“This is a question of values, not stock market values”. Thus Michael Connarty MP summarised the dispute over the future of Minera Majaz, the British-owned mining company involved in developing the potentially vast project in northern Peru at Rio Blanco. Majaz is a wholly-owned subsidiary of Monterrico Metals, which itself is now the subject of a takeover bid by a Chinese consortium, Zijin. Rio Blanco has been at the centre of a long-running and violent dispute involving the company, the Peruvian authorities, and the local communities on whose land the mining project lies.

A year ago, the PSG organised a meeting at Portcullis House in the House of Commons, at which a representative of the communities came to put the case against the Rio Blanco project. Monterrico Metals, for its part, was present to defend its position. This was not exactly a meeting of minds. One of the few points of agreement to emerge was that the PSG should organise an expert fact-finding delegation to examine the case and then make recommendations. Thus, in October 2006, an independent delegation, organised by the PSG, went to Peru.

In the mock-Gothic splendour of the House of Commons Committee Room 14, known as the Gladstone Room, with its portraits of 19th century worthies gazing down from the walls, led by Professor Anthony Bebbington, the members of the PSG delegation to Peru delivered their report. They included Michael Connarty MP, who also heads the all-party parliamentary group on Peru, Professor Anthony Bebbington, a geographer from Manchester University, and Dr. Wendy Coxshall, an anthropologist from Bristol University. The geologist Professor Mark Williams from University of Colorado at Boulder and journalist Hugh O’Shaughnessy, both members of the delegation, were unable to be there.

Debate over Rio Blanco
Presented by Prof. Bebbington, the report details the background to the Rio Blanco dispute which led to violent confrontation between Minera Majaz and members of the Segunda y Cajas and Yanta communities. Those opposed to the Rio Blanco project have organised themselves into the Frente por el Desarrollo Sostenible de la Frontera Norte del Peru. Members of the Frente, as well as others – including the Bishop of Chulucanas – have been accused of forming part of a ‘network of terror’. Monterrico denies having had any part in this campaign of defamation.

When developed, Rio Blanco, promises to be one of Peru’s largest copper mines. It lies only a few kilometres from the frontier with Ecuador. It forms part of a geological structure that holds out the promise of other mines being developed in the area. As the report shows, what happens in Rio Blanco will therefore have much wider repercussions for this part of Piura department, as well as in neighbouring Cajamarca.

According to the Defensoria del Pueblo (Ombudsman’s office), the procedures for consultation with the local communities at Rio Blanco were not followed properly. Consequently, the Defensoria alleges that the concession does not fulfil the legal requirements, a position that contradicts that of the Ministry of Energy and Mines which gave the concession and approved the study that gave Monterrico the green light to proceed with exploration.

For Monterrico Metals, the future of the Rio Blanco project is make or break. It is a junior mining company, and this is its only major project. According to its CEO, Richard Ralph, the former British ambassador in Lima, who spoke at the Committee Room 14 meeting, there is “no doubt” as to the legality of its holding. The sale of Monterrico to Zijin is therefore predicated on Rio Blanco going ahead.

Broader considerations
The report also seeks to put Rio Blanco into a wider setting. It discusses ways in which the objectives of large mining projects can be made to mesh with those of local development, conceived of as increasing levels of economic opportunity, improving human security and empowering local populations. The historical legacy of mining in Peru is not one that encourages optimism in these respects. The interests of peasant communities have been routinely sacrificed to those of corporate interests, whether private companies or those belonging to the Peruvian state. Communities have been deprived of their land, have seen their rights ignored, and have suffered the environmental and social degradation that almost always go with mining.

As well as criticising Monterrico Metals for the way they have conducted themselves – a criticism some of which Monterrico accepts in a public apology published in a Piura newspaper in September 2006 – the report is highly critical of the way in which decisions about mining are conducted in Peru. This centres on the role of the Ministry of Energy and Mines, one of the most powerful departments of state in Peru. Assesing EIAs for mining projects is vested in the ministry which – effectively – acts as judge and jury when it comes to awarding mining concessions.

In his section of the report, Mark Williams raises a number of serious environmental concerns, in particular the long-term damage inflicted on the region from acid mine drainage. It also highlighted the as yet untested plans for dry filtered storage of tailings in an area of high precipitation, as well as the chances of mining to levels beneath the local water table. Monterrico Metals has protested its concern for the environment, and Ralph declared that the Environmental Impact Assessment (EIA) would take care of these concerns. Original plans to pipe out ores to the coast (reducing environmental hazards) appear to have been abandoned in favour of trucking out the ores.

The delegation as a whole was struck by just how ill-informed locals were as to the possible environmental effects, exaggerating some but greatly underestimating others, such as acid mine drainage. It points to the need for an informed debate as the starting point to any consultation process. Wendy Coxshall gave special emphasis in what she said to this lack of information – indeed she referred to systematic disinformation – among local stakeholders. She also stressed the need to take into account the impact of the project on social relations, including gender relations.

Where next?
One of the first questions raised at the meeting was what should be done next: how to avoid this report being just another ‘gathering dust on people’s bookshelves’. For the PSG, this is now perhaps the crucial issue. Lord Avebury, the PSG president who chaired the meeting, suggested that the PSG should continue to raise the issues contained in the report, with stakeholders, with Monterrico Metals and with the cross-party parliamentary committee that deals with UK relations with Peru.

Meanwhile, three matters will be defined in the near future:

  • The issue of the disagreement between the Defensoria and the Ministry of Energy and Mines over the legality of the concession has yet to be finally resolved. The Ministry appears simply to have ignored the complaints lodged by the Defensoria.
  • The ownership of Monterrico Metals has yet to be defined. It appears that some Monterrico shareholders think that the offer from Zijin (350 pence a share) does not reflect the true value of Monterrico’s holdings in Peru.
  • The Environmental Impact Assessment will have to be studied by the Peruvian authorities. Normally EIAs – prepared at the expense of the company itself and therefore hardly independent – go through on the nod without proper public discussion. In the wake of the PSG report, which will be released in Spanish translation in Lima, the environmental and social impacts detailed in the report will undoubtedly raise more discussion than usual.

The PSG stands to protect the interests of Peruvians at the bottom end of the social pile. It is not anti-mining as such. But mining has to respect constitutionally defined citizenship rights and cater for the needs of society as a whole, and in particular those most immediately affected. This represents a major challenge. Simply to ignore – or worse still to suppress – those interests will be a recipe for disaster in the longer run. The levels of violence seen so far at Rio Blanco are likely to multiply, creating a poisoned chalice for whoever eventually seeks to develop the mining industry in this troubled part of the Peruvian highlands.

For copies of the report call 0207 354 9825, or to download it by clicking here.