Mining is a highly disruptive activity that routinely generates significant adverse environmental and social impacts. Mining activity in Peru is no exception.

Environment

Toxic chemicals such as cyanide and sulphuric acid are employed by the mining industry to extract minerals. The extraction process can also produce toxic by-products. These chemicals are not always transported or handled properly and spills are not uncommon in Peru. In 1999, in the village of Choropampa, residents were exposed to the potent toxin mercury when a truck from the Yanacocha mine spilled its load. The residents, who show symptoms that are consistent with long-term mercury poisoning, have never been compensated nor have they received adequate medical treatment.

Environmental contamination is also frequently caused by inadequate tailings containment. Tailings are the rock wastes left behind following ore extraction. They often contain heavy metals, acid-forming minerals, and residue from toxic chemicals used in the extraction process. Widespread water contamination caused by inadequate mine waste management is a global problem that also affects Peru.

Social impacts

The arrival of a mining company can have serious social consequences for local communities, including outright displacement. In some cases, communities are forcibly relocated to make way for mine development. In the case of the controversial Tambogrande gold mine in the department of Piura, such relocation was avoided. Construction of the mine by the Canadian company Manhattan Minerals required the relocation of approximately half the town of Tambogrande. Community members refused to abandon their homes and by uniting in opposition to the mine, successfully stymied the company's proposal.

Mining activity often involves the arrival of outsiders, which frequently generates tension within communities and threatens traditional practices. It's not uncommon for prostitution, alcoholism, domestic violence, family breakdown, and health problems to increase in communities that coexist with mining.

Perhaps most devastating for affected communities is the impact of mineral activity on their sources of livelihood. In Peru, the majority of communities affected by mining are farmers and livestock rearers. The impacts of mineral activity, specifically the loss of land and the contamination of water and soil resources, dramatically limits the ability of campesino communities to pursue traditional subsistence activities, thereby restricting their livelihood opportunities. In other communities, such as Tambogrande, mineral development threatens a different economic activity: export-oriented agriculture.

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Antamina
Shareholders: BHP Billiton, Noranda Inc, Teck-Cominco Ltd. and Mitsubishi Corp.
Antamina in the central Andean department of Ancash was inaugurated in 2001. It is expected to become the world's No. 1 copper producer, and No.3 Zinc producer in its first ten years. There have been conflicts with the local community: In 1998 the Federation of Fishermen in the port town of Huarmey said the company was polluting fishing waters and frightening away marine life during construction of a wharf and mineral-pipeline. Since then, the company has invested considerable funds in social relations and has been credited by the industry as a leader in community development. The company has also been accused of lowering waters levels in Laguna Conococha, affecting plant and animal species and of contaminating the zone with mineral residues. In may there were regional strikes to protest the mine's activities and local mayors are calling for a number of measures including an end to construction of the mineral-pipeline in favour of road transportation and municipal participation in environmental monitoring.

La Oroya
Shareholders: the Doe Run Company, owned by the renco group, USA, a US$2.5 billion private investment holdings company. This mineral processing complex with smelter and refinery facilities is based in the town of La Oroya in the central Andean region at an altitude of 3,745 metres. US-based Doe Run bought the complex in 1997, as part of the Fujimori government's privatisation programme. Previously La Oroya was part of Centromin, a conglomerate of mines in the central Andean Mountains expropriated by Peru's military government from an US-owner during the mid-1970s. As private companies are exempt from the regulations governing state-run mining companies workers were no longer provided with housing, schooling, medical care, electricity or water. While Doe Run has invested in new sanitation facilities for workers and windows for local public schools, many workers feel these benefits do not make up for the loss of basic necessities.

La Oroya has a long history of environmental contamination but Doe Run promised to install cleaner technology. Under Peruvian law Doe Run has until 2007 to comply with environmental regulations and although some investment is being made, reports of air, water and soil pollution have ignited protest and locals are being trained in environmental monitoring.

Results of a 1999 government study confirmed fears of lead poisoning in La Oroya. Prolonged exposure to lead increases risk of cancer, anaemia and infertility and causes learning disabilities in children. The study found 99.4 percent of children between the ages of 2-10 had levels above acceptable World Health Organisation standards.

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According to official statistics, total cumulative UK investment in the Peruvian mineral sector reached approximately US$800 million in 2002, representing an impressive 47% of total foreign direct investment in this sector. According to these statistics, the UK is the number one source of foreign investment in the mining sector. United Kingdom investment in mining activity grew considerably during the nineties, in the wake of the structural adjustment reforms described above. In 1992, investment by UK miners in Peru represented just 3% of the total in this sector. By 1999 this value had jumped to almost 45%.

However, the values cited above are not comprised of exclusively UK investments. They also include investments made by non-United Kingdom companies, including Canadian, American and Japanese companies that are registered in overseas territories of the UK, such as the Cayman Islands. The values are therefore highly misleading. A further distortion is caused by the omission of investment values for important UK mining companies such as RTZ.

When the investments made by non-UK companies are removed from Peruvian government statistics, the UK's share in foreign mining investment falls significantly, to less than half its original value. Unfortunately, a precise value for UK investment in the Peruvian mining sector cannot be calculated due to the unavailability of investment values by companies such as RTZ.

The gross misrepresentation of UK mining investment values in official Peruvian statistics is significant. This inaccuracy creates an inflated impression of the UK presence in the Peruvian mining industry. It also reveals that a considerable amount of mining investment is being channeled through offshore British tax havens in order to avoid taxation and other obligations.

While the financial dimension of UK mining investment may be exaggerated in official documents, the impact of such investment on campesino communities in Peru is unequivocal.

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