Anglo’s $3 billion copper mine in Peru is a go
Despite the recent deadly and divisive disputes over mining projects in Peru, London-based mining giant Anglo American (LON:AAL) got the green light from the regional government of Moquegua for its $3 billion Quellaveco copper mine.
Peru’s Minister of Energy and Mines, Jorge Merino, said the agreement between the miner and the community was reached thanks to the participation of all sectors related to the mining project, according to Gestión.
He stressed the agreement guarantees clean water supplies for the locals, agricultural development, construction of roads, and other benefits for communities in the area.
The authority said Anglo American will make voluntary payments to surrounding population of about $370 million during the mine's 30 years of operations.
Once in production, Quellaveco will generate 220,000 tonnes of copper per year, about a fifth of what Peru produced in 2011.
Quellaveco was approved years ago, but construction was postponed because of community opposition. The key issue raised by the local community has been water access; farmers fear the company will pollute lakes or use up the scarce water resources they need for their crops.
Despite Anglo's optimism, it wouldn’t be unlikely for the company to face strong opposition to its project over the next 44 months, which is the estimated time it would take to build Quellaveco.
Last week, protests against Newmont Mining's $5 billion Conga project in the Cajamarca region, the biggest in Peruvian history, left at least five casualties and several people injured.
And in June, Peruvian authorities met with representatives of the town of Espinar in southern Peru, to resolve a conflict between the community and Xstrata’s Tintaya copper mine, which they accuse of polluting their land and water supplies.
All over the country, underprivileged residents claim they don’t see the benefits of the country's mining profits coming from foreign firms.
$50 billion jeopardized
When Peru’s President Ollanta Humala was elected a year ago, he promised to solve the ongoing disputes among mining companies, the government and local communities. But the conflicts, which left 190 people dead during the preceding administration, continue to outshine the potential benefits that mining investment can bring to the country.
The $50 billion in investments forecasted for the next five years, according to most analysts, is starting to fall.
Canada’s Scotiabank states that, of the projects that account for over 85% of the planned spending in the Peruvian mining industry, 11 face social struggles.
Peru is the world's second biggest producer of copper and silver and a major producer of gold, zinc and lead. The country’s extractive sector accounts for 60% of the economy.
Anglo American operates the Collahuasi mine in neighbouring Chile, the world's top copper producer, with Xstrata. It is also trying to settle a multimillion-dollar dispute with Chile's state-run Codelco.