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7/22/19

Regarding Tia Maria

From IKN530, out last night:



Peru: Tia Maria hype
On a PR level, President Vizcarra’s handling of the Tia Maria construction licence affair has been mediocre at best, which is surprising considering he was the one (With Governor of Moquegua) who managed a successful negotiation between the people of the region and the Quellaveco mine owned by Anglo American. His main error was to have talked up a visit to the zone of influence around the Southern Peru (SCCO Tia Maria project by either himself of his Prime Minister, only to abandon that plan and issue the construction licence anyway. The main message to the Islay locals that “we little choice but to approve the permit, but there will be no construction until a consensus is achieved locally” has been scuppered by his non-appearance locally, summed up by Arequipa governor Elmer Cáceres who, when asked whether either he or locals were willing to sit down and talk, replied (translated) (18), “If they’ve granted the construction licence, what are we going to have a dialogue about? We demand, as the region of Arequipa, that the construction licence be annulled. If it is, then we can sit down and talk. As long as it is not revoked, what are we going to talk about?” He has a point, as SCCO could if they wish ignore both national government and local resident, just plough ahead and (try to) build their mine. Really wouldn’t be advisable, though. Unsurprisingly the government replied that the permit was irrevocable (technically true, but this is South America and anything can happen) so we have immediately fallen into a deep impasse, both sides entrenched and unlikely to speak to each other directly in the weeks to come. Cáceres is my idea of a bad governor (see IKN Weeklies passim), so it’s downright foolish of Vizcarra to have offered up such an easy political advantage to him.

However, as noted last weekend context is required. The enemies of the current government (and there are many) are trying hard to make Tia Maria into some sort of inflection point in the Peru mining sector and hyping it as the last chance for the country. They say if it fails, the mining sector will fall into complete inertia and that’s utter balderdash and nonsense. Tia Maria has been a no-go for the last eight years and that’s not going to change, neither will it stop other projects from becoming operating mines in the years to come including Mina Justa and Quellaveco  (currently being built), then add the development we’ll see in the Cajamarca region over the next five to ten years, that’s without even checking the Peru Mining Ministry website.

Tia Maria is a major issue, yes, but it’s first and foremost an issue for SCCO which has backed itself into a corner with unspeakably bad CSR policies over the years. Above and beyond the eight locals who have died in separate clashes during protests over the years there (and locals are very quick to remind you of that fact), let us consider the way in which the SCCO management said in 2015 that those opposed to the project were “anti-mining terrorists” and the same person in 2018 noted that the zone was the birthplace of Abimael Guzmán, leader of the Sendero Luminoso extreme left wing terrorist group that murdered countless thousands in the 1980’s and 1990’s, and that “there must be something in the genes there”. Accusing any group of terrorism is serious stuff, doing it in a place like Peru is triple trouble. It is of course also political issue, a hot potato for the government, a football to be kicked back and forth between the sitting administration and its opposition. However it is not some sort of nemesis for the Peru mining sector, never has been and never will be. Context, please.

PS: This Sunday morning, the latest Ipsos survey shows the approval rating for President Martín Vizcarra down from 50% to 44% (19). The main reason for the change is a precipitous 20 point drop in his approval in the South of the country, from 56% in June to 36% today, with the principle reason cited being his (mis)handling of the Tia Maria permitting issue. His approval rating rose slightly in Lima/Conurbation (from 49% to 52%) but fell in all provincial macro-regions, which in itself is an indication of the political split of the country. He also polls most strongly with the higher level socio-economic groups (A+B), lowest with the levels (D+E). Sadly, we’ve seen this movie before. The 2021 presidential election campaign will bring interesting times to Peru (in the Chinese proverb way).