Anti-mining groups force Hudbay to keep Peruvian operation suspended
Operations at Hudbay Minerals’ (TSX, NYSE:HBM) Constancia copper-molybdenum mine in Peru remained suspended Thursday as a group of locals that has occupied parts of the pit since Monday evening refuse to leave the site.
The trespassing by the crowd of about a thousand, according to local paper La Republica (in Spanish), forced Hudbay to temporarily suspend operations as a safety measure to protect both employees and protesters.
Local leaders say the move came as a reaction to Hudbay violating social agreements signed with Chamaca authorities, including improvements to the local health centre, a project to feed underprivileged children and roads repairs.
Most of the intruders are from the Chamaca district, about an hour away from the mine, Hudbay said in a statement. It added that their representatives had signed an agreement with the national and local governments, as well as with Hudbay Peru within the previous two weeks, confirming their willingness to work together and cooperate.
Police are on the scene to maintain order, the firm said, adding that efforts continue to resolve the situation peacefully through talks.
One of the protestors’ leaders, Alvaro Castañeda, told La Republica the move came as a reaction to Hudbay Peru violating social agreements signed with Chamaca authorities, including improvements to the local health centre, a project to feed underprivileged children and roads repairs.
According to Hudbay, the trespassers have yet to present specific demands, suggesting the action is likely designed to garner government attention in the context of a regional anti-mining protest, Stefan Ioannou of Haywood Securities said in a note to investors.
Mining investments in Peru, which drove economic growth during the past decade, has fallen dramatically in the past two years as violence linked to relentless anti-mining sentiment keeps scaring investors away.
It is estimated that about $22 billion worth of mining projects have been cancelled or delayed in the South American nation in recent years as a result of social conflicts and red tape.
Peru is the world’s No 3 copper producer behind Chile and China, and mining accounts for about 60% of its export earnings.
Since reaching commercial production in the second quarter of 2015, the ramp up of Constancia has increased Hudbay’s production volumes, pushing revenues and gross profit higher, despite lower realized metals prices.