Peru revokes licence of Canadian mining firm Bear Creek – by William Lloyd George (Globe and Mail – June 27, 2011)

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As smoke rose from burning tires and torched security vehicles, heavily armed police confronted nearly a thousand angry anti-mining protesters walking the runaway of Juliaca’s airport in southern Peru, near Lake Titicaca. One protest leader called for the group to reclaim the airport. Others said it was too dangerous. Then a call came through from the protest leaders in the capital, Lima.

The government had given into their demands and agreed to revoke the licence for Canadian mining firm Bear Creek to open its Santa Ana silver mine in the area; as well, it halted all new mining concessions in Puno province for 36 months. The unrest ended with the agreement Saturday, narrowly averting a repeat of a bloody conflict the day before, when police killed at least five demonstrators at the airport.

While the breakthrough agreement stopped further bloodshed, it casts doubts on other resource operations in Peru, a nation that relies heavily on foreign investment and receives about 70 per cent of its GDP from the mining industry. Peru is South America’s fastest-growing economy, driven by surging commodity prices, but the rural poor have benefited little from mining and complain it contaminates their water and crops. The incoming government must balance the interests of international resource firms, whose production is a huge source of national wealth, alongside those of protesters who argue mines have a devastating impact on the environment.

“Perceived protester success in the Puno region has the potential to empower a more broad-based anti-mining movement in the country, causing investor uncertainty over the security of exploration and mining concessions throughout Peru,” BMO Nesbitt Burns analyst Andrew Kaip said in a report on Sunday

The recently approved Santa Ana project in southern Peru has become a symbol for thousands of protesters opposed to mining and energy projects in the run-up to the recent election, which was won by left-wing nationalist and former army rebel Ollanta Humala. Protesters are using forceful demonstrations to pressure Mr. Humala’s administration as it decides on changes to legislation for resource firms after it takes office on July 28. Outgoing president Alan Garcia told reporters on the weekend that “dark political interests” were to blame for the deadly clashes in Puno province, which is in the southeastern region of the country.

With his presidency nearing an end, it is widely believed that Mr. Garcia gave into the demands to avoid the violence escalating under his watch and instead chose to pass the problem over to Mr. Humala

Edwin Gallegos Pasco, dean of the engineering faculty at the regional University of Altiplano, said the protests will only reduce development in the region. He argues that the formal mines bring development and less contamination than the informal mining, which will increase in place of the foreign-run mines.

Prof. Pasco believes, though, that the government is to blame for the protests, saying there is a lack of education about mining. He argues that the government should be informing the people in “peaceful times” how the contamination levels are lower in multinational mines than in smaller independent mines.

“The government always waits till it’s too late and there is a problem,” says Prof. Pasco adding that the government needs to use the income from mines more efficiently. “Their mismanagement of the economy is also to blame for the protests.”

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