(Bloomberg) — Schools and clinics. Soccer fields and bull rings. Even plump guinea pigs — to eat. From South America to Africa, mining companies are throwing all that and more at communities to quiet growing opposition to controversial projects.
“There’s something like $25 billion worth of projects tied up or stopped,” Mark Cutifani, chief executive officer of Anglo American Plc, said in an interview. “We have to get all those relationships right.”
While opposition to mines is nothing new, the issue is a growing concern for miners like Anglo American and executives are increasingly speaking out. Billions of dollars are at stake, they say. Their opponents say the companies despoil the environment and often fail to benefit local economies, or at least not as much as they claim.
Push-back has been growing since the 1980s, when communities were rarely consulted about new mines. Now, local support is critical, according to Thras Moraitis, head of strategy at Xstrata Plc before its 2013 takeover by Glencore Plc.
“You can’t get a permit without involving full and prior consent of the local communities,” he said. Communities from Peru to South Africa are mobilizing to negotiate more successfully with the companies, according to two studies released late last year. Residents who are relocated to make way for mines are demanding more in return.
Power, Water
In Peru, it took six years of talks before work could begin on the Las Bambas copper project, said Moraitis, who’s now a principal at X2 Resources, a mining investment vehicle founded by former Xstrata managers.
Clinching the Las Bambas deal required building a new village with six-bedroom houses, a bull ring and a soccer pitch atop a 4,000-meter (13,000-foot) mountain. The village, Nueva Fuerabamba, has power, running water and sewage-treatment facilities.
“We call it New York in the Andes,” said Andrew Michelmore, CEO of China’s MMG Ltd., which bought Las Bambas from Glencore in July for $7 billion.
MMG has moved three-quarters of the villagers and expects to complete the relocation this quarter.
Relocation plans cover minute details. In Fuerabamba, for instance, Xstrata brought in husbandry experts to breed healthier, bigger guinea pigs, which are a common food in Peru and Ecuador.
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