Deadly attack spurs plea for Peru crackdown on unlicensed mines

Bloomberg News | December 5, 2023 | 

Credit: Minera Poderosa SA

Mining executives in Peru are imploring authorities to crack down on escalating violence by informal miners, which this weekend cost the lives of nine staff members of a large, legal gold mine.


“Formal mining is under attack,” Angela Grossheim, the head of industry group SNMPE and a former minister, told reporters Tuesday. “Illegal mining today is the country’s main illicit activity, even bigger than drug trafficking.

Over the weekend, workers in a shaft at a mine run by Cia. Minera Poderosa SA were ambushed by explosives, bringing the number of deaths in clashes with informal miners at Poderosa to 16 in the past two years. Peru is a major gold and copper supplier, with the two metals attracting more informal mines made more lucrative by high prices and new techniques.

Conflicts have extended to some of Peru’s sprawling copper deposits, including Southern Copper Corp.’s Los Chancas project and MMG Ltd.’s Las Bambas mine. Both have struggled to develop new pits in areas that have drawn informal miners. The Los Chancas mining camp was burned down last year.

The industry is laying part of the blame on temporary permits known in Peru as Reinfo, a registry that allows informal miners to operate with some legal protections while they formalize operations. But the registry has been open for a decade and many workers have remained in the system without formalizing.

“It’s time to put a stop to this mantle of impunity,” said Poderosa corporate affairs manager Pablo de la Flor. He added that Poderosa has been in conflict with informal miners who are part of the Reinfo registry.

Poderosa is calling on authorities to send in the army at a site where hundreds of additional police officers have been deployed. The Lima-based firm has hired an additional 1,200 security guards just in the past few months.

(By Marcelo Rochabrun)

In Peru’s hills, an artisanal miner boom frustrates Big Copper’s plans

Reuters | December 1, 2022 | 

Las Bambas is considered the world’s ninth-largest copper mine with an output of about 400,000 tonnes of the industrial metal per year. (Image courtesy of MMG.)

In the hills of Tapairihua in Peru’s Andes, Samuel Retamozo and other artisanal miners have found a rich seam of copper on their indigenous community’s land. Armed with temporary government permits, they started exploiting it earlier this year.


There’s just one problem – the seam is within the site of Southern Copper Corp’s planned $2.6 billion Los Chancas mine. One of the world’s biggest copper miners, it also has a permit to dig in the same area.

Grupo Mexico’s Southern Copper aims to start producing here in 2027 after decades of studies. The planned mine is crucial to the company’s goal of producing 1.8 million tonnes of copper annually by 2030.

But the rise of artisanal copper mining – driven by high global metal prices and sustained by a messy government permitting system – is threatening billions in new investments by Southern Copper and others in Peru, according to Reuters reviews of internal company reports, interviews with executives and a visit to Tapairihua to meet the miners.

Small-scale copper miners are now challenging Big Copper for territorial control of rich deposits of the red metal. Artisanal copper mining is creating much-needed income for impoverished Andean Peruvians even as it brings them into conflict with major miners, a rare and previously unreported trend in the world’s No. 2 copper producer.

“This used to happen with silver and gold, but now it’s affecting copper,” said Raul Jacob, Southern Copper’s chief financial officer, bemoaning what the company sees as the government’s poor handling of artisanal mining permits.

In Peru, artisanal mining permits have doubled to 80,000 since 2020, government records show. And copper is the new focus.

Southern Copper is not the only mining company in a stand-off with the miners. Chinese-owned MMG Ltd’s nearby Las Bambas copper mine is struggling to develop two new open pits because of artisanal miners who have settled on the same land. The company says its current pit is running out.

“Informal mining is entering lands granted to formal (mining) companies and threatening the development of large-scale projects,” a source close to MMG told Reuters.

While companies often call small-scale miners “informal” or “illegal,” what complicates the matter are two dueling authorizations – one for artisanal mining and another to hold the mining rights to a given area. Mining companies own the latter, known as concessions.

