment; exploration, development, and equipment are especially impacted.
  - Exception: investment in processing plants weakly increases in the first two years; processing plants account for 26 percent of investment over 2018-2024.
- Short-run impacts on employment and financial activity:
  - Districts experiencing an illegal mining shock exhibit higher levels of employment (up to 0.5 pp), concentrated in the informal sector.
  - Deposits and credit per capita rise slightly: up to 0.03 percent (deposits) and 0.02 percent (credit).
  - Increase in deposits concentrated in rural and municipal banks.
  - Point estimates are small; much illicit cash likely remains unrecorded or leaves local communities.
  - In remote communities, illegal mining can be an important source of employment and income.
- Impact on social development outcomes:
  - Districts with illegal mining shocks have lower levels of household living standards, literacy rates, years of education, and secondary education rates.
  - Most negative impacts on development appear 1-2 years after the illegal mining shock.
  - Prosperity score defined as an index of principal components of the share of households with access to water, sewage, and electricity.
- Relationship with insecurity and crime:
  - Model does not show a statistically significant causal link between illegal mining shocks and increases in crime rates within the same district.
  - Higher insecurity was widespread: districts at almost all levels of illegal mining probability experienced higher homicide and extortion rates in 2024 compared to 2018.
  - Possible explanations include underreporting of crimes in areas with illegal mining, structural factors (weak governance and rule of law), and spillovers occurring far from production districts.

### The potential macro-criticality of illegal mining: projections and scenarios
- Projection based on metal prices:
  - Based on copper and gold price projections between 2025-2031 (WEO, April 2026), illegal mining could increase 11 pp by 2031 relative to 2024 at the median.
- Persistence and structural drivers:
  - Even if prices decline, illegal mining is unlikely to revert to previous levels due to high fixed costs, accumulated resources, and regulatory ambiguity from REINFO extensions facilitating capture of informal activities by illegal actors.
- Propagation channels that could erode growth potential:
  - Lower investment, higher uncertainty, lower productivity, foregone fiscal revenue, weak rule of law, and weakened financial integrity via ML/TF risks.
- Fiscal revenue estimate (reference):
  - SNMPE (2024) suggest 1.6 billion Soles (0.5 billion USD) per year based on 2022 data.
- Growth impacts from reduced mining investment:
  - Direct effect on mining investment alone could reduce GDP growth by up to 0.25 pp per year by 2030 under severe scenarios.
  - Scenario-based peak impacts in 2030 (percentage points):
    - Scenario 1 (lower range): -0.03
      - Based on an 11 pp increase in illegal mining (estimated increase in the median probability across districts based on current copper and gold price projections). Growth impact increases from -0.002 pp in 2026 to -0.03 in 2030.
    - Scenario 2 (middle range): -0.04
      - Scenario 2: all districts with greater than 50 percent probability of illegal mining in 2024 increase to 100 percent probability.
    - Scenario 3 (higher range): -0.05
      - Scenario 3: Scenario 2 plus all districts with legal copper and gold production increase to 100 percent probability.
    - Scenario 4 (entire pipeline): -0.25
      - Pipeline refers to US$12 billion worth of projects impacted by illegal mining (IPE 2025b), which could contribute at least 0.25 pp to GDP growth yearly between 2026-2030 if affected.
- Additional fiscal and security cost estimates:
  - Public spending on security estimated at 0.5-0.7 percent of GDP.
  - Private spending on security estimated at 1.2-1.5 percent of GDP.

