The Peruvian government has authorized the deployment of armed military troops to the Puno region of southern Peru in response to large anti-mining protests which have blocked roads connecting the country with Bolivia. Several media outlets, including Agence France Presse (AFP), say up to 10,000 protesters mainly of the Aymara minority have been demonstrating since May 9 against the future development of the Santa Ana silver project owned by Vancouver-based Bear Creek Mining (BCM-V), as well as other projects, citing concerns over potential contamination of water sources.
The company issued its first press release about the issue to North American markets on May 24, in which chief executive officer Andrew Swarthout suggested the problems are “the result of the pre-election political situation in Peru.” In a follow-up telephone interview with The Northern Miner, he asserted Bear Creek has received strong local community support for the project recently and that “these protests are really derived from communities outside of Puno, even as far away as Arequipa, communities that are at least 50 to 100 km away from us.” Notwithstanding the unambiguous chants by the protesters of “Mina no, agro si,” (Mining no, agriculture yes), Swarthout maintains “they are being fuelled by a number of different components, with all of them being political and none of them being technical.”
The protests come in the middle of a contentious presidential run-off election between Ollanta Humala, a nationalist leftist candidate proposing a windfall mining tax, and Keiko Fujimori, an advocate of Peru’s free market-oriented status quo and the 35-year-old daughter of imprisoned former president Alberto Fujimori. The close electoral race is scheduled to end on June 5, with the latest polls suggesting a near tie or that Fijimori has a slight lead.
In an attempt to calm tensions in the Puno region, the Peruvian government is setting up a commission comprising local elected officials and other parties “to study and propose appropriate action in respect to mining activities” in the area. It will reportedly last up to 180 days, or six months. The decision to set up the commission followed failed talks in mid-May between the government and protesters. AFP quoted protest leader Walter Aduviri as saying there is only one suitable solution to the problem: “We are asking the government to cease and permanently cancel all mining and petroleum concessions.”
Bear Creek nevertheless says it does not expect the protests or the study to affect the approval process of Santa Ana’s environmental and social impact assessment (ESIA), which is needed to proceed with development. The company has decided, however, to push back its anticipated construction and production timelines by six months and has relocated its few employees at the site to a nearby location.
According to Swarthout, the communities nearest to the project continue to support its development. “Our communities are not participating in these protests; in fact, they’re quite troubled by them. The nearest blockade, which is quite small, is at a small bridge about 10 km away from the project which does not affect our access.
“The protests are not just anti-mining, anti-oil and gas now, they’re sort of taking on the flavour of the Aymara resistance to the presence of the State, as well as foreign and even Peruvian investment. It has become this reactionary, symbolic movement ahead of an election process.”
Other projects reportedly being protested against include unspecified oil and gas claims and the proposed Inambari dam, a 2,000-megawatt hydroelectric project several hundred kilometres to the north being financed by a Brazilian-owned consortium. In early April, Peru’s Mining Ministry cancelled the Tia Maria copper project owned by Southern Copper (SCCO-Q), a division of Mexican natural resource behemoth Grupo Mexico, after having previously suspended operations at the project for close to a year. Protests at the Tia Maria, located just south of Arequipa, left up to three people dead last month according to the BBC. In 2009, at least 23 police and 10 Amazonian Indians were killed in protests over resource development projects further to the north.
The majority of Peru’s roughly 500,000 to 600,000 indigenous Aymara live in the southern Andean region of Puno, and most communities within 150 km of Santa Ana are Aymaran, according to Swarthout. They are mainly comprised of farmers and labourers, many of whom feel left out of a decade-long economic boom, with distribution of resources a top campaign concern for the coming election.
Unlike Southern Copper, Bear Creek successfully completed the necessary formal public hearing for its Santa Ana project in February. Having already finished resource infill drilling and final metallurgical test work, the only activities being carried out there now involve social and community relations work, with the company completing the environmental permitting process in the meantime.
“There is a lot of misinformation out there,” argues Swarthout. “One thing that I’ve heard, for example, is that the Santa Ana project has the potential of affecting Lake Titicaca, which is absolutely false. The Santa Ana project is actually located in a separate basin and does not even drain into the Titicaca system.”
The company has minimized its visual presence in the area, says Swarthout, but with the protests now well into their 18th day, Bear Creek might still be facing a long, bumpy road ahead on its way to silver production from Santa Ana.
A positive feasibility study for the project completed in mid-2010 outlined an 11-year mine life producing 5 million silver oz. per year for the first six years from a 63.2-million-oz. silver resource in the proven and probable categories (37 million tonnes grading 53 grams per tonne silver, as well as 0.34% lead and 0.58% zinc). It further boasts life-of-mine operating costs totalling US$8.72 per silver oz. and an initial capital cost of just $70.8 million.
Bear Creek also owns the much larger Corani silver-lead-zinc project in southern Peru, approximately 300 km to the north of Santa Ana but in a less politically active area of Puno. The company is currently completing a feasibility study for the world-class project, expected next quarter.
Shares of the company fell 73¢ in the two days following the May 24 announcement, closing at $7 with 1.47 million shares traded on May 25.
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