Cecilia Jamasmie | March 15, 2022
The Cuajone copper mine is in southern Peru, about 878 km from Lima.
(Image courtesy of Southern Copper.)
Operations at Southern Copper’s Cuajone mine in Peru have been suspended for 15 days as locals continue to block the company’s access to a water reservoir and other key supplies, the country’s mining and energy industry body has revealed.
The blockade began on February 28, when Southern Copper made the decision to replace a 50-year-old water pipe that supplies nearby communities.
According to Raul Jacob, chief executive of Southern Copper and current president of the Society of Mining, Petroleum and Energy of Peru (SNMPE), the section replaced is on the mine’s concession.
Jacob told local media he has documentation that proves the move was brought to community leaders as well as to regional and national authorities.
“The blockade took us by surprise,” Jacob said.
Workers at the Cuajone copper mine, which employs more than 5,000 people, are asking the government to mediate the conflict between the company and locals, arguing their jobs and lives are at risk.
“The refusal of residents to restore water supply to Cuajone and free the railroad prevent us from resuming operations at the mine,” Southern Copper said in an emailed statement.
The above video shared on social media shows mine workers asking for government help and calling locals to let supplies get to them.
The SNMPE said protesters were demanding $5 billion in compensation as well as a share of 5% of the company’s profits.
Mining specialist at Velocity Trade Capital, Pablo O’Brien, said there was more to the situation, which he qualified as “very serious.”
“No one can just turn off water supplies to a group of people whatever the reason is…This situation is an unfortunate proof that the state does not have the capacity at this time to mediate to resolve conflicts,” O’Brien said.
Peru is the world’s second largest copper producer after neighbouring Chile and mining is a key source of tax revenue. Residents of nearby communities have been increasingly protesting mines, claiming they cause pollution without contributing enough to local economies.
Fighting to keep top producer status
Southern Copper, part of Grupo Mexico, is one of the biggest copper companies by mineral reserves and Cuajone is its second largest mine in Peru.
The miner’s copper production dropped by 4.3% in 2021 and it recently said it expected the decline to continue this year.
Southern Copper expects to churn out 922,000 tonnes of the metal used in construction and electric vehicles in 2022.
“After this year, we believe our 2023 production will bounce back to one million tons of copper,” it said in a February earnings statement. “By the end of this decade, as our organic growth projects mature, we expect to hit the 1.8 million-tonne copper production mark.”
Southern is developing projects worth $2.8 billion in Peru. If the up-and-coming Michiquillay and Los Chancas projects are included, that figure jumps to almost $8 billion.
Operations at Southern Copper’s Cuajone mine in Peru have been suspended for 15 days as locals continue to block the company’s access to a water reservoir and other key supplies, the country’s mining and energy industry body has revealed.
The blockade began on February 28, when Southern Copper made the decision to replace a 50-year-old water pipe that supplies nearby communities.
According to Raul Jacob, chief executive of Southern Copper and current president of the Society of Mining, Petroleum and Energy of Peru (SNMPE), the section replaced is on the mine’s concession.
Jacob told local media he has documentation that proves the move was brought to community leaders as well as to regional and national authorities.
“The blockade took us by surprise,” Jacob said.
Workers at the Cuajone copper mine, which employs more than 5,000 people, are asking the government to mediate the conflict between the company and locals, arguing their jobs and lives are at risk.
“The refusal of residents to restore water supply to Cuajone and free the railroad prevent us from resuming operations at the mine,” Southern Copper said in an emailed statement.
The above video shared on social media shows mine workers asking for government help and calling locals to let supplies get to them.
The SNMPE said protesters were demanding $5 billion in compensation as well as a share of 5% of the company’s profits.
Mining specialist at Velocity Trade Capital, Pablo O’Brien, said there was more to the situation, which he qualified as “very serious.”
“No one can just turn off water supplies to a group of people whatever the reason is…This situation is an unfortunate proof that the state does not have the capacity at this time to mediate to resolve conflicts,” O’Brien said.
Peru is the world’s second largest copper producer after neighbouring Chile and mining is a key source of tax revenue. Residents of nearby communities have been increasingly protesting mines, claiming they cause pollution without contributing enough to local economies.
Fighting to keep top producer status
Southern Copper, part of Grupo Mexico, is one of the biggest copper companies by mineral reserves and Cuajone is its second largest mine in Peru.
The miner’s copper production dropped by 4.3% in 2021 and it recently said it expected the decline to continue this year.
Southern Copper expects to churn out 922,000 tonnes of the metal used in construction and electric vehicles in 2022.
“After this year, we believe our 2023 production will bounce back to one million tons of copper,” it said in a February earnings statement. “By the end of this decade, as our organic growth projects mature, we expect to hit the 1.8 million-tonne copper production mark.”