### A coordinated policy response to address illegal mining (policy implications and recommendations)
- Closing legal gaps and formalization:
  - REINFO extensions undermined formalization and provided legal cover for illegal miners.
  - MAPE Law needs to:
    - Provide a clear pathway to formalization for informal miners.
    - Clearly distinguish between illegal and informal miners.
    - Establish incentives to make formalization economically viable.
  - Clear and enforced property rights needed via functioning and updated cadasters and mining concession registers and an adequate miners’ census.
- Enhancing state capacity: security, enforcement, and supervision:
  - Improve state capacity and governance outside main urban centers to reduce opportunities for illegality to spread.
  - Ensure adequate supervision of formal artisanal and small-scale mining to prevent infiltration by illegal actors.
  - Empower and coordinate specialized agencies: SUNAT, SBS, OEFA, the Public Prosecutor’s Office, and the PNP.
  - Strengthen investigative and enforcement capacity.
  - Complement with stronger AML/CFT supervision of high-risk financial institutions and designated non-financial businesses and professions in exposure areas (banks, cajas municipales, dealers in precious metals and stones).
  - Measures to trace and confiscate criminal proceeds by leveraging parallel financial investigations and strengthening cross-border cooperation.
  - Consider creation of a specialized investigative unit focused on asset tracing and illicit mining-related money laundering investigations with prosecutors, FIU, customs, and police.
  - Implement staff integrity vetting to mitigate corruption risks when increasing resources.
- Supply-chain approach and due diligence:
  - Understand industrial organization and pursue actors along the supply chain to obstruct illegal mining.
  - Improve monitoring of sales of restricted inputs—particularly mercury, explosives, and machinery—to strengthen identification of illegal production.
  - Enhanced due diligence requirements and adequate supervision for traders, aggregators, refiners, exporters, and other higher-risk sectors to disrupt laundering of illegal production and proceeds.
  - Leverage the beneficial ownership framework for prioritized verification of entities active in mineral supply chains.
- Regional cooperation:
  - Porous borders have facilitated spread of illegal mining and related operations.
  - Sustained and coordinated international efforts, including bilateral discussions and global initiatives promoting transparency in mineral products trade, are needed to exchange information and enforce border policies.
- Supply-side and development policies to reduce attractiveness of illegal mining:
  - Invest in social development, particularly education, and deepen financial inclusion to reduce informality and increase productivity.
  - Revamp fiscal decentralization and redesign natural resource revenue-sharing formulas to improve public investment efficiency and raise local living standards.
  - Sectoral diversification policies to expand economic opportunities in mining communities and provide alternatives to illegality.

### Box 1 — Legal changes and criminal-justice hurdles (summary)
- January 20, 2026 legislative decree amendments to the Criminal Code:
  - Expanded crime of illegal mining to cover processing and other mining activity to criminalize unpermitted downstream processing.
  - Increased minimum sanction from 4 to 5 years of imprisonment and removed reduced-penalty negligence classification.
  - Added a Criminal Code article on illicit trafficking criminalizing storing, transporting, concealing, commercializing, acquiring, exporting, and possessing minerals originating from informal activities with a sanction of 6 to 9 years of imprisonment.
  - Strengthened sanction for illicit trafficking of chemical inputs and machinery from 3 to 6 years to 6 to 9 years of imprisonment.
  - Repealed provision that allowed prosecutors not to prosecute if a suspect voluntarily ceased illegal mining.
- Organized-crime framework and evidentiary burdens:
  - Decree lists illegal mining crimes within organized-crime framework enabling special investigative techniques and specialized prosecution where criteria are met.
  - Earlier amendments to the definition of “organized crime” require proving a “complex, developed structure” and “greater operational capacity,” imposing increased and open-to-interpretation evidentiary burdens.
- Other criminal justice and procedural hurdles:
  - Amendments to “efficient collaboration” provisions now prohibit cross-corroboration of multiple statements, shorten timelines, raise evidentiary standards (e.g., requiring independent corroboration), and introduce stricter revocation rules.
  - Shortening of statute of limitations for corruption offences (suspension of statute of limitations limited to one year for certain processes) hinders complex corruption and organized crime investigations that rely on cross-border cooperation and lengthy financial investigations.

*Source: PERU — THE MACROECONOMIC THREAT OF ILLEGAL MINING, April 28, 2026.*

### 1. Legal Gaps in the Fight Against Illegal Mining  ______________________________________ 16

### 1. Legal Gaps in the Fight Against Illegal Mining

### The macroeconomic and socioeconomic threat
- Recent record-high mineral prices have led to a notable escalation of illegal mining in South America; some estimates suggest that about 51 percent of gold exported in recent years was illegal (IPE 2024).
- Peru is the largest exporter of illegal gold in the region; illegal gold production in 2025 reached levels similar to legal gold production (IPE 2025a).
- Illegal mining affects an estimated US$12 billion pipeline of mining projects (IPE 2025b), threatening private investment, growth, and Peru’s position as a reliable destination for mining investment.
- Illegal mining has broad repercussions: environmental damage, threats to citizen security, undermining the rule of law, impacts on labor markets and socioeconomic development, and risks of permanent entrenchment in the economy.

