'The Curse of Inca Gold': Mining Peru's Wealth

A new PBS Frontline documentary, The Curse of Inca Gold, examines how an American company won the contract to operate Peru's Yanococha Mine, the richest gold mine in the world. Madeleine Brand talks with Lowell Bergman, the investigative reporter who covered the story for Frontline and The New York Times.

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NOAH ADAMS, host:

This is DAY TO DAY. I'm Noah Adams.

In Peru, the world's most productive gold mine sprawls over the Andean Mountains 13,000 feet high. The extraction of more than $7 billion worth of gold from the mine has its costs, both for the local people and for the foreign companies operating there. In a documentary airing tonight, Frontline/World and The New York Times are looking at these costs. DAY TO DAY's Madeleine Brand talked to reporter Lowell Bergman about the investigation.

Mr. LOWELL BERGMAN (Reporter): We get an inside look at what goes on, both on the sort of political and business side of a multinational company operating overseas, particularly in what's known as the extractive industries, and at the same time, we also see what the effect is of some of the things that we take for granted on the environment and on the local communities around the world. Is it worth doing this kind of mining? Is there a real purpose behind it? And if there is, how can you best control it? How can you best look at it in a rational way?

MADELEINE BRAND reporting:

And this is something that's a luxury product. It's not something like coal, which is more of a necessity.

Mr. BERGMAN: They call it an aspirational commodity, that is, it has no--80 percent of the gold that's mined in the world goes into primarily the Indian and Chinese jewelry market. The price of it is maintained basically artificially by the US government, the IMF and some other holders of large amounts of bullion. But people are drawn to gold culturally; people are drawn to it out of a sense of insecurity about regular currency. That seems to be its value. As you said, it's not like coal, it's not like copper, it's not like a lot of the other commodities around that actually have a utility.

BRAND: You traveled to the Andes mountains and went to the Yanacocha mine. Describe it. What does it look like there?

Mr. BERGMAN: What's amazing is that as far as they eye can see in some parts of the mine is that they've moved the tops of the mountains. It looks like a giant development, let's say a suburb of Los Angeles where they're putting in a subdivision, but you're 13,000 feet up in the Andes. This is an open-pit mine--it stretches over 60 square miles--where what they do is they move, they say, half a million tons a day, first with blasting and then with shovels and giant dump trucks, and they pile the ore that they are blasting on top of drip irrigation lines, and they pump a solution of cyanide through that. And that's the way they get what's called microscopic gold to precipitate out of the ore.

BRAND: And you mentioned cyanide. That sounds dangerous, and is it?

Mr. BERGMAN: It is potentially very, very dangerous. They say that the Yanacocha mine is the most advanced in terms of controlling the cyanide, controlling it from, if you will, leaching out into the community or into the streams and so forth. Just the scale of it has interfered with the lifestyle of the local campesinos, and in 2000--one of the byproducts of this process is not just the cyanide going together with the gold, but it also unleashes mercury and arsenic and other potentially dangerous toxic chemicals--and a truck with a bunch of this mercury on it dumped, by accident, 300 or so pounds of it in a village nearby. And they wound up creating sort of a public health disaster.

BRAND: And this mine is run by an American company, Newmont.

Mr. BERGMAN: Right, Newmont of Denver, in partnership with a Peruvian company.

BRAND: And how did that come to be? How did this American company gain control of this very lucrative mine in a foreign country?

Mr. BERGMAN: In the early '90s, the French government decided to privatize part of their holdings in this mine and other mines that they owned around the world. Newmont and its Peruvian partner used that move as a way to go into Peru's courts, who in turn literally confiscated, if you will, the French interest in the mine and allowed them to buy it at a bargain price. So Newmont wound up being the majority shareholder as well as the manager of the mine.

Because it went into the Peruvian judiciary, there was a lot of maneuvering that went on to influence the court, and at that time in Peru, the hidden power, if you will, broker in the country was a man named Vladimiro Montesinos, and we actually have footage, in this case an audiotape, of Montesinos meeting with an executive of Newmont Mining and discussing the case. And then later we have him discussing it with the judge who will cast the deciding vote in the Peruvian Supreme Court. And of course, the Americans win; the French lose.

No one's ever been prosecuted for any activity related to this. Obviously there have been a lot of questions raised, both by the French and in Peru, but it's a window, if you will, into the way business has to be done, in some cases, people with the company would say, when you're involved in a developing country.

BRAND: The man that met with Montesinos, the executive at Newmont, you interview, and you say he's--this is the first time he has been interviewed.

Mr. BERGMAN: His name is Larry Kurlander. He was the number three executive of the company until early 2002, I believe, and he is the man who goes in to see Montesinos, as he says, because everyone told him he was the guy to see in order to, in a sense, get a fair hearing in the Supreme Court. It's--he feels uncomfortable even talking about it. He's a lawyer; he's a former prosecutor.

(Soundbite of interview)

Mr. LARRY KURLANDER (Former Newmont Mining Executive): It is what it is, and the fact that you're in a country and you're forced to deal with a guy like this, it's a terrible thing.

Mr. BERGMAN: Kurlander says that he started to realize that the company, which had been saying publicly that it operates under EPA standards and any strict international standard around the world--and this company is in every place from Indonesia to Peru to Uzbekistan to Nevada--that he realized they weren't doing that.

(Soundbite of interview)

Mr. KURLANDER: There is a social license that in my opinion is far more important than the government license, because the social license is granted by the people of the community. And without building a trust with the people who live there and work there, and who've lived there for centuries, you're going to have trouble, and indeed they have.

BRAND: And there's a long history of gold mining in Peru. It's associated with colonialism, and did you make that link?

Mr. BERGMAN: Well, the irony of the Yanacocha mine is that it's an area called Cajamarca, high up in the Andes, one of the poorest regions of Peru. But it's also the place, in 1534, where Pizarro came and met the Inca Emperor Atahualpa, and it's that story, Atahualpa being taken hostage by Pizarro, Atahualpa saying `I'll fill this room'--that he was being held in--`with gold,' as high as he could reach along the wall. His followers then delivered the gold. He's supposed to be released. A Jesuit priest apparently said, `No, you can't do that unless he converts.' He wouldn't convert, so they kill him and they keep the gold.

And to people in the local community, there's a moral to that story today, foreigners coming, foreigners taking, in a sense, their gold, and leaving with it. And we all know the volatile history of Peru over the last particularly 20, 30 years, and it's still seething there in Cajamarca.

ADAMS: Reporter Lowell Bergman. The documentary "The Curse of Inca Gold" airs tonight on PBS stations around the country. That interview by DAY TO DAY's Madeleine Brand.

NPR's DAY TO DAY continues. I'm Noah Adams.

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