President Alejandro Toledo’s anticipated visit to Britain in March to attend a Foreign Office conference on extractive industries once again raises the issue of mining and how the benefits are distributed. The UK is Peru’s largest single source of foreign investment, and that investment is overwhelmingly in the mining sector.
It is worth remembering a little of the history of mining in Peru. The country became the centre of the Spanish empire in South America because of its importance as a source of gold and silver. In the 19th and 20th centuries, Peru attracted international mining companies for copper, lead, zinc and other minerals. In recent years, attracted by untapped reserves, privatisation and changes in the tax regime, multinational companies have again been knocking at the door. But mining has never done much for broad-based development.
Recent years have also seen a growth in local opposition to the granting of huge mining concessions to foreign companies. Most of the biggest reserves of minerals are to be found in the sierra, and the way governments distribute concessions pays scant attention to the interests of those living in these areas. Peasant communities in the vicinity of mines get short shrift: their water sources tend to be appropriated; they suffer industrial pollution and spillages; and they receive little by way of employment spin-offs.
It is to be welcomed that governments – both in developed countries like Britain and developing ones like Peru – are taking a lead in stimulating more debate about the costs and benefits of mining and other extractive industries. There is much to talk about. Not only is it a question of working out a fairer system of distributing benefits among all stakeholders, but also whether this narrow model of development – which boosts exports and government revenues but does little for employment and social welfare – can be made to benefit the wider economy.
There are signs that multinational mining companies are becoming more aware of the need to think beyond the bottom line. Shareholder rebellions and the activities of NGOs worldwide have had an effect, and the realisation is dawning in corporate boardrooms that poverty is not necessarily good for business. Multilateral banks and local policy makers are also beginning to see the need to think beyond boosting exports and Treasury receipts.
However, the pressure will need to be kept up; and what happens in Peru may have an influence that goes way beyond the geographical confines of South America.
The PSG will be following what comes out of the March meeting with great interest.
You can find more information on the issues surrounding mining in Peru and the UKs perspective on mining on the following websites:
www.eitransparency.org – The Extractive Industries Transparency Initiative is a multi-stakeholder initiative, with partners from governments, international organizations, companies, NGOs, investors, and business and industrial organizations.
The Extractive Industries Review was launched by the World Bank Group to discuss its future role in the extractive industries. On these pages you can browse for information on the impacts of World Bank investment and the extractive industries on people and the environment, and the alternatives proposed by people around the world.
www.oxfamamerica.org – You can find out what Oxfam are doing to improve mining procedures in Latin America.
In our ‘Key Issues’ section you can find more information about extractive industries in Peru.