### Scope and recent trends in Peru
- Illegal mining has historically concentrated in gold; small and artisanal miners contribute about 19 percent of official gold production (MINEM 2025).
- In 2024, the share of Peru’s gold exports not accounted for by domestic production reached 48 percent of total gold exports, equivalent to 2.5 percent of GDP.
- Illegal copper is emerging: staff estimated illegal copper accounted for up to 5 percent of copper exports in 2024.
- Administrative indicators, 2020–2024:
  - Environmental complaints to OEFA almost tripled.
  - Illegal mining cases with public prosecutorial offices, including FEMA, doubled.
  - The value of suspicious transaction reports related to illegal mining received by SBS’s UIF-Perú averaged 1 percent of GDP each year.
- Between 2018 and 2024:
  - The median probability of illegal mining increased 7.8 pp, with 4 pp of that occurring between 2023 and 2024.
  - In 2024, 47 percent of districts were above 50 percent probability of illegal mining.
  - 56 percent of districts experienced an increase in probability; 59 percent of districts that were below 25 percent probability in 2018-2020 saw increases.
  - Over 80 percent of districts with legal mining production as reported by MINEM were above 50 percent probability of illegal mining.
  - The median probability of illegal mining increased 9.8 pp in districts with legal copper production (2018–2024).

### Links to organized crime and laundering
- High profits have incentivized organized crime involvement; illegal production and income are laundered by investing in the legal economy.
- Financial investigations with illegal mining as the predicate crime accounted for almost 60 percent of all investigations’ value over 2021-2025, compared to 8 percent for drug trafficking and 4 percent for tax crimes.
- New registrations of businesses for the processing, marketing, and export of gold tripled in 2020-2024 compared to 2015-2019 (IPE 2025a).
- Media and surveys indicate links to political corruption and expansion into other illegal activities (illegal forestry, coca cultivation, human trafficking, child labor, transnational organized crime).

### Legal and regulatory gaps
- Peruvian law distinguishes illegal miners (operating in violation of law) from informal miners (artisanal or small scale in non-prohibited areas); illegal mining is prosecuted under Legislative Decree 1100 and Penal Code articles 307 A through F as an environmental crime.
- The Comprehensive Mining Formalization Registry (REINFO) introduced December 2016 intended to incentivize formalization, but has created a prolonged grey zone:
  - Repeated deadline extensions: 2019, 2021, 2024, June 2025, and December 2025.
  - Weak oversight and lax control at processing plants have allowed illegal operators to shield themselves behind REINFO registrations, which exempt registered miners from criminal, civil, and administrative liability.
  - At end-2024, almost 80 percent of the existing 84,318 REINFO registrations had been suspended, while only about 2,200 miners had fully formalized and held a mining concession.
- The botched formalization process has distorted incentives, fostered public distrust toward artisanal miners, and made adoption of a new Artisanal and Small-Scale Mining Law (Ley MAPE) extremely contentious.

### Detection and measurement using remote sensing and machine learning
- Illegal mining is inherently hard to detect; available sources capture partial dimensions (environmental complaints, unlawful acquisition of heavy machinery and chemical inputs, suspicious financial transactions, violations of concessions, use of violence).
- Staff compiled a training set of 218 districts (109 districts with reported illegal mining matched to 109 similar districts without reported illegal mining) from multiple sources and trained a random forest model to predict annual, district-level illegal mining probability for 2018–2024 using satellite-derived and administrative covariates (including nitrogen dioxide levels, land cover, night-time lights, enhanced vegetation index, normalized difference vegetation index, aerosol optical depth, and legal mining activities).
- Model performance and validation:
  - The model explains approximately 71% of the out-of-sample variance.
  - Mean Absolute Error (MAE) of 0.23 and RMSE of 0.28 on a normalized [0,1] target range.
  - High precision at threshold probabilities of illegal mining greater or equal to 0.75.
  - A sample of high-probability district-year pairs were externally validated using an orchestrated AI-assisted workflow to curate publicly available supporting or contradicting evidence.
- Caveats: results rely on indirect detection methods and may partially capture informal mining; other economic activities can generate similar land use and pollution patterns; a single model was used across mountain and forest areas despite differing mining methods.

