Rio Blanco and the Conga Fallout

Peter Low | 150 . Feb - Mar 2012

Of the 229 ongoing social conflicts in Peru, it is the dispute over the proposed Minas Conga mine which continues to dominate headlines. Its political salience has been assured by the fact the conflict was the first serious challenge for Humala’s administration, that the proposed project is so large (just over £3bn/US$4.8bn), and that it involved a mining company which had already proved controversial.

Undoubtedly, a diverse range of firms, organisations and analysts will all have been closely monitoring developments in Cajamarca as events there will have significant implications for the whole country. Already they have nudged the Humala government further towards an economic policy largely analogous with that pursued under García.

Humala’s new – or rather, not so new – political direction has already caused great consternation among many communities, and not just in Cajamarca. Anxiety is most evident among those living near projects (temporarily) suspended by the previous government when they proved too controversial. Many locals had hoped, during the early months of the Humala government, that these investments would be suspended indefinitely. Such hopes now seem increasingly forlorn.

According to the Peruvian Human Rights Ombudsman, today there are over 20 'latent conflicts' related to extractive activity in the country. Many such disputes are likely to flare up once more as García-era suspensions expire on Humala’s watch. Of these, the conflict over Piura’s Río Blanco project is set to be the most serious.

A Conflict Suspended, Not Resolved

The dispute between the Río Blanco operators and nearby communities did not begin in earnest until 2003, when then UK-owned firm Monterrico Metals took over the project. Locals, later backed by the Peruvian Human Rights Ombudsman, argued the firm had never gained the correct permissions to operate on community territory. Monterrico denied this and an acrimonious debate ensued. In the context of deteriorating relations, from 2004 locals organised a series of protest marches against the mine. Clashes between demonstrators and police resulted in numerous injuries and occasionally even fatalities. During one notorious incident in 2005 twenty-eight people were detained, allegedly by police and mine security officials, and tortured over several days.

Such demonstrations gained little central government support for their cause, so in 2007 locals tried a different tactic. The communities organised a (non-binding) referendum in which the overwhelmingly majority – approximately 95% of voters – registered their objection to the project. Yet it wasn’t until more radical elements burned down buildings owned by the mine in 2009 that the government was eventually prompted into action. The project was suspended, albeit temporarily, helping to ease the immediate tensions. However, the underlying issues were never addressed and instead a date of 2015 was set for work at the site to resume.

New Owners, New Practices?

Today, the project is operated by Chinese mining consortium Zijin which purchased Monterrico Metals in early 2007 (a few months prior to the above referendum). The firm has sought to distance itself from the bad practices of the past and usher in a new period of improved community relations.

Despite an extensive PR campaign however, Zijin has proved unable to produce a sea change in local attitudes towards the project or its operator. Much of the nearby population is uninterested in the change of ownership, perceiving the very existence of the mine, whoever its owners, as the problem. Where comment is passed, it is usually to cast doubt on the extent to which Chinese firms in general are committed to human rights.

Furthermore, while the issue of permissions remains unresolved Zijin’s continued presence in the project area will remain a thorn in the side of community relations. Definitively resolving this would require the company to request new authorisation from locals to operate on their territory. Given the widespread opposition to the project, it is highly improbable that their approval would be forthcoming.

Chronicle of a Conflict Foretold

For its part, Zijin is unlikely to easily accept the cancellation of a project in which it has already invested millions. Its 2007 purchase of Monterrico alone cost nearly £100m. It also had to spend a significant sum on legal counsel to defend UK civil proceedings brought by those tortured at the mine site in 2005. Costs mounted further last year when, in an out-of-court settlement, the company agreed to pay an undisclosed sum to the 33 claimants as compensation (without admission of liability). As a commercial entity, the firm will naturally be looking to recoup these early losses. The Río Blanco project, with its estimated reserves of 4m tonnes of copper, would afford Zijin the opportunity to achieve return on its investment many times over.

For now, the firm’s activities in the region have been scaled down and tensions have therefore eased. Nevertheless, Zijin shows every intention of gradually increasing work In the area in the run up to 2015. Meanwhile, communities in Piura continue to demand a permanent end to the project. One major lesson from Humala’s actions over Conga however, is that such calls will likely go unanswered.

In this scenario, it is difficult to imagine how renewed confrontations can be avoided once Zijin escalates its exploration activities in the area. Anti-mining rhetoric in Piura is becoming noticeably more radical in the interim, with a disconcerting number now talking of how they are prepared to die protesting. Better that, they say, than to die from the mine’s contamination thereafter.

For more background on the Rio Blanco project please see our report, 'Mining and Development in Peru with Special Reference to the Rio Blanco Project, Piura'.

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