The kidnapping and execution of 13 miners at the Poderosa gold mine in Pataz, Peru in May 2025 was not only a brutal tragedy. It was also the latest in a pattern of escalating violence across the Andes, as organised crime grows bolder across countries like Ecuador and Peru and gangs expand from extortion and drug trafficking to seeking control of productive assets such as gold mines. 

Industry sources are growing increasingly concerned about how this surge in criminal activity could reshape the investment landscape in the region. The convergence of rising violence and growing security spending has created a volatile investment environment, posing significant risks to both local communities and international investors in the mining industry, which has historically driven growth throughout the Andean countries.  

Regional governments are becoming more alert to the threat but have not responded uniformly. Ecuador, for one, has announced a centralised security crackdown while the director of a Peruvian mining company accused the Peruvian government of “talking a good game” while “nothing happens.”  

In this volatile environment, investors should take a proactive approach to finding the best on-the-ground intelligence to understand local dynamics, to separate rhetoric from reality and prepare appropriately, whether that means shifting resources from one sector or region to another, or even in terms of deciding to increase spending on personal and physical security. 

Digging – and dying – for gold

Peru, the world’s sixth-largest gold producer and the largest in Latin America, is experiencing a surge in violence tied to illegal mining. The director of a Peruvian mining company shared that Poderosa has seen “22 areas taken over by illegal miners,” leading to “36 deaths and the theft of over a thousand truckloads of gold.” 

While the government has announced a 30-day mining suspension in Pataz, alongside a 12-hour curfew and a heightened military presence, the same executive alleged that “not a single criminal has been arrested,” blaming this on corruption in the national and regional governments, calling them “compromised” and “completely rotten.” 

Peru’s own Financial Intelligence Unit observed that illegal gold mining accounted for USD 9 billion, or 60 percent of the country’s total laundered assets between 2014 to 2024, even exceeding drug trafficking. Violent crime has shot up over the same period, with the country notching a record 35.9 percent increase in homicides in 2024 year-on-year. 

Neighbouring Ecuador has faced a similar crisis since 2018. As an advisor to the government noted, the country “is surrounded by cocaine-producing countries and has been a transit country for many years.”  The country now has one of the highest homicide rates in the region, punctuated by high-profile incidents such as political assassinations, attacks on a television studio and prison massacres.  

Illegal gold mining has also boomed in Ecuador, with activists alleging that the sector has grown by 300 percent from 2015. The Los Lobos gang, which is affiliated with the Jalisco cartel in Mexico, has now apparently expanded its illegal mining operations across seven provinces, including Imbabura, Napo, Orellana, Sucumbiós, Azuay and Zamora Chinchipe, and is alleged to launder over USD 40 million per year from mining activities. 

These incidents have prompted President Daniel Noboa to declare that Ecuador is in the midst of an “internal armed conflict” that requires a more militarised response through “Plan Fénix,” which intends to provide a comprehensive security solution, including the centralisation of intelligence-gathering functions under a new agency answering only to the office of the president and which will set security strategy and policies for relevant agencies. As part of this plan, Ecuador has already announced the acquisition of USD 64 million of new assault rifles from the United States, among other policy changes.   

Investment – the canary in the gold mine

The insecurity in Peru and Ecuador has a direct impact on mining investment. Poderosa reported lower production and profits after a one-third increase in operating costs driven by higher security and surveillance expenses. Buenaventura, Peru’s largest miner, remains unaffected for now. However, the Peruvian mining ministry reported a decline in copper production of 0.7 percent from 2023 to 2024, which could be a leading indicator amid a lack of new project announcements. A Peruvian executive for a global London-listed miner worried that “everything happening in Pataz negatively impacts the entire country – not just in mining but for any investor.”  

