Peru government still far from deal on MMG’s Las Bambas mine restart

Las Bambas mine, Peru. (Image courtesy of Minera Las Bambas)

Peru’s government is still far from reaching a deal that would ensure the restart of MMG Ltd’s huge Las Bambas copper mine, a community advisor and a government source said on Wednesday, a day before a crucial meeting with local communities whose road blockade derailed the mining company’s operations.

Protesting what they say is a lack of compensation, residents of Chumbivilcas blocked the key copper transport road for over a month, forcing Chinese-owned Las Bambas to shut down production on Dec. 18. Communities agreed to a brief truce last week to unblock the road until Thursday’s meeting, but said they would resume the blockade if no deal was reached.

Peru’s Prime Minister Mirtha Vasquez will go to Chumbivilcas on Thursday in the government’s most ambitious effort yet to broker a restart deal, as the shutdown has become a major problem for Peru’s leftist administration.

“I don’t know what will happen tomorrow, but I think nothing good,” said Victor Villa, a legal adviser for Chumbivilcas residents, who are demanding the company provide jobs and financial compensation.

A government source familiar with the matter, who spoke on condition of anonymity to speak freely, also said the two sides are still divided.

Peru is dependent on the mine’s tax revenue – Las Bambas alone accounts for 1% of the country’s gross domestic product – but the government has also pledged to prioritize the needs of impoverished communities.

Giselle Huamani, who heads conflict resolution for Peru’s government, said in an interview that the government will unveil details of a proposal on Thursday to benefit Chumbivilcas with higher public spending.

In a press conference on Wednesday, Prime Minister Vasquez said the government’s spending proposal is a “solution.”

But Villa dismissed the idea as failing to address their needs.

“The solution is no longer in what the state or the mine can promise, but in what is real, in what we can get by becoming a part of the mine’s value chain,” he said.

Chumbivilcas and Las Bambas were negotiating earlier this year a deal in which local residents would take jobs driving copper trucks and other vehicles for the mine. But when those talks broke down in November, residents blocked the road.

Huamani said Thursday’s meeting was “not a space for (commercial) negotiations” and said the government would want to hold talks on the mining jobs on a different date.

Las Bambas did not respond to requests for comment, but has said in the past that a truce with the looming threat of resuming the blockade does not guarantee conditions to restart production.

“The upshot is that if the mine remains stubborn and doesn’t want to give in on anything we are going to block the road again. This is only a truce,” Villa added.

The mining industry has called on the government to declare a state of emergency in the area and send law enforcement to clear the road and confront protesters, but officials have resisted the effort saying they prefer dialogue.

(By Marcelo Rochabrun; Editing by Amran Abocar and Aurora Ellis)


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