What could Humala s election mean for mining in Peru?
By Nick Magel
June 14, 2011
Last weekend, Peru elected a new president. Ollanta Humala, a left-leaning former military officer, edged out conservative Keiko Fujimori. The election of Humala means many things for Peru and the entire continent of South America. However, I m most interested in whether his position on Peru s booming mining industry could position Peru as a global leader in responsible mining - with full community consultation and inclusion of environmental and labor safeguards.
Recently, Peru has cemented its place as one of the world s largest minerals exporters. The 2009 USGS numbers place Peru as the 3rd largest exporter of copper and tin, 6th largest in gold, and 1st in silver in the world. These rankings may very well increase given the increase in new mining investments made in Peru. In 2009, we saw a 65% increase from 2008 investments, spiking from $1.7 billon to $2.8 billion. In total, Peru s Energy & Mines Ministry has lined up a staggering $41 billion in mining investment through 2017.
So what does this mean for the incoming Humala administration and for the communities fighting irresponsible mining in Peru? Right now, it is hard to say. Some of the verbal commitments that Humala has made so far indicate support for community-centered mining reform. For example:
- Humala has publicly supported prioritizing clean water over gold by backing the communities opposition to Newmont s attempt to develop a gold mine on the sacred mountain Cerro Quillish, which also serves as the water source for multiple communities.
- Humala has supported imposing a windfall tax on extractive industries, and committed to raising taxes on mining corporations operating in Peru. In Peru, people know there has been economic growth, but at the same time it hasn t necessarily reached them, Humala proclaimed on Monday.
- Humala has strong and vocal constituents in rural and indigenous communities communities that are most at odds with mining operations. He is surely to be held up to greater accountability to these communities, as these are the very communities that have put him in the Presidential Palace.
While the markets reacted and mining shares plunged on the news of Humala s election, corporations mining in Peru will surely be rethinking their operational strategies in Peru. For too long, transnational mining companies have exploited Peru s mineral wealth, leaving little to the communities in which they operate. Now the country has taken notice and voted in a President that has promised to rein them in. As Oxfam's Keith Slack writes in a recent blog, it's time for mining companies in Peru to take notice too. "Rather than seeing a more progressive Peruvian government as a threat, mining companies should embrace the opportunity that it presents to try to find solutions to the country s mining-related conflicts," writes Slack.
Will this election mean an end to mining in Peru? Hardly. Peru has tremendous mineral wealth, and the transnational companies are here to stay. Most communities are not calling for the abolition of mining. They are asking for companies to consult with them first, operate only after consent has been given, and mine in an ecologically and socially responsible way - and Humala has shown support for these communities demands.
It remains to be seen how campaign promises become national realities, but there is a tremendous opportunity for this administration to be a catalyst for community-centered mining reform in Peru.