But since 2012 Peru has been granting artisanal mining permits on lands that overlap with concessions, giving the small-scale miners some legal protection, Reuters found after checking the geolocations of the permits and reviewing an internal document in which Peru’s mining ministry did the same.
Potential for more disputes

Disputes between mining firms and artisanal miners may only increase over time. Peru’s leftist administration presented a new framework for artisanal mining last week that declared artisanal mining is “as important” as big mining.

Southern Copper has asked the government to revoke all artisanal mining permits on its concession. About half have now been canceled, causing resentment in Tapairihua.

“We are going to defend ourselves. At the end of the day we are at home, and from home there is nowhere to go,” Retamozo, a mining engineer and president of the Tapairihua Mining Association, told Reuters.

While artisanal permits have existed since 2012, lower copper prices that decade meant they were not in demand. But copper has risen more than 60% since 2020 due to demand for electric vehicles.

The surge in artisanal copper mining is forcing the government to review its artisanal permitting system, a mechanism that was meant to be a temporary bridge toward formalization and intended mostly for gold miners.

“Our country is a mining country but we haven’t had until now a mining framework that gives a long-term view about small-scale mining,” Alberto Rojas, Peru’s top mining formalization official, told Reuters.

Rojas, however, suggested artisanal miners would lose in a dispute against concession holders.

“Where we have concessions we can’t have (artisanal mining permits),” Rojas said. “We can’t disavow the concessions that have already been granted.”
Diggers, trucks

On a recent day in Tapairihua, Reuters visited the artisanal mining operations, where dozens of wood and blue tarpaulin homes were erected, and tunnels supported with wooden beams burrowed into the steep rocky hillside.

In Peru’s Andes many feel the copper under the ground is a right, with mining dating back to the Incas and other cultures that existed before Spain’s colonization. Tapairihua looks down onto the river Antabamba, meaning “copper plain” in the Andean Quechua language.

Many of the miners are also local subsistence farmers who took up mining in search of income. Many declined to be named because they have been sued by Southern Copper over their mining activities.

To extract copper, they use dynamite to explode rock that they bring out in wheelbarrows and bags. Miners earn 80 soles ($20.61) a day, extracting enough rock to fill a handful of trucks a week, usually containing around 5% copper, though this level can rise as high as 18%.

Gherson Quintanilla arrived in Tapairihua earlier this year with a background in artisanal gold mining. He came because he heard copper was abundant and expertise was low.

“My goal is to extract up to two truckloads a day,” he told Reuters.

But artisanal copper mining is not always as small scale.

An internal Las Bambas presentation seen by Reuters estimated informal miners were blasting some 1,950 tonnes of rock per day, almost double their output a year ago.


The report said artisanal miners were using heavy machinery and diggers as well as pneumatic tools.

Overall, it estimated the government has issued 700 permits that overlap with Las Bambas’s concession,

But removing those miners is not straightforward. While Las Bambas and Southern Copper hold mining rights – which grants them access to the mineral underground – in most cases they have yet to buy the property rights to the surface terrain.

That limits their options because they cannot file an eviction claim on land they do not own.

The source close to Las Bambas said MMG recognized this difficulty and anticipated it would have to buy out the miners if it wants them to leave the site of its third pit, set to open in 2027 – if there are no delays.

At the site of its second pit, which was supposed to open this year, Las Bambas has filed eviction claims against the miners there because it already owns that particular parcel of land. The company estimates almost a dozen mining sites in the area. Reuters was unable to determine the number of miners working in them.
‘Fuel to the fire’

In May, Southern Copper sued Retamozo and other Tapairihua miners, saying their mining permits were non-compliant.

Weeks later a fire destroyed Southern Copper’s local headquarters, which is made up of tents, just minutes downhill from where the small-scale miners are operating. Burned-out cars remain there today.

Nobody was hurt in the fire and no arrests have been made. Peruvian authorities say the matter remains under investigation.

The miners have distanced themselves from the arson, though Retamozo acknowledged the lawsuits have angered them and that some individual members may have acted out of “resentment.”

