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Karl Maslo | The crossroads of unlocking mining projects
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The crossroads of unlocking mining projects

By Karl Maslo

One of the primary expectations that all entrepreneurs linked to the mining sector have in common is that the main mining projects should be made real, to help our economy to double its growth.

 

The government proposed to unlock these mining projects, as one of its main strategies to, among other goals, elevate our copper production and obtain 3.1 million tons of it by 2021, which would mean 30% more than what Peru would produce this year, and all of that with very interesting prices, that in principle, should make any project feasible.

But to resolve these issues takes more than good intentions. According to the economist, Juan Mendoza, in a recent article published in Peru21, the key factor that prevents these mining projects is and will remain the social controversy. If we don’t solve this problem, the much desired unlocking process, equally by the government and the majority of peruvians, sadly won’t become a reality.

 

As Mendoza says, reducing the amount of social conflict to speed up the mining projects is the key to resolving this problem. But as we see how the government handles our conflicts, like the medical strike and the teacher’s strike, it’s concerning that there’s no defined strategy with coordination to handle social conflicts, with empowered leaders and a defined delegation of responsibilities. How are these mining conflicts to be solved?

 

We need to go from positive thoughts to concrete and real action. Particularly, I think Alan Garcia’s proposition for community projects is an interesting initiative to analyze, but we should still evaluate others. That could be controversial, as it is to turn the communities into minority shareholders and their dividends would go to an escrow to guarantee its adequate investing into projects only to improve the profit of the communities. I’ve known that the voluntary might that was agreed upon some years ago by the mining companies was all a success. Why not repeat it?

 

Another alternative, that doesn’t ignore the above, would be to perform a census among the families of the surrounding communities of these mining projects, with the goal of identifying at least one member per family, and training them to work in the mining project.

 

In every case, it’s important to guarantee that the money that flows towards communities would be correctly used to the benefit of all the constituents of those communities. Possibly by creating public-communal units of management controlled by professional managers designated by the central government of the decentralized dependences of the comptroller.

 

It’s also important for the government to show, for good, that their leadership will enforce the laws, which we have more than enough of, to guarantee peace in the country and not to be blackmailed by the interests of a few. This blocks big investments like mining, which is a detriment to the entire country. It’s time to get back to order! Let’s have the courage to do it!

 

I understand those who read this might or might not agree with the above, but it’s not written in stone and might even seem absurd or not viable. So I’d ask you to judge these ideas for yourself, or even better, to develop your own proposals and ideas. The only winner is going to be our country.

 

The truth is that, if we don’t solve these background issues, there won’t be any valuable intention of unlocking these projects. We’ll remain sitting on top of our golden bank, that has now become copper, losing more and more opportunities for development and growth. The opportunities that leave will not be coming back…

 

Let’s go over the main mining projects that could move the compass of our country on the next years:

 

Michiquillay is a copper project in Cajamarca that has been held up for about 60 years. At the start of 2017, the interested company decided not to develop the project. In July, the MEM published that the estimated date for a new adjudication would be on November 15th. Michiquillay requires an investment of $1,000 million US dollars, and would begin operations in 2021. The problem is that hundreds of comuneros are living on the deposit, waiting to negotiate for their lands and relocation.

 

Haquira is one of the most iconic projects in Apurimac. Located near Las Bambas in Challhuahuacho, it requires an investment of $2,8 billion US dollars. But we don’t see any advances yet, as the social panorama that surrounds it, spread by what happened in Las Bambas, doesn’t offer decent conditions.

 

The great rejection of the communities around projects like Conga (Cajamarca) and Tía María (Arequipa) is now well known. Both are still on the waiting list without any other interesting progress for their unlocking. Meanwhile, Galeno and La Granja, projects close to Conga in Cajamarca, are also affected by the no vote from the community and it remains locked.

 

Mina Justa presents a different situation. This project in Ica would demand an investment of $1,3 billion US dollars. It’s expected to receive a final decision in the first trimester of 2018 for its construction. Although this project doesn’t have any social conflict, compared to the others, the weakness of our authorities makes the situation unpredictable…

 

Even when Mendoza doesn’t take the Anglo American project into consideration, Quellaveco, I think it’s very important to be considered, not only for its high level of investment, of $5 billion US dollars, but also for its excellent management of the social environment. But like in the previous cases, only God knows if it will finally be accomplished without a government to impose the rule of law to achieve the tranquility of its investors.

 

 

Sources:
http://larepublica.pe/politica/1067095-los-cuatro-proyectos-mineros-anunciados-por-kucsynski-no-son-tan-faciles-de-ejecutar
http://www.gatoencerrado.net/store/noticias/105/105225/detalle.htm
http://gestion.pe/economia/peru-se-alista-reducir-distancia-produccion-cobre-chile-hacia-2021-2197010

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18 august, 2017

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