PERU

PERU

Anti-mining lobby poses political risk to miners

17th May 2007

LONDON (Reuters) - An intensifying anti-mining lobby in South America could hurt smaller exploration firms and metal producers, industry representatives told the World Mining Investment Congress on Wednesday. "Anti-mining NGOs (non-governmental organisations) are a particular problem in South America right now," Stephen Kay of the small mining firm International Minerals Corporation said.

Historically the mining sector has been criticised for environmental degradation and South Americans have felt the resource extraction has not favoured their economies. "But there is a lot of good work being done now -- most companies, including the juniors, have employed full-time sociologists and that was unheard of a few years ago," Kay, who is president and CEO of the firm operating in Peru and Ecuador, said.

However, the anti-mining lobby in Peru had succeeded in halting a mine from going into production, Kay said.

The advocacy groups, which were mainly funded by people in Europe and the West Coast in the United States, were looking for an area where they would have a receptive audience, Kay said. In Latin America linking up with indigenous peoples is a natural way to bring projects to a halt, Bill Bulmer, senior manager for the mining sector for the International Finance Corporation and the World Bank, said. "The growing activism of indigenous groups...is very real and it is born out of resentment of past mining practices and unfair deals," Bulmer said.

Anti-mining sentiment also was fuelled by the nationalistic tendencies seen in some Latin American governments, Kay and Bulmer said.

Bulmer said indigenous groups wanted mines to be developed but only provided they had a say and share in the process. "This huge movement up against mining is overblown but that is the voice that is heard there and that could ultimately stop a good project... to the disadvantage of these local groups," he said.

Bulmer said most NGOs were in favour and had an important role to play in developing the economies of local communities. "But there is a very small -- but very vocal -- mining advocacy group that doesn't want to talk about the merits of mining, they simply want to shut mining down," he said.