Peru mining protests prompt alarm – by James Wilson (Financial Times – September 27, 2015)

http://www.ft.com/

More than 4,000 metres above sea level in Peru’s central highlands is one of the biggest construction sites in the western hemisphere.

Some 16,000 workers are building Las Bambas, a huge copper mine. It is already 95 per cent complete and when the project owned by MMG, controlled by China Minmetals, starts producing next year it should quickly ramp up to become one of the largest in the world.

The vast mineral wealth of projects such as Las Bambas have made Peru one of the focal points for mining investment in recent years. But while the resources have not changed, the climate has.
Las Bambas may mark the end of a period of substantial mining spending in Peru that has seen one mine, Hudbay’s Constancia, reach commercial levels of production this year, as well as the imminent completion of a big expansion of Freeport-McMoRan’s Cerro Verde copper mine.

“In the past four or five years, we have seen important investments in mining projects,” says Carlos Gálvez, president of Peru’s National Society for Mining, Petroleum and Energy. “But, unfortunately, we are now dropping.”

Mr Gálvez details some $30bn of investment in the sector over the past five years, including a peak of $10bn in 2013. But his estimate for this year is for some $7.5bn, with an expected drop to $5bn in 2016. The pipeline for new projects of more than $1bn “has dried up”, Mr Gálvez says.

Unfortunately for promoters of mining investment in Peru, not all of this can be blamed on the vagaries of the commodities cycle — though a multiyear fall in the price of copper, accelerating during 2015, will undoubtedly affect investment choices. Peru’s more specific problem is that some mining projects have been held up or derailed by vocal and often violent protests.

The opposition to mining in some areas has made a decision to invest in the country much more complicated than any doubts about geology or project economics.

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