Southern is developing projects worth $2.8 billion in Peru. If the up-and-coming Michiquillay and Los Chancas projects are included, that figure jumps to almost $8 billion.
Protests have hit several large mining companies in Peru since leftist President Pedro Castillo took office in July after winning the election with overwhelming support in the country’s impoverished mining regions.
The road used by MMG’s Las Bambas copper mine to transport its metal has been blocked on and off by residents who are demanding financial contributions from the company.
Last year, protests also disrupted the country’s top copper mine Antamina, co-owned by BHP (33.75%), Glencore (33.75%),Teck Resources (22.75%) and Mitsubishi (10%).
Glencore (LON: GLEN), Hudbady Minerals TSX, NYSE: HBM) and Hochschild Mining’s mines have also been affected.
Social unrest in the nation’s mining areas deepens global concerns around a looming deficit of copper.
According to estimates from CRU Group, the copper industry needs to spend more than $100 billion to close what could be an annual shortage of 4.7 million tonnes by 2030.
Copper price rises on Peru supply disruption worries
Staff Writer | March 16, 2022
The vast Cuajone mine complex begins with a water supply at Lake Suche at 14,500 feet in the Andes and ends with a smelter on the South Pacific coast. (Image courtesy of Fluor.)
The copper price rose on Wednesday as supply concerns resurfaced in Peru, the world’s second-biggest producer of the metal after neighboring Chile.
Copper for delivery in May rose 2.6% from Monday’s settlement price, touching $4.633 per pound ($10,192 per tonne).
Operations at Southern Copper’s Cuajone mine in Peru have been suspended for 15 days as locals continue to block the company’s access to a water reservoir and other key supplies.
The blockade began on February 28, when Southern Copper made the decision to replace a 50-year-old water pipe that supplies nearby communities.
The company said on Wednesday it plans to import copper concentrate potentially from as far away as Mexico for its refinery in Peru.
Raúl Jacob, the company’s vice president of finance, said this would imply an increase in costs and a decrease in profits for this year.
Southern Copper, controlled by Grupo México, has a smelter in the Peruvian town of Ilo and operates the Cuajone and Toquepala mines in the south. It also operates the La Caridad and Buenavista deposits in Mexico.
Southern Copper produced about 400,000 tonnes of copper concentrate in Peru last year, according to government data.
“This is going to drive up costs, for sure,” Jacob said. When asked if this would also impact profits for the year, he said it would because “every day that passes the company is going to be prevented from selling some $4.8 million.”
The protesters are demanding compensation of $5 billion for the use of their land and a 5% share of the company’s profits. The company says it has full land-use rights and that the protest is illegal.
Jacob said he hoped authorities would intervene to put an end to the conflict, claiming that the protest, along with others hitting MMG’s huge Las Bambas copper mine was affecting 20% of the country’s copper production.
(With files from Reuters)
Staff Writer | March 16, 2022
The vast Cuajone mine complex begins with a water supply at Lake Suche at 14,500 feet in the Andes and ends with a smelter on the South Pacific coast. (Image courtesy of Fluor.)
The copper price rose on Wednesday as supply concerns resurfaced in Peru, the world’s second-biggest producer of the metal after neighboring Chile.
Copper for delivery in May rose 2.6% from Monday’s settlement price, touching $4.633 per pound ($10,192 per tonne).
[Click here for an interactive chart of copper prices]
Operations at Southern Copper’s Cuajone mine in Peru have been suspended for 15 days as locals continue to block the company’s access to a water reservoir and other key supplies.
The blockade began on February 28, when Southern Copper made the decision to replace a 50-year-old water pipe that supplies nearby communities.
The company said on Wednesday it plans to import copper concentrate potentially from as far away as Mexico for its refinery in Peru.
Raúl Jacob, the company’s vice president of finance, said this would imply an increase in costs and a decrease in profits for this year.
Southern Copper, controlled by Grupo México, has a smelter in the Peruvian town of Ilo and operates the Cuajone and Toquepala mines in the south. It also operates the La Caridad and Buenavista deposits in Mexico.
Southern Copper produced about 400,000 tonnes of copper concentrate in Peru last year, according to government data.
“This is going to drive up costs, for sure,” Jacob said. When asked if this would also impact profits for the year, he said it would because “every day that passes the company is going to be prevented from selling some $4.8 million.”
The protesters are demanding compensation of $5 billion for the use of their land and a 5% share of the company’s profits. The company says it has full land-use rights and that the protest is illegal.
Jacob said he hoped authorities would intervene to put an end to the conflict, claiming that the protest, along with others hitting MMG’s huge Las Bambas copper mine was affecting 20% of the country’s copper production.
(With files from Reuters)
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