The number of valid artisanal mining permits in Tapairihua has fallen from 100 to 32 since May, according to government records. An internal mining ministry document seen by Reuters shows that the process is under way to revoke the remaining permits.

Retamozo cautioned about what would happen if those were canceled.

“Canceling them would add fuel to the fire,” he said.

($1 = 3.8811 soles)

(By Marco Aquino and Marcelo Rochabrun; Editing by Adam Jourdan and Ross Colvin)

Residents end blockade of Las Bambas mine road, agree to dialogue

Reuters | June 22, 2022 | 

Las Bambas is one of Peru’s largest copper producers, accounting for around 2% of global supply. (Image courtesy of MMG Instagram.)

A community in Peru’s Andes mountains on Wednesday suspended their blockade of a highway used by MMG Ltd’s Las Bambas copper mine, agreeing to negotiate with the government and the company over the road’s use, one of the community’s leaders said.


“It is a truce that will last until Wednesday of next week. If a solution is not found, we will restart the protest,” Efrain Mercado, president of the Mara district defense front, told Reuters by telephone.

Residents in the Mara district of the Apurimac region had blocked the highway with sticks and rubber tires, according to photos published on Twitter and confirmed to Reuters by a community leader.

The blockade signaled a new conflict just two weeks after the mining firm resumed operations following another protest that forced Las Bambas to shut down for more than 50 days, the longest in the mine’s history.

A source close to Las Bambas said earlier on Wednesday it was not immediately clear if the protest had affected transportation of copper concentrate from the mine.

Protesters on Wednesday morning had been demanding payment for use of the road, according to a source close to the company and a protest leader.

“We are blocking (the road) because the government is delaying land appraisals on properties through which the road passes. It is an indefinite protest,” Alex Roque, one of the Mara district’s leaders, told Reuters before the blockade was suspended.

Peru is the world’s No. 2 copper producer and Chinese-owned Las Bambas is one of the world’s largest producers of the red metal.

The protest and shutdown have caused a major problem for the leftist administration of President Pedro Castillo, who came to office last year pledging to redistribute mining wealth but who is also under pressure to grow the economy.

Las Bambas alone accounts for 1% of Peru’s gross domestic product.

(By Marco Aquino, Anthony Esposito and Brendan O’Boyle; Editing by Sandra Maler)

Road to Las Bambas mine blocked again by residents

Reuters | June 22, 2022

Credit: Presidencia Perú

A community in Peru’s Andes mountains on Wednesday blocked a highway used by MMG Ltd’s Las Bambas copper mine, demanding payment for use of the road, according to a source close to the company and a protest leader.


The new conflict comes just two weeks after the mining firm resumed operations following another protest that forced Las Bambas to shut down for more than 50 days, the longest in the mine’s history.


Residents in the Mara district of the Apurimac region blocked the highway with sticks and rubber tires, according to photos published on Twitter and confirmed to Reuters by a community leader.

“We are blocking (the road) because the government is delaying land appraisals on properties through which the road passes. It is an indefinite protest,” Alex Roque, one of the Mara district’s leaders, told Reuters.

A source close to Las Bambas also confirmed the blockade, but said it was not immediately clear if the protest was affecting transportation of copper concentrate from the mine.

Following the previous hiatus in operations, MMG said it expected production at the site and material transportation to resume on June 11.

Peru is the world’s No. 2 copper producer and Chinese-owned Las Bambas is one of the world’s largest producers of the red metal.

The protest and shutdown have caused a major problem for the leftist administration of President Pedro Castillo, who came to office last year pledging to redistribute mining wealth but who is also under pressure to grow the economy.

Las Bambas alone accounts for 1% of Peru’s gross domestic product.

(By Marco Aquino and Anthony Esposito; Editing by Sandra Maler)

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Colombia, Ecuador & Peru: Social engagement can make or break mining investment
Henry Lazenby | May 20, 2022 |

A 2021 meeting with farming communities protesting MMG’s Las Bambas copper mine in Peru. (Reference image by Peru’s Presidency of the Ministers’ Council, Flickr).

