By Mingchen Xu and Yuyang Pan
China has become the second-largest trading partner of Latin America, while Latin America has become the second-largest destination for Chinese overseas investment (right after Asia). According to the Chinese Ministry of Commerce, there are more than 2500 Chinese enterprises in Latin America, and China’s direct investment in Latin America has accumulated to 406.77 billion dollars at the end of 2018, accounting for China’s 22% of the total foreign investment. Peru has been one of the important partners to China in supporting the cooperation. In April 2019 as Peru formally joined China’s Belt and Road Initiative, it became the 19th Latin American country to be a part of the multi-billion-dollar global investment and development project.
Peru-the leading Latin Ameirica producer of gold, lead, silver, tellurium, zinc and tin and the world’s no. 2 regional copper producer, is very much open to international trade and foreign investment. In 2018, the mining and energy sector represented 13.1% of GDP and nearly two thirds of exports. Peru is considered to be China’s leading location for mining investment in Latin America. Chinese companies such as MMG, Shougang Group, Chinalco, Jiangxi Copper and China Three Gorges etc. have some important mining projects in Peru. However, Large multinational mining companies or local conglomerates from countries such as the United States, Australia, the United Kingdom, and Canada are considered more influential due to their very profitable mining operations.
The partnership at the age of BRI has boosted the economic growth in Peru in the area of energy. However, the country is now facing new challenges in balancing economic gains and social pressures. The economic interests of the mining industry have led to an increase in the scope of action granted to companies by the government, but no complete legal system exists to protect the rights and interests of local mining communities. Mining is one of the main origins of social conflicts in Peru. Cases of mining companies violating social responsibility and environmental commitments in local communities have often occurred in recent years.
Moreover, Peru is now facing new shocks while Latin America has become the part of the world most affected by COVID-19 pandemic, which is defined as the largest global public health crisis in a century and the greatest challenge the world face since World War Two. The whole population has registered more than 650,000 COVID-19 cases, and Peru’s over 29,000 fatalities is the second highest in South America after Brazil.
Peru has unfortunately fallen into a dilemma of insufficient medical resources and enough protection for ordinary people. Overall, cities located in coastal regions and Andean mountain range, where trade, mining industries, and urban activities contribute to more efficient transmission of coronavirus, become hotspots of skyrocketing amount of new Covid-19 cases. Thus, concerns for these aforementioned vulnerable regions should not be removed in order to alleviate pressures for medical system.
Peru’s mining sector has been seriously impacted by coronavirus, and workers’ life and health cannot be guaranteed. Social conflicts in Peru increased significantly during this time. There were 162 protests related to Covid-19 in Peru in June and July, including 16 linked to country’s mining operation. These conflicts put the issue of unresolved conflicts between national interests, corporate interests and local interests on an urgent label. Since Covid-19 pandemic brought with new challenges in the last six months, the government and Chinese companies in Peru should reconsider the measures needed to resolve local mining conflicts. Moreover, they may need a socially recognized emergency plan for the epidemic period, and meanwhile place the task of properly handling mining conflicts of interest on the agenda in long-term planning.
Mining companies are putting workers at risk
Anti-epidemic measures in the mining industry face enormous challenges in various aspects. Employees engaged in mining are always exposed to dusty environment and poor ventilation with gathered workers- this results in severe cluster transmission. According to Reuters, Pablo de la Flor, executive director of the National Mining, Petroleum and Energy Institute’s industry body, said in June that the 1-1.5 meter social distance was a challenge for the mine and was a problem the industry is trying to solve.
The Antamina mine, controlled by BHP and Glencore, the major players in global mining markets, was a victim with early warning signs and reported 210 cases of Covid-19 infection in the Andes, north of Lima at the end of April. It was the country’s largest mining outbreak and one of the world’s worst.