### Economic and operational impacts on formal mining
- Illegal miners invade existing concessions, damaging production sites, equipment, and infrastructure, sometimes leading to direct confrontations with employees.
- Reported firm-level effects include higher security costs, reduced incentives for exploration, delays in environmental impact evaluations, and modified investment plans to reduce exposure—weakening property rights and potentially affecting companies’ risk ratings.

### Empirical and administrative statistics (selected)
- Small and artisanal miners contribute about 19 percent of official gold production (MINEM 2025).
- Between 2001 and 2024, official gold production was recorded in 181 districts across 18 of 25 departments; official copper production recorded in 116 districts.
- SUNAT data: Over 2018-2022, the number of taxpayers registered in mining extraction grew by 78 percent; those involved in the wholesale of minerals and metals grew by 18 percent.
- Examples of criminal violence linked to illegal mining: in spring 2025, 13 miners were kidnapped and murdered in the province of Pataz during a state of emergency.

### Policy implications emphasized in the chapter
- Tackling illegal mining requires closing legal gaps and establishing clear pathways to formalization.
- Improve state capacity to combat illegal mining and adopt a supply-chain approach to enforcement.
- Implement supply-side policies to reduce incentives to engage in illegal mining.
- Strengthen oversight of formalization mechanisms (e.g., REINFO) and controls at processing plants to prevent legal cover for illegal production.

*Source: PERU — THE MACROECONOMIC THREAT OF ILLEGAL MINING, April 28, 2026.*

### 4.8 pp in districts with legal gold production. In 2024, 80 percent of districts with legal copper

### 4.8 pp in districts with legal gold production. In 2024, 80 percent of districts with legal copper

### D. The Economic and Social Impact of Illegal Mining
- Analytical approach
  - Year-to-year change in illegal mining for district i: ∆p_i,t = p_i,t − p_i,t−1.
  - Local projections estimated: y_i,t+h − y_i,t−1 = α_i + δ_t + β_h ∆p_i,t + X_i,t + ε_it.
  - Controls X_i,t include the logarithm of the per capita level of canon transfers, the lagged change of the outcome variable, and the lagged change of the illegal mining shock.
  - District and year fixed effects: α_i and δ_t. Standard errors clustered at the district level.
  - At horizons h = {0,1,2,3}, β_h measures the difference in outcomes after an illegal mining shock.
  - In impulse response charts, coefficients correspond to the impact of a one standard deviation increase in the probability of illegal mining (one SD = 11.9 p.p. increase in the probability of IM).

- Impact on formal mining investment
  - In the three years following an illegal mining shock, mining investment responds negatively: 0.11-0.24 pp decrease in response to an 11-12 pp increase in illegal mining probability.
  - Negative impact observed across nearly all components of mining investment.
  - Exploration, development, and equipment are especially impacted.
  - Exception: investment in processing plants weakly increases in the first two years; processing plants account for 26 percent of investment over 2018-2024.

- Short-run impacts on employment and financial activity
  - Districts experiencing an illegal mining shock exhibit higher levels of employment (up to 0.5 pp), concentrated in the informal sector.
  - Deposits and credit per capita rise slightly: up to 0.03 percent (deposits) and 0.02 percent (credit).
  - Increase in deposits concentrated in rural and municipal banks.
  - Point estimates are small; much illicit cash likely remains unrecorded or leaves local communities.
  - In remote communities, illegal mining can be an important source of employment and income.

