So ya wanna get rich - part 2

Informality and the high cost of envy

A problem common to the mining industry throughout the developing world is the issue of informal miners. When you read about child workers in African cobalt/diamond/lithium mines, the reference is to informal miners and not to modern mining companies. I know of more than one gold mine in Peru which had been closed only to have informal miners break the concrete bulkheads and start mining in the old stopes. They always mined in pairs; one to mine and the other with a gun to ensure no one raided them. Informal miners use the most primitive methods of mining to scratch out a living with no care or attention given to their safety or health. Hard hats and steel-toed boots are replaced by ball caps and flip flops. Adequate ventilation and protective masks are replaced with pots of mercury amalgamated gold cooking on kitchen stoves while the kids play in the same room. No one keeps statistics on how many are killed while mining or from the effects of breathing mercury and other heavy metals from horrible practices, but it must be a large number.

From a policy perspective, the problem with informal mining is that it provides employment for huge numbers of people. Modern mining, while safer and more healthy, cannot absorb all the displaced informal miners and that is a serious problem for developing world governments.

At Igor, we were not immune to the problem of informal miners. They wanted our approval to mine in areas in which we were not working. This seems a reasonable request and we were sympathetic to entering into some type of agreement. However, the Peruvian government was not willing to cover the liability presented by the informal miners.

• Who was responsible when someone was killed?

• Who was responsible if cyanide was dumped into a local water course?

• Who was responsible if the gold ended up in money laundering operations?

We were not willing to bear that liability and surprisingly, neither was the government. I say surprisingly because they were de facto taking the liability for every one of the tens of thousands of informal miners that were already working in Peru. We continually chased informal miners off the property.

On one occasion, while negotiating with a delegation of informal miners in the local community hall, three women from the community rushed into the room and started whipping us with ¾ inch plastic tubes filled with sand and yes, it hurt. We had two army commandos with side arms in our party and it was with difficulty that they were persuaded not to draw their guns as the blows descended. To call the event surreal is to misrepresent surreal. I suppose the intention of the informal miners was to provoke violence that would result in death or injury and the loss of our exploration permit. No one has ever reliably accused informal miners of being responsible citizens.

For the first twelve months our activity on the concession was limited to taking samples, doing geophysical surveys and drilling relatively shallow diamond core holes. In response, we were regaled daily from the local, church-sponsored radio station with de rigueur calls for our expulsion due to “dirty gold mining”. Every two weeks brought another threat of a kidnapping. To prevent such an event, we invited the equivalent of Peru’s Seal Team 6 to use our camp as a high-altitude training facility. The commandos were rotated through the four-week training, and we provided room, board and a very cool sweatpants ensemble. It was impressive to watch the commandos set off at 6 am for a fifteen kilometer run from 3,000 meters above sea level to 3,800 meters above sea level, looping through the local communities. The message was received; “the mining camp is protected.”

On one memorable occasion, I attended services at the local Baptist church accompanied by a squad of four of the commandos in their sweat gear finery and wearing the darkest of dark sunglasses. Against my protests, they felt it necessary to “protect me”. When called upon by the pastor for “a few words from our gringo brother” I got a laugh by saying that I felt like the apostle Paul in a Roman prison. I think we set a record for Peru’s lowest cost, most effective private security system.

Like most small public mining companies, we had to continually raise funds to carry on our work and often the funds were exhausted before the bills were paid. Small exploration companies have the most long-suffering service providers in the world. On one such occasion, we had to cut back on the security and that opened the door to our ever-vigilant antagonists. That is when I received the phone call.

The kidnapping was well organized and clearly not orchestrated by local actors. Three hundred comuneros from the coca-producing village showed up at the camp at four am, cut the communications cable and rounded up the five geologists and one policeman who were in the camp. Guns were produced but were limited to the three or four leaders and the geologists later told me that they never considered them a threat. The “riot act” which enumerated our sins was read and then everyone was force-marched the thirty kilometers down the mountain to the offended village. These were trail kilometers - the straight line between camp and community meaning that the downward descent was quite steep.

One of the geologists was over six feet tall and could easily out-stride the much shorter comuneros. He subsequently told me that he would purposely build up a large lead over the others just to force them to run down the path to catch up and hit him with their sand-filled plastic pipes. At one point the large group stopped in the provincial capital, called out the policeman who led the local constabulary and pistol whipped him in the public square. The charges against him were never fully explained to me and I suppose the event was mostly performative to demonstrate “strength”.

The phone call I received had been delivered by our head geologist who had spent the night in a local community and returned to the camp just in time to see the last of the crowd set off down the mountain. He was instructed to try to stay in sight of the mob while professional help was organized. This involved me and our security consultant flying to the city of Trujillo to negotiate with local police for a rescue attempt. Remember that at this time we had no knowledge of who was behind the kidnapping or where they were headed. Worse, we knew of the pistol whipping of the police commander but could only speculate about what violence was being done to the employees. The uncertainty was a real killer. As a result, I had a splitting headache on the flight up and remember thinking,

“Which person from history should I emulate to bring this to a quick resolution?”