Antamina workers protested in early April, many of them showing symptoms similar to Covid-19 and demanding discard tests but received unsatisfying responses from companies. Antamina has seen one death after the number of confirmed cases soared to 200 when the workers complained that they had been “abandoned” by the company, providing little care in testing and quarantine. Antamina then faced an investigation for alleged health violations and charges of resisting and disobeying the authorities of the Criminal Prosecutor’s Office of San Marcos.
According to Julia Cuadros, executive director of the NGO CooperAcción, lack of transparency from mining companies makes the situation even worse. Julia is an expert on the issues of Chinese investments, gender equality and small-scale mining at CooperAcción. She mentioned the official number of confirmed cases in Peru’s mining sector, which is provided by the Ministry of Energy and Mines, surged to almost 3,000 in July. “But the companies didn’t give the real number,” said Julia. She added that companies had no protocols for their workers, which was a really big problem.
One example is the Constancia mine in Peru by HudBay Minerals, a Canadian mining company. According to Derechos Humanos Sin Fronteras-Cusco or DSHF, a local organization, the lack of transparency and action by HudBay is part of a broader pattern of irresponsibility.
HudBay insisted no confirmed cases in April, which contradicts a statement issued by the local Health Intelligence Service’s Chumbivilcas Health Services Network (RSSCH). RSSCH claimed that the company tested workers and found 18 positive cases. In June, the number of reported positive cases rose to 42, and the company denied for the second time that workers were infected with coronavirus.
Chinese companies are also involved in the wave of mining protests related to Covid-19. Voices from local trade union and other non-government organizations complained that Chinalco, China’s largest aluminium producer and owner of the Toromocho copper mine in central Peru, failed to disclose the real situation of Covid-19 infections among its workers, which have been accused by over 600 protesters in early May. The company was reported to block the information when a worker tested positive before it registered nine infections.
Existing vulnerabilities due to mine impacts, particularly dust, may be complicated by the lack of clean water supplies, specialized medical services and awareness of the correct protective measures to prevent transmission in mining communities. But it is clear that mining companies have failed to respond effectively to allegations of protecting the health of miners and their families and providing necessary information in time. All this points to inconsistent between the interests of Peruvian mining companies and those of the local community.
Common efforts needed from Governments and Companies
Due to Covid-19, Peru’s GDP historically sunk by more than 40% year-on-year in April. Mining, backbone of the country’s economic, meanwhile halted its normal operation.
Since March 2020, the government has taken a series of strict control measures to contain the outbreak, including several times prolonging the state of emergency.
Many large mines in the country to reduce production, move into care and maintenance or stop operations. This has led to almost paralysis of the mining industry and a fall in global metal prices. According to the Association of Peruvian Exporters (ADEX), Peru’s mining exports fell 27 percent year-on-year in the first half of the year.
Peruvian government has been taking efforts to keep the country’s key economic engine running.
Before the end of the state of emergency, the government announced plans to launch an economic recovery plan from May, which will be carried out in four phases until returning to normal in September. It was then that mines gradually restart with government’s permission when mining was considered as an “essential industry”. Peru’s Ministry of Energy and Mines reported in July that mining operations had returned to 90 percent.
That’s what intensified existing social tensions. NGOs and labor unions raised deep concerns on possible infection risks. Unprepared reactivation of mining sites for the purpose of reducing economic crisis in summer, after months of quarantine and regulation, cannot achieve proper protection for miners to prevent being infected by Covid-19.
An “excessive presence” of trucks transporting minerals for Las Bambas controlled by China’s MMG’s was criticized for exposing workers and communities to COVID-19. At Mexico Southern Copper (Part of Grupo Mexico)’s Tia Maria mine, which has been at the center of the mining conflicts since last year, local residents have again protested against the restart of the Tia Maria copper mine in southern Arequipa, fearing further infection.
Communication seemingly has considerable merits to solving mining conflicts linked to the reactivation.
Petroperu conflict, a Peruvian state-owned oil firm, encountered a group of armed indigenous protestors who broke in a Petroperu pipeline stations and demanded for more medical protection. The pipelines had restarted as Covid-19 restrictions on the industry are eased.
