Peru copper snags highlight rising clout of informal miners

This week’s copper transport disruptions in Peru underscore the growing impact of informal mining on global corporations that operate in the Andean nation.

Frustrated by regulatory restrictions and red tape, thousands of small gold and copper miners in Peru are staging protests, including roadblocks that are choking flows of semi-processed copper from at least two key mines to their shipping port. Peru is the third-largest supplier of the wiring metal, sending most of its mined output to Chinese smelters.

The mines – MMG Ltd’s Las Bambas and Hudbay Minerals Inc.’s Constancia – have been frequently impacted by blockades along Peru’s southern corridor. But typically protests have been staged by communities seeking greater economic benefit, or better environmental protection, from big mines. Las Bambas, for example, has experienced hundreds of days of operational stoppages over the past decade due to such conflicts.

But Las Bambas hasn’t seen many protests like the ones this week, where those behind the roadblocks are fighting for the right to mine themselves. That’s a trend seen only within the past year.

Rising prices of gold and copper have boosted informal activity in Peru as more residents turn from subsistence farming to artisanal mining — mainly on concessions held by large companies. That’s threatening the development of the next generation of giant deposits, the industry warns, as well as adding risk to a global supply already hit by disruptions from Panama to the Democratic Republic of the Congo.

Besides the regulatory and legislative demands, this week’s protests show the emergence of informal miners as a social and political force, as leaders jostle to play a role in upcoming elections, according to Ivan Arenas, a political analyst and specialist in mining and public policy.

“There are two main drivers here — the growth of informal activity as metal prices rise, and the elections,” he said.

Protests are taking place across the nation. But Las Bambas and Constancia are reportedly the main copper mines impacted. Chinese-owned MMG said in an emailed response to questions Friday that the trucking interruptions were continuing. Toronto-based Hudbay didn’t respond to requests for comment.

Disruptions are limited to transport, with no reports of protests affecting production on site. That may change if mines are starved of supplies needed to operate or they run out of storage space. A prolonged stoppage would also start to impact shipments to smelters in China and elsewhere.

In Peru, many small-scale miners use a temporary registry that allows them to operate as they go through the process of formalizing. That program, which has been extended until year-end, is seen by big mining as a cover for illegal activity.

Informal miners are pushing for the registry to drop its restrictions and a for the introduction of a new set of rules designed specifically for artisanal mining, known as the MAPE bill.

Confemin, the confederation behind the protests, is urging small miners to extend the blockades until a July 8 congressional vote on MAPE, according to comments by its president, Maximo Franco Bequer, in a video posted on social media late Thursday.

The growth of informal mining gives the sector “the power of mobilization to pressure for achieving demands without meeting environmental and labor norms,” said consultant Pablo O’Brien.

(By James Attwood)