According to Mining News Pro - Sky-high metal prices and accelerating general inflation are fueling another up-tick in resource nationalism and social unrest in Peru, among the top suppliers of copper, zinc and silver.
As of Wednesday, about a fifth of the country’s copper output will be off-line as MMG Ltd’s Las Bambas mine joins Southern Copper Corp.’s Cuajone in succumbing to community protests. At the same time, unions in the mineral-rich Cusco region are staging strikes against rising prices, while residents near a Glencore Plc copper mine are preparing to resume protests.
To be sure, community conflicts are nothing new in Peru and some of the current unrest is more about protecting water supplies than grabbing a bigger share of the mineral spoils.
But having more than one major copper mine down at any one time is unusual, and this time round the mining protests are embedded in more generalized unrest over living costs that has inflamed an already tense political climate under President Pedro Castillo. Since the former rural activist from a Marxist party took office, the number of social conflicts is up about 7%.
With lawmakers discussing measures to appease the population’s pain from the fastest inflation in 24 years, politicians are looking to the mining industry to help foot the bill.
On Tuesday, Pedro Francke, a former Castillo finance minister and moderate left-winger, said more than a $1 billion could be added to state coffers with a modest hike to mining taxes. Others have tapped into the tensions to rekindle calls for more drastic measures. “The nationalization of strategic resources is the cornerstone of a country’s development,” Vladimir Cerron, founder of Castillo’s own party, wrote in a Twitter post.
The president, who has dodged two impeachment attempts since taking office in July, is being criticized by both the mining industry and some community groups.
Southern Peru Chief Financial Officer Raul Jacob said this week that dialog at Cuajone hadn’t advanced much amid “certain passivity” by the government to resolve conflicts.
The industry puts some of the blame for an up-tick in unrest on the administration’s prioritizing the right to protest over other concerns such as free transit. In isolated areas with poor services and infrastructure, mines can become de facto local governments and therefore an easy target for grievances.
But Castillo is having to walk a tight-rope. After softening his tone on resource nationalism to appease more moderate factions, he’s grappled to maintain support of his party’s more hardline factions and the rural voters who put him in power.
Carlos Hanco, youth secretary of the National Coordinator of Gas Users in Cusco, is among leaders pushing for a review of contracts covering natural gas, minerals and water. His grievances are directed both at the government and legislators.
“It is a demand for the Castillo government to fulfill the campaign promises,” Hanco said. “We also demand Congress stop being a coup plotter and work for the needs of the people.”
Peru will declare a state of emergency near Southern Copper Corp's (SCCO.N) Cuajone mine, the country's prime minister said on Wednesday, as protests hit top mines in the Andean nation, halting 20% of national copper output.
Peru is the world's No. 2 producer of the red metal. Impoverished communities in Peru's copper-rich Andes have been staging growing protests against mining companies including Cuajone, MMG Ltd's (1208.HK) Las Bambas and Glencore's (GLEN.L) Antapaccay.
They complain that the mineral wealth has not trickled down to their communities despite high international prices.
Cuajone suspended operations on Feb. 28 after residents of a nearby community shut down water supply to the mine, demanding financial compensation and a share of future profits.
The government of President Pedro Castillo had been reluctant to use emergency declarations, which suspend civil liberties, in order to suppress protests against Peru's mighty copper industry.
But Prime Minister Anibal Torres on Wednesday said the government was running out of patience to solve the issue.
Communities "are demanding something irrational, $5 billion," Torres said. "That has led us to declare a state of emergency, and the problem has to be solved now."
Reuters could not reach community representatives for comment.
In addition to Cuajone, production at Las Bambas stopped on Wednesday, after residents of the Fuerabamba community entered the mine and set up camp inside of it, leading the Chinese-owned mine to announce a suspension of operations. read more
Peruvian government officials are holding a meeting with Fuerabamba representatives to try to diffuse the situation but had yet to reach a resolution as of Wednesday evening.
Castillo was elected last year with massive support of communities in mining regions amid pledges to better distribute copper profits.
Peru produced 2.3 million tonnes of the red metal in 2021, according to government statistics. Las Bambas produced close to 300,000 tonnes while Cuajone produced another 170,000 tonnes, totaling 20% of national copper production.
Also on Wednesday, protests started against a planned expansion at Glencore-owned Antapaccay. A source close to the company said the demonstrations had not blocked a key transport road shared by Antapaccay, Las Bambas and Hudbay's (HBM.TO) Constancia copper mine.