Costa Rica assails big risks taken by small miners

ABANGARES, Costa Rica (Reuters) - Costa Rica is pushing to legalize hundreds of small-scale miners who scrape out tiny amounts of gold from abandoned mine shafts using dangerous and polluting techniques.

Lured by record prices for gold, which topped $1,200 an ounce this year, some 600 informal miners around the town of Abangares in hilly northern Costa Rica use toxic mercury to extract gold from rocks chipped out of narrow tunnels.

The environment ministry estimates the miners produce around 500 ounces of 14 carat gold a month and sell it to local dealers at cut rates below the market, around $476 an ounce.

Informal mining is practiced in many parts of the world but Costa Rica is as the forefront of a trend to regulate the miners by urging them to form cooperatives, apply for official mining concessions with environmental permits and pay taxes.

The government of the lushly forested Central American nation, which touts its strict environmental rules, is worried unchecked informal miners are dumping dangerous chemicals into water supplies.

"This is a social problem caused by unemployment in the tourism sector," said Jose Castro, head of mining at the Environment Ministry. The economic downturn has hit the tourism industry at beaches and nature reserves in the region.

"What we're trying to do is organize (the miners) and monitor their activities," Castro said.

Top mining officials toured the area around Abangares this month and want to push through the tougher regulations before President Oscar Arias' term ends in May 2010.

The government campaign has made headway, with about half of the miners already organized into officially recognized cooperatives and one in the process of applying for a formal concession.

PROFIT OUTWEIGHS RISK

Better known for its exports of bananas and high-quality coffee, Costa Rica's does not have the mineral resources of other Latin American countries. Metallic mining comprises less than 1 percent of the gross domestic product.

There are no major operational gold mines and the only big project, Las Crucitas, which is being built by Canada's Infinito Gold Ltd, has been suspended pending a supreme court ruling on whether it is environmentally safe.

But with gold prices soaring, informal miners are willing to take big risks to scrape a living out of deep caves, some a century old, abandoned by international mining companies.

Miners have died when weakly supported tunnels collapsed during rainy season. And they regularly handle mercury with their bare hands, even though the liquid metal can cause birth defects, miscarriages, nerve damage and renal failure.

"There is no other work. You can earn more here than in any kind of company," Jose Campos, a 29-year-old miner said.

(Editing by Lisa Shumaker)