Amid social conflicts, mining op-eds in vogue

The social conflict in southern Peru over the proposed Tía María mining project continues. Last week, protests erupted in violence, leading the Peruvian government to supposedly consider asking Southern Copper to make changes to its proposal for the $1.4 billion mining project. Energy and Mines minister Rosa Maria Ortiz told Reuters, “If the government feels that the changes are necessary, it may ask the company to modify the project's environmental impact study, depending on the need.” This comes in light of the fact that the government approved Southern Copper’s environmental impact study in August of last year.

Over the weekend, Peruvian business journal El Comercio ran a series of op-eds touching on the subject of mining in Peru. Jurgen Schmidt, an economics professor at the University of the Pacific, writes about the environmental downside of the mining industry. He explains that two-thirds of the socio-environmental conflicts in the country are related to the mining industry, and notes that many of these infractions are not from artisanal miners but from big players in the mining industry.

Mining consultant Veljko Brcic writes about how formal mining in Peru is still in high demand even though the sector has been in decline for the last three years and does not show signs of a quick recovery. He explains that one of the real bright spots in the sector has been mineral treatment or “tolling” plants. Peru’s focus on formalizing the mining sector has fueled the growth of mineral treatment service providers, as they process the ore from the artisanal miners. Brcic argues that incentivizing and simplifying the procedures for setting up tolling plants will help combat informal mining.

Ian Vásquez, from the Cato Institute, outlines a proposal for disarming anti-mining sentiment in Peru. He notes that the cost of the social conflicts over mining projects is very high, costing Peru 1.5% of GDP over the next ten years. Vásquez argues that this situation will not change unless the underlying problem is addressed: a lack of clarity over basic property rights. The local communities where resources are discovered and exploited receive just a very, very small part of the resulting wealth, and consequently are resentful of the companies and the government. He believes that the government should grant property owners the mineral rights to their lands, and that this would resolve the social conlicts in Peru.