The same pressures are present in Ecuador, where the mining industry is less developed. Ecuadorian Mining Chamber President María Eulalia Silva noted that “there has been an increase in the cost of production due to security issues” but expressed hope that investment would continue to flow into the next wave of major mines, which include Dundee Precious Metals’ Loma Larga and SolGold’s Cascabel, among other key development projects with international operators. A local Ecuadorian lawyer agreed that the security situation was “complicated” but noted that some projects have continued to move forward. 

By contrast, Argentina and Chile, fellow Andean economies, have so far been spared from the worst of these problems due to their greater distance from the hubs of cocaine production in Peru and Colombia. They continue to attract foreign direct investment into their mining sectors, demonstrating the concrete benefits that can come from greater security. Chile, for example, has just seen state-owned Codelco agree a USD 900 million partnership with Rio Tinto to develop the Maricunga lithium project. Argentina, for another, is poised to benefit from major copper projects that could contribute approximately USD 47 billion despite its own chequered macroeconomic history. 

However, the threat of organised crime now looms over even these stable jurisdictions. Chile marked a record amount of cocaine and cocaine precursor seizures in 2022 and 61.2 tonnes of illicit substances were confiscated by the authorities between 2023 and 2024, mainly in the northern provinces of Antofagasta and Tarapacá, due to their proximity to the trafficking hotspots of Peru and Bolivia. 

Violence has increased in tandem, with the homicide rate climbing from 2.5 per 100,000 in 2012 to 6.0 per 100,000 by 2024. As a result, public perceptions of security have deteriorated significantly, with 86 percent of Santiago residents reporting that they feel less safe. The CEO of a major copper miner in Chile agreed that security had become an issue, with his operations experiencing rising copper theft, “ranging from break-ins at storage sites for inventoried copper to armed trucks entering remote locations.”  

Feeling secure?

In response to these pressures, governments and businesses in Peru and Ecuador are increasing their spending on defence and security, implying likely growth in those sectors. The Peruvian government increased “order and security” spending by 13 percent in the 2024 budget, with funds explicitly designated for security infrastructure and vehicle and equipment procurement.  

The Ecuadorian government, as noted above, has already ordered new security equipment from the United States as part of a comprehensive security build-up and passed a specific increase in the Value Added Tax from 12 percent to 15 percent to finance “additional commitments and expenses in terms of security and defence.” 

Increased security spending promises to yield benefits for providers. While military spending in Latin America varies significantly, the growing opportunity means that suppliers with a better local engagement strategy may yet gain ground, with a defence consultant noting that the procurement decisions are ultimately “all about politics...who has visited the country? How many times?” 

Looking to the future

As governments invest in equipment and build up their capabilities, they will likely prioritise enforcement in key urban centres ahead of rural areas, which are more difficult to monitor and secure. If these crackdowns and other security reforms are successful, stability is likely to return first to major cities like Lima and Quito. This would benefit urban-focused industries such as real estate and IT services, rather than more vulnerable sectors like mining. 

For investors and companies with exposure to the Andean region, this means that intelligence has shifted from a peripheral concern to a core part of strategy and operations. The violence observed in the region affects some provinces in some countries more than others, implying that some mining assets and companies will be hit harder than others, forcing them to pay higher security costs or prepare for hits to production.  

While governments work to contain the spread of organised crime, the private sector must adapt in parallel. Companies that fail to grasp and respond to the shifting security landscape risk becoming increasingly vulnerable in a region where criminal groups are rapidly expanding both their economic reach and territorial control. 

Mining companies operating in the Andes should deepen their understanding of local security dynamics and government responses. This could involve monitoring community sentiment for early signs of criminal encroachment or engaging with security services to advocate for more intensive coverage in sensitive areas.  

Given how differently organised crime and illegal mining are affecting different provinces and countries across the Andes, a one-size-fits-all approach will not suffice. As they look to the future, companies must quickly come to terms with the nuances of each locality they operate in, potentially by commissioning regular briefings from sources on the ground that encompass various parties – local communities, civil society, government, security forces and even potential competitors. The gold remains up in the Andes - but ensuring it is extracted by legitimate operators, for the benefit of all, requires a much more informed and agile approach.