- Impact on social development outcomes
  - Districts with illegal mining shocks have lower levels of household living standards, literacy rates, years of education, and secondary education rates.
  - Most negative impacts on development appear 1-2 years after the illegal mining shock.
  - Prosperity score defined as an index of principal components of the share of households with access to water, sewage, and electricity.

- Relationship with insecurity and crime
  - Model does not show a statistically significant causal link between illegal mining shocks and increases in crime rates within the same district.
  - Higher insecurity was widespread: districts at almost all levels of illegal mining probability experienced higher homicide and extortion rates in 2024 compared to 2018.
  - Possible explanations:
    - More severe underreporting of crimes in areas with illegal mining.
    - Structural factors (weak governance and rule of law) contributed to concurrent increases in illegal mining and insecurity.
    - Illegal mining indicator predicts production only; complex value chains mean spillovers and links to insecurity may occur far from production districts and are not captured by local projections.

### E. The Potential Macro-Criticality of Illegal Mining
- Projection of illegal mining based on metal prices
  - Based on copper and gold price projections between 2025-2031 (WEO, April 2026), illegal mining could increase 11 pp by 2031 relative to 2024 at the median.

- Persistence and structural drivers
  - Even if prices decline, illegal mining is unlikely to revert to previous levels due to high fixed costs, accumulated resources, and regulatory ambiguity from REINFO extensions facilitating capture of informal activities by illegal actors.

- Propagation channels that could erode growth potential
  - Lower investment: disruption and higher risks for legal mining reduces investment and jeopardizes Peru’s attractiveness for mining investment.
  - Higher uncertainty: illegal actors distort competition and infiltrate other segments, potentially increasing insecurity.
  - Lower productivity: undermines formal economy, discourages small producers from growing and workers from entering formal employment; worsens human capital via poorer social development outcomes.
  - Foregone fiscal revenue: illegal mining does not contribute to tax revenues, impairing ability to address social and investment needs.
  - Weak rule of law: increases private and public spending on security and enforcing property rights.
  - Weakened financial integrity: illicit proceeds generate ML/TF risks, are laundered into the formal economy or moved cross-border, challenging AML/CFT frameworks.

- Fiscal revenue estimate (reference)
  - SNMPE (2024) suggest 1.6 billion Soles (0.5 billion USD) per year based on 2022 data, though such estimates may reflect untaxed production in prohibited areas and better enforcement could generate larger government revenues through direct confiscation as one-offs.

- Growth impacts from reduced mining investment
  - Direct effect on mining investment alone could reduce GDP growth by up to 0.25 pp per year by 2030 under severe scenarios.
  - Scenario-based peak impacts in 2030 (percentage points):
    - Scenario 1 (lower range): -0.03
      - Based on an 11 pp increase in illegal mining (estimated increase in the median probability across districts based on current copper and gold price projections).
      - Calculation details: growth accounting framework with Cobb-Douglas production function augmented with a mining sector; mining capital elasticity = 0.8; steady-state mining sector growth = 4.3 percent; penalty applied to mining investment projections 2026-2030 using peak coefficients from local projections weighted by investment shares 2018-2024. Growth impact increases from -0.002 pp in 2026 to -0.03 in 2030.
    - Scenario 2 (middle range): -0.04
      - Scenario 2: all districts with greater than 50 percent probability of illegal mining in 2024 increase to 100 percent probability.
    - Scenario 3 (higher range): -0.05
      - Scenario 3: Scenario 2 plus all districts with legal copper and gold production increase to 100 percent probability.
    - Scenario 4 (entire pipeline): -0.25
      - Pipeline refers to US$12 billion worth of projects impacted by illegal mining (IPE 2025b), which could contribute at least 0.25 pp to GDP growth yearly between 2026-2030 if affected.

- Additional fiscal and security cost estimates
  - Public spending on security estimated at 0.5-0.7 percent of GDP.
  - Private spending on security estimated at 1.2-1.5 percent of GDP.

### F. A Coordinated Policy Response to Address Illegal Mining
- Closing legal gaps and formalization
  - REINFO extensions undermined formalization and provided legal cover for illegal miners.
  - MAPE Law needs to:
    - Provide a clear pathway to formalization for informal miners.
    - Clearly distinguish between illegal and informal miners.
    - Establish incentives to make formalization economically viable.
  - Clear and enforced property rights needed via functioning and updated cadasters and mining concession registers and an adequate miners’ census.