Companies operating in Colombia, Ecuador and Peru should do a better job of engaging and sharing the wealth their mines generate.


Observers tell The Northern Miner that implementing corporate social responsibility (CSSR) programs when mining business in Colombia, Ecuador, and Peru is simply not enough to guarantee success.

Instead, mineral explorers and developers often see substantial projects halted in their tracks by staunch community-level opposition, even when projects had passed regulatory muster, says mining sector researcher, analyst and reporter Paul Harris, in an interview.

Related: Peru fails yet again to broker truce allowing Las Bambas mine restart

Legacy CSR programs are simply no longer adequate. The analyst suggests those wishing to do business in these jurisdictions take a more holistic approach toward meaningful engagement with host communities before engaging governmental authorities about their respective projects.

The solution, according to Harris, is companies today have to be willing to give up an ownership stake in their projects so that local communities and local and federal governments have more skin in the game.

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KEEP READING AT NORTHERN MINER

Peru fails yet again to broker truce allowing Las Bambas mine restart

Reuters | May 19, 2022 

Las Bambas copper mine. Image: YouTube

Peru’s prime minister on Thursday failed to broker a deal with indigenous communities to allow for the restart of operations at MMG Ltd’s Las Bambas copper mine, the government’s fourth failed negotiation attempt.


Chinese-owned Las Bambas is one of the world’s largest copper mines, accounting for 2% of global supplies. The mine suspended operations on April 20 after two indigenous communities entered company property, reclaiming land that had once belonged to them before the mine started operations in 2016.

Peru is the world’s No. 2 copper producer.

On Thursday, Prime Minister Anibal Torres traveled to the Andean region of Apurimac where the mine is located. But he arrived late and then abruptly left the meeting only an hour after it had started.

“It’s a lack of respect toward community members,” Baltazar Lataron, the governor of Apurimac, said about Torres’s departure.

The failed meeting extends the uncertainty on when Las Bambas will be able to restart copper production as its current suspension approaches the one-month mark, its longest shutdown so far.

Las Bambas accounts for 1% of Peru’s gross domestic product and company executives have warned that if a solution is not found soon they may have to furlough or fire some of its workers.

The protesting communities of Fuerabamba and Huancuire sold land to Las Bambas in the past for millions of dollars, but allege the mine has failed to honor all of its commitments.

Las Bambas is notorious for its social conflicts, involving dozens of different Andean communities that allege the benefits of its vast mineral wealth have not trickled down to them.

(By Marcelo Rochabrun; Editing by Marguerita Choy)

Peru mining protests risk clogging $53 billion investment pipeline

Reuters | May 17, 2022 

Yanacocha mine, in Peru’s northern Cajamarca region. (Image courtesy of Newmont.)

Peru, the world’s second-largest copper producer, risks losing out on billions of dollars of mining investment if the government fails to defuse protests that are hitting the industry and denting production, analysts and executives said.


Social conflicts have risen in the Andean nation over the past year since socialist President Pedro Castillo came into office, with a spate of protests against mines, including one that has halted production at the huge Las Bambas copper deposit.

With global prices soaring on high demand, that now threatens a mining investment pipeline of some $53 billion and could stall future projects expected by investment bank RBC to make up 12% of the world’s copper supply in years to come.

“Without any world-class projects on the horizon, the prospects for sustaining production are not good,” said Gonzalo Tamayo, analyst at Macroconsult and a former Peruvian mines and energy minister.

Mining executives and analyst met last week in Peru’s capital Lima, where the main concern was falling investment tied to rising social protests. A central bank report shows investment dipping some 1% this year and 15% in 2023.

The conflicts, mainly in poor Andean areas where communities feel bypassed by the huge mineral wealth beneath their soils, have started to bite, with protesters emboldened under Castillo who won election pledging to redistribute mining wealth.

Southern Copper’s Cuajone mine was paralyzed for almost two months earlier this year.

Las Bambas, owned by China’s MMG Ltd, suspended operations in April after an invasion of the mine by communities demanding what they called ancestral lands. The mine, which produces 2% of the world’s copper output, remains offline.

