FACTBOX-Social conflicts over Peru mining projects

Thu Nov 3, 2011 9:49pm GMT
 

Nov 3 (Reuters) - Protests have erupted in northern Peru as residents demand U.S.-based Newmont abandon work on its giant Congas gold mine, the biggest test yet of President Ollanta Humala's ability to resolve social conflicts over natural resources.

When he took office in July, Humala promised to spur development through policies based on the principal of social inclusion and thereby quell some 200 festering social conflicts near mines and oil wells.

Local communities often fear they will derive no economic benefits from mining or oil projects, or that construction and drilling will pollute the environment and use up scarce water supplies.

One in three Peruvians still live in poverty despite a decade-long economic boom fed by high commodities prices.

Below are some of the major lingering social conflicts that Humala is trying to address in Peru, a top global metals exporter:

CONGA - NEWMONT MINING/BUENAVENTURA

Local residents have demanded an end to construction on Conga, a $4.8 billion gold and copper mine in the northern region of Cajamarca. They fear farmers will not have adequate water sources once the mine starts to produce in 2014.

Congas is a joint venture by U.S.-based Newmont and Peru's Buenaventura . It is Peru's most expensive mining project ever and is expected to churn out between 580,000 and 680,000 ounces of gold per year.

Protests against Conga erupted just days after residents of Cajamarca blocked access to the Yanacocha gold mine, also operated by Newmont and Buenaventura.

The protesters, who demanded $73 million in compensation from the company, burned machinery and temporarily halted production at Yanacocha.

TIA MARIA - SOUTHERN COPPER

Tia Maria, Southern Copper's $1 billion project in the southern region of Arequipa, has faced numerous delays due to protests from farmers who fear the mine will use their water.

After violence erupted in April, leaving at least three dead and some 50 people injured, former President Alan Garcia's government said an environmental impact study for the mine was "inadmissible." The company must produce a new one.

Southern Copper, controlled by Grupo Mexico , says Tia Maria would produce 120,000 tonnes of copper per year.

TOQUEPALA EXPANSION - SOUTHERN COPPER

Southern Copper also faces community opposition to an expansion at its Toquepala mine in Tacna, near Peru's southern border with Chile.

Residents want the $800 million project to rely on desalinated water from the sea. Southern Copper says the expansion would recycle groundwater it is already authorized to use at Toquepala, requiring no additional water sources.

Authorities in Tacna threatened to start a region-wide strike against the project, but backed down when the central government intervened and the company promised dialogue.

QUELLAVECO AND MICHIQUILLAY - ANGLO AMERICAN

Anglo American , the fourth-largest diversified miner in the world, plans to start production on the $3 billion Quellaveco copper mine next year.

Quellaveco, expected to produce 220,000 tonnes of the red metal per year in southern Moquegua, has also experienced protests stemming from concerns over water supplies.

Anglo American has the $1 billion Michiquillay mine in the pipeline as well in northern Cajamarca. It is expected to produce 300,000 tonnes per year starting in 2018

The company decided to continue work on the project last year after a year-long delay caused by community resistance. Townspeople had demanded greater compensation and feared the mine would damage the environment.

SANTA ANA - BEAR CREEK

Garcia's government revoked Canadian miner Bear Creek's license to build the Santa Ana silver mine in southeastern Puno after violent protests left at least five people dead.

Some 5,000 protesters, mostly Aymara Indians, had descended on Puno for more than a month to demand concessions be revoked for all mining companies, not just Bear Creek, ostensibly over concerns about potential pollution.

Bear Creek had planned to invest $71 million in the mine.

Market Update

  • Africa
  • US
  • Europe
  • Asia
UK £ USD =1.5629
Euro USD =1.2227
Rand USD =0.0865