- Enhancing state capacity: security, enforcement, and supervision
  - Improve state capacity and governance outside main urban centers to reduce opportunities for illegality to spread.
  - Ensure adequate supervision of formal artisanal and small-scale mining to prevent infiltration by illegal actors.
  - Empower and coordinate specialized agencies: SUNAT, SBS, OEFA, the Public Prosecutor’s Office, and the PNP.
  - Strengthen investigative and enforcement capacity.
  - Complement with stronger AML/CFT supervision of high-risk financial institutions and designated non-financial businesses and professions in exposure areas (banks, cajas municipales, dealers in precious metals and stones).
  - Measures to trace and confiscate criminal proceeds by leveraging parallel financial investigations and strengthening cross-border cooperation.
  - Consider creation of a specialized investigative unit focused on asset tracing and illicit mining-related money laundering investigations with prosecutors, FIU, customs, and police.
  - Implement staff integrity vetting to mitigate corruption risks when increasing resources.

- Supply-chain approach and due diligence
  - Understand industrial organization and pursue actors along the supply chain to obstruct illegal mining.
  - Improve monitoring of sales of restricted inputs—particularly mercury, explosives, and machinery—to strengthen identification of illegal production.
  - Enhanced due diligence requirements and adequate supervision for traders, aggregators, refiners, exporters, and other higher-risk sectors to disrupt laundering of illegal production and proceeds.
  - Leverage the beneficial ownership framework for prioritized verification of entities active in mineral supply chains.

- Regional cooperation
  - Porous borders have facilitated spread of illegal mining and related operations.
  - Sustained and coordinated international efforts, including bilateral discussions and global initiatives promoting transparency in mineral products trade, are needed to exchange information and enforce border policies.

- Supply-side and development policies to reduce attractiveness of illegal mining
  - Invest in social development, particularly education, and deepen financial inclusion to reduce informality and increase productivity.
  - Revamp fiscal decentralization and redesign natural resource revenue-sharing formulas to improve public investment efficiency and raise local living standards.
  - Sectoral diversification policies to expand economic opportunities in mining communities and provide alternatives to illegality.

### Box 1. Legal Gaps in the Fight Against Illegal Mining (summary)
- January 20, 2026 legislative decree amendments to the Criminal Code:
  - Expanded crime of illegal mining to cover processing and other mining activity to criminalize unpermitted downstream processing.
  - Increased minimum sanction from 4 to 5 years of imprisonment and removed reduced-penalty negligence classification.
  - Added a Criminal Code article on illicit trafficking criminalizing storing, transporting, concealing, commercializing, acquiring, exporting, and possessing minerals originating from informal activities with a sanction of 6 to 9 years of imprisonment.
  - Strengthened sanction for illicit trafficking of chemical inputs and machinery from 3 to 6 years to 6 to 9 years of imprisonment.
  - Repealed provision that allowed prosecutors not to prosecute if a suspect voluntarily ceased illegal mining.
- Organized-crime framework and evidentiary burdens
  - Decree lists illegal mining crimes within organized-crime framework enabling special investigative techniques and specialized prosecution where criteria are met.
  - Earlier amendments to the definition of “organized crime” require proving a “complex, developed structure” and “greater operational capacity,” imposing increased and open-to-interpretation evidentiary burdens.
- Other criminal justice and procedural hurdles
  - Amendments to “efficient collaboration” provisions now prohibit cross-corroboration of multiple statements, shorten timelines, raise evidentiary standards (e.g., requiring independent corroboration), and introduce stricter revocation rules.
  - Shortening of statute of limitations for corruption offences (suspension of statute of limitations limited to one year for certain processes) hinders complex corruption and organized crime investigations that rely on cross-border cooperation and lengthy financial investigations.

*Prepared by IMF staff based on the provided content.*

---


_Source: https://www.imf.org/-/media/files/publications/cr/2026/english/1perea2026002.pdf_