Social conflicts besetting mining investment in Peru

By Monica Martinez

Lima, May 16 (EFE).- Mining investments in Peru, which have amounted to $60 billion over the past 10 years, look to be in trouble in the near future due to social conflicts surrounding several mines and the upcoming start of operations at the latest copper mining megaproject, various experts say.

A large portion of Peru has significant reserves of copper, silver, gold and zinc, among other metals, which contribute 10 percent to the country’s GDP, and 60 percent of the country’s exports are primary materials.

However, after years of bonanza and a steady stream of projects, the present situation seems to be limiting such investments.

“There has been a dynamic of always having a big investment in the works. The bad thing is that in recent years we’ve gotten to the Quellaveco (copper project) and (that situation) is already ending,” the president of the National Mining, Petroleum and Energy Society (SNMPE), Raul Jacob, told EFE.

“In the second part of this year (Quellaveco) should begin operations, and after that we don’t have any projects,” he added, regarding the enormous British-owned Anglo American copper mine located in the Moquegua region, which has received some $5.3 billion in investment.

During the first two months of this year, investment in mining rose to $603 million, 5 percent more than during the same period in 2021, but 30 percent of those funds went into Quellaveco.

The top union representative said that they have “great hopes” that “the appropriate conditions will be created so that mining projects can continue moving forward.”

However, “Having this type of production line where a big project came in and a mining operation was created, then another one came in, that’s been lost,” he said.

Jacob, who is also the vice president of finance for the Southern Copper mining firm, said that the basic element “is not so much the lack of legal security, because there’s a certain climate of stability there, but rather it’s the tensions and disputes.”

Of the 209 social conflicts reported last April by the Ombudsman’s Office, more than 63 percent were linked to complaints about environmental damage resulting from extractive activities like mining, among others.

Southern Copper runs the Tia Maria project that has been on hold since 2011 due to conflicts with the nearby communities and recently its copper operations were also paralyzed in Cuajone due to the blockade of the water reservoir.

In addition, a little less than a month ago another big copper mine operated by China’s MMG was paralyzed by social protests in Las Bambas, in the Apurimac region in Peru’s southern mountains.

“For the country, each day that Las Bambas isn’t operating means we’re not receiving $8.5 million in exports and a little over five million soles ($1.3 million) in taxes per day,” the president of the SNMPE said.

Jacob noted that this climate of confrontation has to be handled in a parallel fashion at the national level to prevent “conflicts from escalating to a level where the police need to intervene” and so that “the resources that have already been created (by mining) can be converted into benefits” for the communities.

Of the approximately 40 billion soles ($10.5 billion) generated by mining in taxes and royalties over the past decade, the regions that have benefited and the government have spent 60 percent, said Jacob, but just a quarter of those funds were allocated to healthcare, education and cleaning up the residues and environmental damage from the mining.

This deficient level of spending in the metals-producing regions creates “huge frustration” and “great resentment because people know that there are resources, but they’re not seeing their lives improve,” Jose Augusto Palma, the president of the 14th International Gold, Silver and Copper Symposium, being held in Lima this week, told EFE.

However, Palma added that “the demands do not justify violence” and “what has happened at several mining projects is unjustifiable because nobody has the right to commit a violent act.”

Palma, who is also the vice president for legal and corporate affairs at the Hochschild gold mining company, said that the sector has to work, along with the state, to “reduce the social tensions and conflict and streamline the (awarding of) permits that mining is demanding today.”

He emphasized that these efforts are imperative, given that in the coming years there’s going to be “a reduction in private investment because, after Quellaveco, no megaproject of this kind is currently in sight.”