Las Bambas had received government approval in March to expand the mine, a plan which is now under threat.

Álvaro Ossio, vice president of commercial and finance for ​​Las Bambas, said in a presentation at the Lima event, that the country faces a big task to benefit from high global prices.

“The great challenge that remains for all Peruvians is to take advantage of this great opportunity in these future trends,” he said.

Peru’s last big mining investments were in Anglo American’s Quellaveco and Minsur’s Mina Justa of a combined $6.6 billion. Their operations starting this year will help Peru hit annual output of 3 million tonnes of copper by 2025, experts say.

However, other major projects like Southern Copper’s Tia María, Michiquillay and Los Chancas worth some $6.7 billion, Buenaventura’s near billion dollar Trapiche and Rio Tinto’s $5 billion La Granja remain up in the air.

Not all was downbeat, however.

The world’s largest gold miner, Newmont Mining, said at the event that it was considering expanding into copper production in Peru, with a potential future return to the canceled Conga project.

Analyst Tamayo, though, stressed recent protests against mining had become harder to resolve.

“Now there are protests that stop mines in full operation,” he said. “The mining firms feel that the State does not support them and that the State has ceased to be the arbiter in conflicts.”

(By Marco Aquino; Editing by Adam Jourdan and Richard Pullin)

Blockade halts Southern Copper’s Cuajone mine in Peru
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.

RANKED: World’s top 10 biggest copper mines

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).

[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)

Peru wants mining companies to help build railway to Pacific coast
Reuters | August 25, 2021 |

Harbour in San Juan de Marcona, Peru. Credit: Wikimedia Commons

Peru is asking help from mining companies Las Bambas, of China’s MMG Ltd, and Grupo Mexico’s Southern Copper to build a rail system from a mineral-rich Andean zone to the country’s central Pacific coast, Mining Minister Ivan Merino said in an interview.


Representatives of both companies said they were open to discussing participation in the railroad, which would be used to transport both commodities and people. Peru is already the world’s No. 2 copper producer, and the country’s new government want to further develop the sector.

The railway, in the technical evaluation stage and with construction scheduled to start in 2023, would start in Cusco or Apurimac and go to the port of Marcona, Merino told Reuters in an interview late on Tuesday.

PERU’S SOUTHERN ANDEAN REGION HAS LARGE MINES SUCH AS MMG’S LAS BAMBAS AND GRUPO MEXICO’S LOS CHANCAS

“The cost of the project is being evaluated,” the minister said, adding that the train should be ready to roll in 2028.

Peru’s southern Andean region has large mines such as MMG’s Las Bambas and Grupo Mexico’s Los Chancas.

Las Bambas produces an average 350,000 tonnes of copper per year and Los Chancas is a $2.6 billion project, currently in the environmental impact study phase. Southern Copper plans to produce 100,000 tonnes of copper per year at the site.

“They are part of the project,” Merino said.

Asked about the plan, Southern Copper Vice President of Finance Raul Jacob said that he had discussed the train proposal with Merino.

“We consider it an interesting project that must be carefully evaluated,” he told Reuters in a written message.

MMG ‘s corporate affairs manager, Maggie Qin, said in an email that Las Bambas is aware of the railway plan.

“We are willing to work closely with the government and help it when and where it is needed,” she said.

Australia-based MMG is a subsidiary of Chinese state-owned enterprise China Minmetals Corp.

(By Marco Aquino and Hugh Bronstein)

Peru will seek to tax miners more when prices high
Reuters | August 26, 2021 | 

Guido Bellido. Credit: Wikipedia

Peruvian Prime Minister Guido Bellido asked Congress on Thursday for legislative powers for the executive on tax matters as he seeks a first vote of confidence for the new cabinet of leftist president Pedro Castillo.


Bellido said that the government also plans to tap the excess profits of mining companies at times of high international prices of raw materials. Peru is the world’s second largest copper producer and mining is the engine of the Andean country’s economy.

(By Marco Aquino and Aislinn Laing)