Sent: Wednesday, February 09, 2005 10:53
Subject: Communism in anti-mining
The discussion in greenyes digest about religion
and environmentalism is interesting enough. Here's another topic,
described in this weeks Economist, about how the Trotsky-ists are getting into
mining protests. The enemy of my enemy may be my friend, but I'd be much
more comfortable with the recycling community as an anti-mining, anti-forestry
advocate. As the article describes, even the best-run mining and
smelting operation makes a worse neighbor than a landfill, and almost as sorry
I think part of the problem is that there's
unlikely to be any corporate sponsorship for this effort. The very
largest recycling companies are very aware that their raw materials customers
benefit enormously from land use subsidies. While Bureau of Land
Management reforms would be wonderful for recyclers, no copper or paper or
metal recycling company is going to get caught advocating for
Mining in Peru
Halting the rush against
Feb 3rd 2005 | CAJAMARCA
From The Economist
Big mining and its increasingly radical
A PLEASANT town in a broad green valley in
northern Peru, Cajamarca is the site of one of history's great betrayals. Some
200 yards from the main square, through a Spanish colonial doorway, stands a
stone building known as the ?Ransom Room?. Though this particular building may
in fact have been his prison, in 1532 Atahualpa, the Inca ruler, offered to
fill such a room with gold artefacts in order to win freedom from his
conquistador captors. He kept his side of the bargain?but was murdered anyway.
Now, once again, some people in Cajamarca complain that Peru's gold is being
carried off by foreigners?and they are trying to stop it.
Astride the Andean watershed an hour north of
Cajamarca is Yanacocha, one of the world's biggest and most profitable gold
mines. Run by Newmont, a Denver-based company which owns it with Peru's
Buenaventura, Yanacocha is a world away from the dark and dangerous gold mines
of the past. At five separate sites, giant scoops slice the sides from
mountains, loading 300,000 tonnes of rock a day into 250-tonne trucks, each
the height of a four-storey building. The rock is laid out in terraces, sealed
in black plastic, and injected with cyanide solution. This process yields an
ounce of gold from each tonne of rock. So successful has Yanacocha been that
its output has soared from 81,000 ounces of gold in 1993 to 3m ounces last
This headlong expansion has injected wealth into
Cajamarca, though it is still one of Peru's poorest departments. The mine has
produced fears and resentment too. For a fortnight last September, thousands
of protesters blocked the road to the mine; supplies and staff had to be
ferried to and fro by helicopter. The protest was against Newmont's decision
to prospect on Cerro Quilish, a mountain which locals say feeds streams that
supply the city with drinking water. The protesters won hands down. Humbled,
Yanacocha agreed to stop prospecting, asked the government to revoke its
licence to do so, and issued an unprecedented public apology.
Two months later, at La Zanja, a six-hour journey
from Cajamarca, a mob of some 350 locals, stirred up by extreme leftists,
burnt and sacked a prospecting camp run by Buenaventura; they destroyed ten
years' worth of rock samples. In December, three provinces in the area were
shut down by a two-day protest strike against mining, while at Rio Blanco,
close to Peru's border with Ecuador, a local-radio reporter was kidnapped by
opponents of another proposed mine.
These events are widely seen as a turning point for
mining in Peru?in more ways than one. ?The pace at which we've expanded will
be difficult to maintain,? admits Brant Hinze, an American who is Yanacocha's
general manager. The protests also pose some broader questions. Will Peru
remain one of the world's top mining countries? Will an alliance of local
activists and rich-world NGOs thwart investment in a crucial industry? Or will
both sides work together to ensure that mining is compatible with the
environment and social development? The riot at La Zanja prompted several NGOs
to issue a statement condemning violence. The government has sent police
reinforcements to mining areas. ?The state has drawn a line...[the threat to
mining] is being seen as being as serious as drug-trafficking and terrorism,?
says José Miguel Morales of the National Mining Society, who is also
Buenaventura's general counsel.
