Projects stalling out in Peru

La Republica reported that twenty large mining projects in Peru, representing investments that total more than $25 billion dollars, have been delayed or halted. The two main reasons for the freeze are falling global commodity prices and social conflicts regarding the mining projects.

The report explained that the most emblematic of these projects is the Conga gold mining project in Cajamarca, run by Yanacocha and representing an investment of $4.8 billion. Social conflicts with the local community have brought the entire project to a halt. Others examples are the Tía María in Arequipa, a $1 billion copper mining project, and the $1.5 billion Cañariaco copper mining project.

According to José Miguel Morales, the director of the National Mining, Petroleum, and Energy Society (SNMPE), many of the projects comprising this $25 billion slate would have started on time if their authorization papers had been processed on time two years ago when metal prices were still high. Mining expert Rólumo Mucho stressed, though, “Commodities prices should not delay projects, as these are slow-maturing projects. The scenarios account for high and low prices, but always move forward.”

In unrelated news, using the UN Climate Talks in Lima as a backdrop, the Guardian reported on a series of oil spills that occurred in the Peruvian Amazon over the last few months. The report noted that these oil spills received little attention in Lima during the talks, but have devastated indigenous families. According to the Guardian, there have been five separate breaks on Petroperú’s North Pervian pipeline, which an 850 km pipeline that goes from San José de Saramuro in the Loreto department all the way through the jungle and across the Andes mountains to Sechura Bay on the Pacific. The oil company contends that the leak was due to an act of sabotage on the pipeline, but indigenous leaders argue that the pipeline is old and in disrepair. Regardless of whether the spill was due to negligence or an act of sabotage, Peru will need better oil infrastructure and regulations if it wants to develop its oil potential in a way that does not exacerbate the already-dangerous social conflicts in the country.