Light and shade in the coming copper boom

24 June 2018

Peru is riding a wave of investment interest in its copper sector. The output prediction is 4.8 million tons a year by 2021, double the 2017 level. Copper projects elsewhere in the world are faltering, given rising costs and the negative impact on Chinese demand as the US-China trade war builds.

Peru contains the only two copper projects over 200,000 tonnes a year predicted to come on stream worldwide over the next five years: Michiquillay in Cajamarca and Quellaveco in Moquegua. Both projects have histories of conflict that will have a bearing on their outcomes.

Michiquillay was acquired for development in 2007 by Anglo-American, but in 2014 the company relinquished it after the major dip in the world market. But it can only be supposed that the history of conflict played a part in this decision. Anglo maintains that conflicts were not the main reason for withdrawing, but they did stimulate a re-think and new company policies. Anglo also owns the rights to Quellaveco, and now that Mitsubishi has agreed to take a stake in the project, it is all set to take development forward. The learning from Michiquillay should now be put to good use.

Michiquillay, however, is now in the hands of Southern, owned by Grupo México. Here the runes are hardly favourable and much care will be needed by all stakeholders. The context is Cajamarca, home to the unhappy Conga mining project, and Michiquillay is not far away from Conga. Southern has had a long history of conflictive labour relations, as our readers will know, with major problems at its other two large projects (Cuajone and Toquepala in the south of the country) and a long history of environmental problems at its Ilo smelter. Its other major project, Tía María (in Arequipa), is stalled for lack of agreement with nearby communities.

Southern plans to start production at Michiquillay in 2022, earlier than expected, but it will first need to establish trust among the communities in developing a project with an unhappy past.

Many more modest projects are in difficulties at present over community relations, and work is urgently needed to support innovative and constructive relations among stakeholders.

It is encouraging to see the successful completion of a three-month communications project in the so-called ‘mining corridor’ in southern Peru. Four workshops have now been held, three in Cuzco and one in Abancay, organised by a coalition of eight Peruvian NGOs working in the mining sector. 

But more initiatives of this sort are needed to bring all stakeholders together in a constructive dialogue.

Environmental concerns are the main cause of most conflicts, though often expressed through their effects on people’s livelihoods. The government’s most recent initiative has been to give a larger role to the mining ministry (Minem), reducing still further the powers of the environment ministry (Minam). This is hardly helpful and has already set alarm bells ringing.

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    The Peru Support Group exists to promote social inclusion, sustainable development and the observance of human rights in Peru. To that end the PSG highlights shortcomings in observance of established norms, whether international or local in nature, in its research, advocacy and publications. In so doing, it underscores the relationships that exist within the political system, how institutions work, and the effectiveness of policies that aim to reduce poverty and inequality within the context of sustainable development.

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