Peru says large-scale informal copper mining exists and could grow

Peru’s government is acknowledging for the first time the existence of large-scale informal mining of copper, warning that high prices could see the activity grow in the near future.

The government is on alert for large artisanal mining of copper, especially in an area where mineral rights belong to the Las Bambas mine run by China’s MMG Ltd., Energy and Mines Minister Jorge Montero told foreign media in Lima on Tuesday.

“That is the largest non-formal copper production operation at this time that we have identified,” Montero said. “The alert is that in that area we already have large-scale mining operations working with copper.”

The informal mine, which is called Apu Chunta and operated by the indigenous community of Pamputa, was featured in a Bloomberg story in April. Annual output at the mine is estimated at 30,000 metric tons, worth almost $300 million at current prices. While Pamputa owns the land, Las Bambas holds the rights to the copper being extracted. The mining company also plans to build an open pit in the area in the 2030s, for which it would have to buy the land from the community.

Informal mining and conflicts between property and concession holders has become a key issue for Peru’s mining industry, with the government struggling to strike a balance. The nation is the world’s No. 3 copper supplier and the top gold producer in South America. Its rich deposits have attracted hundreds of thousands of small-scale miners, who work predominantly on lands where they do not hold mineral rights.

Informal operators have encroached on exploration projects operated by Southern Copper Corp. and First Quantum Minerals Ltd. The minister said Teck Resources Ltd.’s Zafranal project has also been affected. To be sure, informal copper output is still minimal compared with formal production.

(By Marcelo Rochabrun)