Toromocho: Chinese appear to be trying hard

18 January 2016

Chinese companies are relatively new to the extractives sector in Latin America, and Peru is a prime focus for these. At Morococha, in the department of Junín, the idea of creating a ‘new town’ had been shelved when Chinalco took over the Toromocho project in 2007. The idea was swiftly resurrected, and today it appears that the majority of residents have chosen to move to the town of over a thousand rent-free houses and five schools. Unlike their predecessors at Morococha, houses have indoor bathrooms and running water. The town represents an investment of more than $50 million.

What is lacking, of course, is work, and that is the principal cause of dissatisfaction, an issue that goes far beyond the capacity of the company to resolve. There is also some dissatisfaction about the conditions of shelter and security provided by the new housing and resistance to government pressures to make all families move so that children can attend the new schools. According to Wikipedia, this dissatisfaction has led to the formation of the Frente Amplio de Defensa y Desarrollo de los Intereses del Distrito de Morococha.

By and large, the Chinese effort to deal with the local situation is quite impressive. Cynthia Sanborn, an expert on Peru-China relations as well as on the extractives sector at the Universidad del Pacífico in Lima, finds the Chinese impressive in their desire to learn: “They're very aware that their companies' behaviour is being watched by the rest of the world. Latin America is largely democracies with demanding societies and free press, and I've been struck by how concerned they are to play by the rules and abide by the rules and to comply with the kind of regulations we have on the books".

Overall, Chinalco has invested more than $3 billion on developing Toromocho and expects the mine to be active for at least 35 years. But since the price of copper has dropped significantly, some are questioning the initial investment. In the two years since the operation began, the mine has not been profitable due to low copper prices and because the plant is not yet running at full capacity. According to Víctor Astete, the geology chief at Chinalco, “next year, we hope to at least cover the running costs".

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