Tia Maria: inside the commodity versus community dilemma in Peru

More than half of the country’s coal mines are managed by pro-Russian separatist militia.

Credit: DmyTo/Shutterstock.

Among the protestors’ main grievances is that the Tia Maria open pit mine will harm farmers’ water sources and pollute the Tambo River – despite SCC’s pledge to build a $95m in a desalination plant – as well as contaminate the air with the overland transport of minerals from the mine to the port.

Open pit mining can be particularly damaging to the surrounding environment, releasing potentially harmful radioactive elements, asbestos-like minerals and metallic dust, as well as toxic tailings that can contaminate surface water, groundwater and soil.

Tia Maria is located 2km away from the Tambo Valley, home to more than 24,000 people who are primarily dependent on agriculture. Local activists fear cyanide and nitrogen from the mine will contaminate crops, destroy forests and negatively affect the health of the population and wildlife.

Tensions over the project began in 2011, when the government approved an environmental impact assessment (EIA) carried out by SCC that the UN subsequently found to be riddled with problems.

Following a UN assessment, which cited 138 critical observations, local farmers held a series of protests against Tia Maria and succeeded in having the mine’s development postponed indefinitely.

A reworked EIA was approved in 2014, resulting in further demonstrations that led to a state of emergency being declared; again, the project was abruptly halted. SCC has spent the intervening four years trying, unsuccessfully, to convince the valley of the mine’s many economic benefits.

Critics of the EIA – which had been set to expire on 1 August, one of the reasons behind the government’s decision to grant the construction license – claim that key details of the project, including water sources, the depth of the open pit, the location of the minerals processing plant and the transport modality from mine to port – remain opaque. They refuse to back down until the license is annulled.

Two former government ministers, Carlos Herrera and Ricardo Giesecke, have both said that the failure to consider all the facets of the mega-project was partly due to high staff turnover at MEM and, therefore, little institutional memory of the global issues surrounding specific mining projects.

In 2018, Peru’s mines produced 2.44 million metric tons of copper – up from nearly 1.3 million in 2009 – cementing its position as the second-largest copper producer behind neighbouring Chile.

According to the 2017 Annual Mining Report published by MEM, mining activity overall accounted for nearly 10% of the South American nation’s GDP and close to 62% of its total exports value.

"It [Peru] relies on a project portfolio worth over $58bn, strengthening its position as an attractive place for mining investments and a country full of opportunities," the report read.

The Peruvian Government worries that demonstrations like those seen in the Tambo Valley have the potential to dissuade mining multinational from ploughing billions into new projects in the country.

These fears appear to be largely unfounded. Mining investment in Peru jumped 6.3% to $395m in August 2017 compared with the previous year, while investment in development and preparation, the first stages in building a mine, reached $63m, the highest mark in more than four years.

“We’re expecting to get at least $21bn of investments going in the next three years,” said energy and mines minister Francisco Ismodes in 2018. “Given the international context, with demand forecast to support metal prices, we are expecting sustained growth in investment,” citing a $58.5bn portfolio of mining investments that have the potential to double Peru’s copper output.

In Peru’s fragile democracy, however, a system blighted by corruption, the perennial commodity versus community debate inevitably takes on a political dimension – and things can change quickly.

Bloomberg reports that the economy posted weak growth in January and February after metal output was affected by protests, rains and lower ore grades. Mining dragged down overall exports, the report said, which fell for a seventh consecutive month in February.

In Cajamarca in northern Peru, for example, a succession of anti-mining politicians has succeeded in derailing new projects, while as recently as last year, a state of emergency was declared in Apurimac in the south, where the MMG-owned Las Bambas copper mine was blockaded by local communities.

“The main challenges are within the country,” Juan Luis Kruger, CEO at Peruvian mining company Minsur, said last year. “We can’t have world class assets – billions of dollars in investments – that every day suffer blockades, blackmail and extortion, and that aren’t protected by the law.”

President Vizcarra’s flair for mediation appears to have served him well during his ascendency to the top in Peru. The coming months and years will reveal whether or not those powers of diplomacy are enough to defuse the volatile situation in the Tambo Valley, kick-start the Tia Maria project and help secure the investment his country’s mining sector needs if it is to continue to flourish.