Chinese-Owned Mine Hit by More Delays in Key Peru Copper Expansion Project

Marcelo Rochabrun
Thu, July 13, 2023 


(Bloomberg) -- A unit of state-owned China Minmetals Corp. is bracing for further delays in building a second pit at its troubled Las Bambas copper mine in Peru, while the military there continues to buffer the operation from protest disruptions.

A long-delayed project to mitigate depletion at the current pit was slated to begin in the second half of the year. That’s looking increasingly unlikely due to delays in negotiations with an indigenous community.

“We hope we can finish negotiations this year, but it’s too early in the process yet to know how fast it will go,” Troy Hey, who heads corporate relations at Hong Kong-listed MMG Ltd, said in an interview from Lima. “Once we get an agreement, it’s probably up to three months to get to mining.”

Las Bambas, located in a remote part of the Peruvian Andes, is one of the world’s biggest and most troubled mines. It’s faced recurrent protests from indigenous communities since opening in 2016 at a cost of $10 billion. Blockades and other disruptions have exceeded 600 days in that span, interrupting shipments to smelters in China.

The mine, previously owned by Glencore Plc through its acquisition of Xstrata, can produce as much as 400,000 metric tons a year. But it’s repeatedly underperformed because of protests and declining ore quality. Opening the second pit would see Las Bambas run at full capacity. Without it, the mine will produce about 300,000 tons next year, assuming no disruptions, Hey said.

It’s currently operating with military protection. Tensions reached a peak a year ago when the Huancuire community entered Las Bambas and built a camp on land they had sold to the company for the second pit. Hey said Huancuire members had finally left the area, but that talks were not done yet. MMG is encouraged by new community leadership and is overhauling its approach to community relations, Hey said.

“We are in the best place we have been for a long time in terms of negotiations but it’s tough to see what time-frame it will be,” he said. Huancuire leadership turnover had stalled talks for more than six weeks but MMG hopes to restart negotiations next week, Hey said.

Transporting semi-processed copper from Las Bambas to a seaport has long been the company’s biggest challenge. It uses a mostly unpaved road that traverses about 70 indigenous communities, many of which have long complained about insufficient financial benefit from mining.

President Dina Boluarte has managed to keep copper flowing since March by deploying military to the area. Her administration plans to keep soldiers there until further notice.

“Having police and military presence to keep things calm is not a long-term solution, though I think at the moment we greatly appreciate the support of the government to do that,” Hey said.

Without the military, Las Bambas probably would have seen renewed blockades, he said. “It’s a chronic problem, and so if we do nothing differently we should expect to see the same outcome.”