Background and Enforcement Measures
On October 7, 2025, the Andean Community ruled that Peru has failed to meet its obligations to combat illegal gold mining and mercury trafficking in the Amazon basin. The ruling followed a complaint by Indigenous and river-basin communities in the Nanay region, alleging pervasive environmental harm and state inaction. The bloc ordered Lima to enact urgent reforms: seize dredges and unauthorized mining equipment, halt extensions of informal miner registries that critics say shield illicit operators, and submit a compliance plan within 20 working days.
LTO Implications and Sector Risk
The decision signals a serious escalation of License to Operate (LTO) risk for mining companies in Peru. The ruling underlines that state regulatory failure is now a tangible source of project-risk, not just local protest. A formal finding of non-compliance by a regional trade body heightens reputational exposure, may trigger trade or sanction threats, and raises questions about the enforceability of mining licences and environmental clearances in affected territories. Companies operating in Peru must now factor in not only local community risk, but increasingly regional-governance risk linked to cross-border mandates and indigenous rights.
Outlook and Strategic Response
For Peru’s mining sector, the ruling presents both a challenge and a strategic inflection point. On the one hand, firms may face heightened scrutiny, enforcement actions and potential licence re-review. On the other, the decision might spur regulatory reform and strengthen long-term LTO foundations if acted upon credibly. Stakeholder strategy must now integrate deeper environmental due diligence, traceability of supply chains (especially for gold), and closer collaboration with Indigenous and river-basin communities. In this new context, legitimacy is no longer just local—it is regional.