Social conflicts' real cost to Peru

The fallout from Peru’s famous social conflicts over mining projects continues to dominate the business headlines in the country. It’s unsurprising, though, when you consider the cost that social conflicts have imposed on the Peruvian economy. Fifteen large mining projects worth a total of $67 billion have been paralyzed since 2014 because of social conflicts. The list of projects includes Tía María in Arequipa, Conga, Michiquillay and Galeno in Cajamarca, Río Blanco and Tambo Grande in Piura, and Las Bambas and Los Chancas in Apurímac.

According to the general manager of Altural Mineral Corp., Miguel Cardozo, Peru could easily be producing 5 million tons of copper per ay, but because of the stalled projects, it currently produces just 1.4 tons per day. Furthermore, it would take another 5 to 8 years, assuming investment activity spikes, to raise copper production to those levels.

Peruvian economist Hernando de Soto, in an interview with El Comercio, provided his view on the $67 billion in stalled projects. He believes that the grassroots opposition to these large mining projects demonstrates that the Peruvian people are rebelling and have rejected the Peruvian government’s current mining model. De Soto has long advocated for the rights and interests of Peru’s artisanal miners, and believes that artisanal and small-scale mining provide an alternative development model to the large-scale projects that the Peruvian government has been pursuing.

The social conflicts show no sign of stopping, as the Peruvian National Office for Dialogue and Sustainability intervened during the month of May in 43 social conflicts and took preventative action in 114 cases nationwide. The vast majority of these incidents are related to extractive sector activities, mainly mining projects.