Fortunately, this negotiation ended with nonviolent and efficient conversation, and workers would quickly restart works in strict compliance with secure protocols. The company was involved in a direct meeting with indigenous leaders and government officers, and then reached an agreement about implementing infrastructure projects for local communities to fill the social gaps.
Sympathy is required in analyzing workers’ interests and requirement. In an interview with a professional on labor relations in mining sector, he made some recommendations for companies, “It is about your employees and families apart from business, and a company needs to understand this kind of workers with loved ones at home.” He then replenished his answers by pointing out that labors usually pursue safe means of livelihood and home issues. If measures are provided to ensure safety and basic lives of workers through responsible actions, protestors will be happier due to their common eventual goal-secured lives. As companies were willing to avoid unsafe reactivation of mining projects and understand interests of miners, workers would see hopes and build trust with companies in order to reach negotiation-fostering success of anti-coronavirus measures.
He added that expectations for economic growth cannot be based on sacrifice of public health and ignorance to security requirement, which result into a vicious cycle of intensified conflicts as well as pressure to healthcare system.
Need for COVID-19 Emergency Plan to Solve the Mining Conflicts
In March 2020, the early stages of the outbreak, social conflict cases in Peru remained at an all-time high, with two-thirds of them related to the mining industry.
Covid-19 pandemic has damaged the collective system and is now considered a catalyst for rebuilding trust. That’s why an emergency plan is needed, despite the difficulties it would face.
Some NGOs fear that the government has increasing power to assist mining companies, for mining will help revive an economy in crisis, to cover up companies’ dirty tracks and take the chance to enhance their reputation. With support from government, companies are providing medical supplies to municipalities and medical centers.
This may also be a reflection of what mining companies are suffering from the consequences of broken social trust in their history. The company’s lack of social recognition seriously destroys the company’s image and thus affects business. For example, Tia Maria project has delayed for nearly a decade because of opposition from local farmers.
The responsible role of stakeholders in Covid-19 crisis will be more urgent than ever, as recovery without trust will be precarious. Workers and some NGOs hope mining companies, governments, agencies and other organizations to listen to their voice, deliver on promises and act responsibly.
The prevailing opinion for all companies applies equally to mining companies. As recovery continues and workers are relocated, leaders need to communicate with employees and assure them that they will return to a safe environment and minimize the risk of infection.
The International Labor Organization proposed a checklist for preventing and mitigating the spread of Covid-19 in mining, including measures to improve planning, resources and management systems, education and communication on Covid-19 prevention, health monitoring, sanitation and cleaning, and mining communities. The checklist may help governments and companies on decision-making to protect mining communities from infection.
The BRI has brought with exciting investment opportunities, but Chinese mining companies are currently facing opportunities and challenges as a new participate in the Latin American region that has attracted worldwide attention. The country’s mining sector has historical hidden danger such as severe environmental pollution, insufficient business management and lack of communication with the local community, causing long-term lack of trust of local communities. In the context of Covid-19 pandemic, conflict of interest has become more acute. Moreover, the intensified conflicts have exposed people in mining communities to the risk of being infected by Covid-19.
The shadow of Covid-19 as a global public health emergency, will continue to linger over Latin America with uncertainty. Under varying situation of the global pandemic, Peru has officially launched a new round of 30-days national emergency and mandatory social distancing policies in specific areas in order to effectively respond to the epidemic. In this context, the public’s dissatisfaction with the mining industry’s inaction and government supervision measures has increased the dangers of social unrest, which is extremely detrimental to controlling the spread of the epidemic in Peru.
In view of the current tensions in Peru, Peruvian government and Chinese companies should work together to resolve social conflicts in the context of dealing with the epidemic with a crisis management attitude, as well as formulate plans to gain long-term social recognition and public trust to ensure sustainability development of mining sector.
* Guanxi Liu contributed to the story.