The protests typically mix genuine grievance with
ignorant fears that are whipped up by political extremists. In part, they are
a sign of a more vigorous, if chaotic, democracy. They also reflect a mining
boom. Although Peru has been a mining country since pre-Inca times, since 1992
output has tripled. In the decade to 2003, foreign mining companies invested
some $6.7 billion in the country. Projects involving potential investment of
more than $10 billion?and many of the world's top mining firms?are being
While mining provides relatively few jobs, it is
vital to Peru's economy in other ways. Thanks both to high mineral prices and
rising output, mineral exports were up by almost half last year, and accounted
for 55% of total exports. Mining brings in 29% of total tax revenues. Of this
money, the government last year returned $138m as a local royalty to mining
areas, most of which are otherwise poor and remote.
Because of its scale and prominence, Yanacocha may
hold the key to mining's future in Peru. ?If Yanacocha does things better, it
will open the door to all mining projects in the north of Peru. If it doesn't,
it will close the door to these projects,? says Marco Arana, a Catholic priest
who led the protests over Cerro Quilish. The mine's critics focus on two
things: its environmental impact, and its alleged lack of benefits for local
people, many of whom are poor farmers.
Many of the environmental complaints, such as
claims that the mine has polluted Cajamarca's drinking water with cyanide or
mercury, look specious. An independent report by Stratus, a Colorado
consultancy, found that while the mine's operations have ?altered water
quality and quantity in some locations and at some times? they have posed no
threat to human health nor to drinking water. But the mine's rapid expansion
has affected farmers. Several irrigation channels have dried up, while extra
sediment in rivers has killed trout. Yanacocha has dealt with some of these
complaints: it is spending $30m on three large dams to filter run-off water.
In 2000, a contractor's truck carrying mercury from the mine had an accident;
dozens of people in Choropampa, a nearby village, were taken ill. The mine
spent $16m on cleaning up and compensation and has tightened procedures for
the transport of dangerous materials.
It is hard to gainsay the mine's economic impact.
Its 8,000 workers are well paid by local standards; another 40,000 jobs depend
on the mine. Under pressure, Yanacocha is increasing the amount of supplies
and services it buys locally. Cajamarca has the air of a boom town, with big
new houses going up?along with brothels and noisy night clubs. In 2003, some
$70m of Yanacocha's tax payments returned to Cajamarca as local royalty?a huge
sum for a town of some 150,000. In addition, the company spent $14m on local
social programmes, such as donations to schools and a regional hospital.
Scratch deeper, and other things lie behind the
discontent. One is history: for centuries, mining companies (some of them
state-owned) dumped toxic residues freely in Peru's fields and rivers. Since
1992, they have faced tighter environmental rules. The industry has spent $1
billion on cleaning up. But past pollution?and accidents such as at
Choropampa?make farmers scared of new mines and of prospectors. And mines?like
many farmers?do not pay for the water they use.
Second is Yanacocha's sheer scale: economically and
politically, it dominates the city of Cajamarca. That generates great
expectations and, since many in the area remain poor, envy and frustration.
Some farmers sold their land cheaply to the mine and have watched land prices
soar. ?Yanacocha asks why they are seen as able to solve all the community's
problems. It's because they've given that image...they use social investment
as a means of social control,? says Father Arana.
Mr Hinze concedes that rapid expansion ?caused us
to overlook details?. He has told his managers to make greater efforts to
listen to the communities around the mine. But he also points out that his
company must strike a difficult balance: ?it's our responsibility to return to
communities some of the wealth?. But, he adds, ?if you're not careful you
become the government. We shouldn't become it.?
Indeed so. At the root of many of the conflicts
over mining lies the weakness of the Peruvian state. If there is still much
poverty in mining areas, that is not mainly the fault of the industry. Local
governments are often corrupt and spend their mining riches badly. The
corruption of the authoritarian regime of Alberto Fujimori, which ran the
country from 1990 to 2000, robbed environmental regulation of credibility.
Alejandro Toledo, the unpopular current president, has lacked authority and
has struggled to keep order. In some places, says Dante Vera, a former
interior ministry official now advising Yanacocha, protests are being whipped
up by drug traffickers, former guerrillas and other extreme leftists. He
worries that mining's expansion and the radicalisation of its opponents could
lead to violence.
Yet there are some hopeful signs. In December,
after three years of talks, the managers of Tintaya, a copper mine run by BHP
Billiton, signed a wide-ranging agreement with local communities backed by
NGOs. Environmental and social responsibility have become part of the price of
operating a mine in Peru. With prices high, that is fine. If and when they
drop, the country may face some hard choices. For Peru cannot afford to do