Peru tries solving Xstrata’s conflict to stop mining investments from falling

Peruvian authorities met Thursday 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.

Espinar is, like other regions in Peru, regularly hit by anti-mining protests by underprivileged residents who say they don’t see the benefits of the country's mining profits. Both the central government and miners, as El Comercio reports, accuse local governments of lacking the ability to properly allocate tax revenues and say they are sitting on piles of cash.

An environmental study commissioned by the local Roman Catholic Church last year apparently found elevated levels of arsenic, copper, mercury and other heavy metals in soil and water samples.

Xstrata, through its operations director for Peru, Luis Rivera, has denied the accusations, adding that the company remains committed to a $1.5 billion expansion of the Tintaya mine.

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 is, according to most analysts, 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 some 60% of the economy.