May 28, 2012 / 8:13 PM / 7 years ago

Xstrata committed to Peru despite protest

LIMA (Reuters) - Protests at Xstrata’s XTA.L Tintaya copper mine in southern Peru have blocked transport links, but it is operating normally and its port on the Pacific coast has stocks of concentrates for the time being, a company executive said on Monday.

Despite being hit by a week-long protest, Xstrata is committed to investing in Peru and its $1.5 billion expansion to the Tintaya mine is on track to open in late August, said Luis Rivera, the company’s operations director for Peru.

The protest over the spoils of natural resource wealth is one of many that President Ollanta Humala has tried to defuse. The protests threaten to delay investments in a sector that drives 60 percent of exports. RPP radio said at least one bystander died on Monday near the protests, where police have clashed with people blocking roads. About half a dozen people have died in protests over natural resources since Humala took office in July.

Protesters in the province of Espinar claim the mine causes pollution and want the company to boost financial donations it makes to the local government of Espinar, which the company has rejected saying its voluntary contributions are already very generous.

“Our local contribution is 30 million soles ($11 million) a year, which isn’t a little,” he said. “We give 3 percent of our pre-tax profits to the province of Espinar and they want us to raise this to 30 percent.”

Espinar, like many local and regional governments in Peru, is periodically hit by anti-mining protests by poor residents who say they haven’t seen the benefits of the country’s decade-long economic boom. The central government and miners criticize local governments for lacking the capacity to spend tax revenues and say they are sitting on piles of cash.

“The municipal budget in Espinar is 190 million soles a year, and its efficiency is only spending 30 percent, and they are asking for more money,” Rivera said.

He said all serious studies have shown the mine fully complies with all environmental standards and that complaints of the protesters over water quality were being trumped up for political reasons.

“There is a radical political position behind all of this,” he said.


Humala, a former leftist who now firmly supports projects proposed by foreign mining companies, has said the far-left, while small, has tried to stop big mining projects as part of a push to expand its influence.

Protests against the $4.8 billion Conga mine in northern Peru, the largest project in the history of the country, have already delayed U.S.-based Newmont Mining’s (NEM.N) timetable for the mine.

“We are interested in dialogue and the development of Espinar, but we find ourselves facing a very radical opposition,” Mines and Energy Minister Jorge Merino said in a statement from his office.

“There is a radical current that says no to Antapaccay and no to Las Bambas. This means they don’t want mining, which is unacceptable,” the minister said.

Rivera said the company’s Antapaccay copper project of $1.5 billion, which is essentially an expansion of Tintaya that would almost double capacity to 160,000 metric tonnes (176,370 tons) a year, is on track to open in late August.

The existing part of Tintaya is slated to end operations in 2014 and Antapaccay would stay open to 2030 or beyond. Tintaya currently produces about 90,000 metric tonnes a year of copper.

Xstrata is also working on its $4.2 billion Las Bambas project in southern Peru. It would produce an average of 400,000 metric tonnes of copper concentrate plus gold, silver and molybdenum byproducts. The company’s website says it would open by the end of 2014.

“Las Bambas is in the engineering phase. Obviously any noise disturbance in the area affects all projects in southern Peru,” Rivera said.

Reporting By Marco Aquino; Editing by Kenneth Barry

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