It was the headache that pointed me to Ulysses Grant. On the morning of the unconditional surrender of the Confederate forces at Appomattox Court House, Grant suffered a migraine headache that almost left him in bed. When he received Robert E Lee’s note offering a meeting, his headache disappeared. Three years earlier, at the conclusion of the first day’s fighting at the Battle of Shiloh, Grant, smoking a cigar, sat under a peach tree denuded of foliage by the fighting. Tecumseh Sherman walked over to where Grant was sitting, “on ground that was so thick with the dead that I might never step on the grass” and suggested that it had been an awful day.

“Yep. Get ‘em tomorrow though.”

I wanted to be like Grant and determined that when my employees were safe, the bastards that did this would pay. Thus began my education about justice in the developing world. In fact, at one point our corporate lawyer asked me why I was so determined to press the issue when this was not “a real kidnapping”. Apparently in Peru you need to be stored in a shallow grave for a couple of weeks before it is “a real kidnapping”.

It is often said that personnel is policy and that was never so true as on the Saturday we recovered our kidnapped employees. Our complaint was first heard by a police colonel who manned the receiving counter of the police station. Within minutes we were in the office of the Police General who was responsible for all policing in north-central Peru. This would never have happened had I been alone. It happened because our secret weapon was security consultant. He was a young lawyer who had been the head of Peru’s anti-drug and anti-terrorist agencies - the Peruvian equivalent to the CIA. His ability to bluff the police with the tone of his voice and the names he dropped was absolutely epic. I spent the whole day thinking,

“Wow! How did he do that?”

By the time we were ushered into the General’s office, he had contacted a military friend who was the bodyguard of the Minister of the Interior – the police general’s boss. His friend was instructed to inform the Minister of the kidnapping at the earliest opportunity and that the company was currently negotiating for a police rescue team to intercept the kidnappers and recover the geologists and policeman. I thought that our ace in the hole was the presence of a kidnapped policeman. This turned out to be an irrelevant detail.

For the next two hours I asked for police support and was met with a request for decorating tips. We had decided that I would pretend that I couldn’t speak Spanish and allow the consultant to do all the talking. He would then translate for me when a decision was to be made. This caused a frustrating delay but turned out to be the right strategy. At one point my consultant, with some exasperation, said,

“It is a tv set! Why not just buy it?”

I had to admit that we didn’t have any money, and I was angry enough with this “public servant” that I wasn’t going to give up without a fight. It was at about this time that the General’s cell phone rang, and his demeanor changed completely. My consultant accurately predicted that his friend had passed on the message and the Minister was calling to see how the “mining affair” was going.

“Inmediatemente, Senora!”

I knew we had him. We had to agree to pay the overtime costs of the operation and with that, a team of fifteen police were put together and were soon on their way. By this time the chief geologist had called to tell us to which village the kidnappers were headed and gave an estimate of when they would arrive. We calculated that the police would arrive shortly afterward, and a quick plan was organized that would not endanger the geologists but ensure the comuneros knew that their best option was to give up their hostages. When the police set off, I noted that my headache had ended.

By the time the hostages arrived at the village, they were good friends with their captors and had arranged that they would be freed upon arrival. As they were shaking hands and saying goodbye in the village square, the wives of the kidnappers descended upon them and started beating their husbands saying that under no circumstances would the geologists be released. Into this melee drove the police truck with 15 armed operatives raising the tension considerably. One of our employees had the presence of mind to tell the lead policeman to retreat to the village entrance and only return if the hostages didn’t show up in 15 minutes. Within 15 minutes they were loaded onto the police truck and by six p.m. they on their way towards us.

I suppose that I should consider this event to have been one of the worst things to happen in my life. In fact, it was thrilling and, other than the headache, I loved every moment of it. That is easy for me to say because I wasn’t kidnapped. Strangely, the geologists also reported that the outing was a net plus for their resumes, and, other than the dramatic ending with the kidnappers’ wives, they never felt at any significant risk. We had several laughs (and beers) that evening contemplating the conversations the kidnappers had with their wives after the hostages walked out of town to their freedom.

There is a funny note of karma to the corrupt behaviour of the police general. The plaudits he received following the successful recovery of the hostages were short lived. Within a week of the event, the laudatory headlines in the local newspaper turned to accusations of corruption when the overtime wages were not paid. The affected police units accused their general of taking the money from the mining company but not passing it along. I received several angry phone calls from the General who refused to pay the overtime until I came up with the money which I assured him was “on its way”. His phone calls stopped when my consultant took one of the calls and read him the “riot act” for ransoming the overtime charges to shake down a foreign corporation. He completely flipped the script, and I never heard from the General again. At the end of all things, the police were paid their overtime, and the General lost a promotion because of the publicity. I laughed out loud when I heard of his misfortune.

Next up… Part 3 - Not all that glitters is gold