MAC: Mines and Communities

Peru's president-elect vows consultation in bid to end mining conflicts

Published by MAC on 2011-07-04
Source: Reuters, Business News Americas

Peru's president-elect vows consultation in bid to end mining conflicts

By Terry Wade


27 June 2011 

LIMA - President-elect Ollanta Humala said remote towns bear the costs of mines, which can cause pollution and sap scarce water supplies, but do not see direct economic benefits from them, as thousands of indigenous protesters opposed to mining lifted their blockades in the remote Peruvian region of Puno. The protests only ended after deadly clashes prompted the outgoing government to give indigenous people more control over natural resources.

"No to mining concession, we want clean water" - Puno
"No to mining concession, we want clean water" - Puno protests
Source: Diaro Los Andes/AFP/Getty Images

Mr. Humala, a leftist former army officer who has promised to govern as a moderate, takes office on July 28. He campaigned on promises to end conflicts, in part by charging a windfall profits tax on mining companies to fund anti-poverty programs in rural towns.

"The issue of mining concessions generates 70 per cent of the conflicts in the provinces and we think mining needs to contribute more to development," Mr. Humala told reporters.

Mr. Humala also wants to pass a bill that would require Peru to adhere to the UN treaty on indigenous peoples, which requires tribes to be "consulted on issues that affect them" to ensure there is "free, prior and informed participation in policy and development processes."

Congress approved the bill at least once, but outgoing President Alan Garcia refused to sign it into law, saying the treaty gives local communities the power to veto the construction of new mines.

Peru's mining ministry issued a rule over the weekend that requires companies to consult with mostly Aymaran Indians in southern Puno before building new mines or oil projects. The government also revoked the licence of Canadian mining firm Bear Creek Corp. on Friday in a bid to persuade the protesters to allow stores and roads to reopen.

Protests in Puno turned violent on Friday and five people died in a clash with police. Conflicts over natural resources - which have killed nearly 100 people over the past three and a half years - have marred Mr. Garcia's term as poor towns demand a bigger slice of Peru's lucrative mining boom or try to halt projects they said would cause pollution.

Mining is the traditional economic engine of Peru, one of the world's fastest-growing economies, and Mr. Garcia has lined up more than $40-billion in foreign investment for mining projects for the next decade.

Bear Creek believes in political solution for Santa Ana - CEO - Peru

By Ryan Dube

Business News Americas

28 June 2011

Vancouver-based Bear Creek Mining believes a political solution is possible for the development of its Santa Ana silver project in Peru's Puno region, CEO Andrew Swarthout said during a conference call on June 27.

Peru's government revoked Bear Creek's concession for Santa Ana last week due to protests calling for the cancellation of the project, and all mining and oil concessions in the region.

Protests began on May 9 and turned deadly last Friday (Jun 24) when demonstrators clashed with police as they tried to take over the airport in the city of Juliaca. Six people were killed and numerous injured in the confrontation.

The protests, which are estimated to have cost Puno region more than US$117mn, according to local press, came to an end following the government's decision.

Legal Action

Bear Creek plans to take legal action to oppose the cancellation of its concession "through all available avenues," the company said in a release on June 24.

"Despite the measures recently taken by the Peruvian government, which forced Bear Creek to take immediate legal action to defend its rights under law, the company still believes a political situation is yet possible," Swarthout said.

"Santa Ana exemplifies exactly the kind of environmentally sound mining project that president-elect [Ollanta] Humala needs in order to achieve his goal of further reducing poverty in Peru," the executive said. "We see an opportunity to build bridges with the incoming government."

Political Motives

Bear Creek believes that the protests are politically motivated. The opposition Raíces party, which controls Puno's regional council, has been organizing the protests to put pressure on the administration of regional president Mauricio Rodríguez of the Aquí party, the company's corporate affairs manager Tony Balestrini told reporters during a meeting in mid-May.

Outgoing President Alan García has also blamed the protests on "dark political interests."

"All along the protests have been politically motivated," Swarthout said. "The protests were not fomented by our communities, but instead by a small number of radicals for political motives."

"We believe the real cause of the reversal is due to political pressure exerted on a transitional government by the restrained pressure to resolve the multi-faceted, political and growing general protest in Puno," he added.

Before the start of the protests, Bear Creek had expected to begin production at Santa Ana in 2H12. Preproduction capital investment was estimated at US$70.8mn and silver production for the first six years was set at 5.0Moz/y with average output over the 11-year mine life of 4.3Moz/y.

In Puno, Bear Creek also has the Corani silver project which has been unaffected by the protests. The feasibility study is on track to be completed in September or October, according to Swarthout.

"Corani is a distinctly different project. It is located in a very sparsely populated area at a very high elevation," Swarthout said, adding: "[It] is unaffected by the actions taken by the government or the protests."

Puno protests will spark reform to mining concessions, expert says

By Ryan Dube

Business News Americas

30 June 2011

The recent protests against mining in southern Peru's Puno region will likely result in a debate on how to reform the process of awarding concessions, the head of community rights and extractive industries at Lima-based NGO Cooperacción, Jose de Echave, told BNamericas.

"The impression I have is that the policy for concessions will begin to be revised because this topic is going to be on the agenda of the next congress," De Echave said, adding: "From here on, there are going to be changes to the way concessions [are granted]."

Residents in Puno began protests in early May calling for the cancellation of Vancouver-based Bear Creek Mining's Santa Ana silver project. Residents were also calling for the definitive cancellation of all mining and oil concessions in the region.

The protests, which are estimated to have cost Puno region more than US$117mn, according to local press, came to an end following a deal with the government.

The government agreed to revoke Bear Creek's concession for Santa Ana, as well as suspend the approval of new mining concessions in the region for 36 months. In addition, the government agreed to implement measures aimed at improving consultation with residents for the development of mining and energy activities in the region.

The increase in the number of concessions in Puno was a central element of the protests. According to De Echave, mining concessions in Puno increased about 270% from 2002-10, making it one of the most heavily concessioned regions in the country.

Santa Ana is the second project in southern Peru to be affected by local opposition in the last few months.

In April, the government rejected the environmental impact study for US-based Southern Copper's US$934mn Tía María project in Arequipa region.

The protests in Puno could result in further disputes to projects in Peru's southern highlands, according to De Echave.

"I don't have the slightest doubt that it is going to set a precedent," he said. "Puno is going to have a very quick, very immediate and very direct influence on neighboring regions such as Apurímac, Cuzco, Arequipa and Moquegua."

In May, the ombudsman's office reported 227 social conflicts in Peru. The most common conflict is socio-environmental, which accounts for 117 cases. Seventy percent of the socio-environmental conflicts are in the mining sector.

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