Mining Firms Alarmed at Election of Leftist Governor in Peru

(IPS) – The triumph of a left-wing candidate, Gregorio Santos, as governor of the region of Cajamarca, one of Peru’s richest mining areas, has raised concern among mining companies operating there in a climate of tension and conflicts with local communities.

“This is devastating news. Santos is known for his anti-mining stance,” Hans Flury, president of the National Mining, Oil and Energy Society (SNMPE), the industry’s powerful private business association, told IPS.

Flury says that with Santos, one of the leaders of social movements against mining projects that lacked the approval of local communities, as governor, mining investment in the northern region of Cajamarca could come to a halt.

Under Peruvian law, mining companies must consult local communities and obtain prior approval before conducting any mining operations. But the absence of efficient oversight and controls on the part of the central government, which is concerned about driving away investors, often results in companies ignoring that requirement, thus sparking conflicts with local residents.

“If they comply with the law, they have nothing to be afraid of,” Santos told IPS, in response to Flury’s remarks. “The people voted for me because they trust me and know I will defend their interests. If they didn’t believe that, they would have voted for candidates who support the mining companies.”

Santos, the candidate for the Movimiento de Afirmación Social (MAS), was elected governor of Cajamaraca in the Oct. 3 elections with nearly 31 percent of the vote, well ahead of runner-up Beltina González of the Fuerza Social Cajamarca party, who garnered just 12.8 percent. The winner needed 30 percent to avoid a runoff. Santos’ victory was declared in early November.

Mining corporations had publicly forecast an easy win for another candidate, Absalón Vásquez, a former agriculture minister during the Alberto Fujimori administration (1990-2000). But Vásquez was officially disqualified four weeks prior to the election when it was revealed that he had not served a four-year sentence for corruption handed down by a court in 2007.

Cajamarca is home to South America’s largest gold mine, Yanacocha, operated by a joint venture led by the U.S.-based Newmont Mining Corporation, which has clashed on numerous occasions with local communities.

In 2004, an announcement that gold mining operations would begin on Quilish mountain, which holds an estimated 3.7 million ounces of gold, unleashed a major conflict between the company and the local residents, who feared that mining activities would pollute their water. Santos was one of the more prominent leaders who led the movement against the project, which was eventually suspended.

Originally from a peasant community in the province of San Ignacio and a schoolteacher by profession, Santos began his activism leading peasant groups known as “rondas campesinas,” which are formed by local communities as a way to defend and protect themselves in the absence of proper policing. These groups have also taken on the defence of natural resources, opposing their commercial use without prior consultation of the communities involved.

Of Peru’s 25 regions, Cajamarca receives the most mining tax revenue. In 2006, it ranked first, with 98.7 million dollars in taxes, and from 2008 to 2009 it obtained a total of 116 million dollars. But despite this influx of tax money, the National Statistics Institute (INEI) reports that in that same period, poverty grew by more than two percentage points, from 53.4 to 56 percent.

In 2010, this Andean region, where approximately 33 mining companies operate, took in 115 million dollars in mining tax revenue.

“But it’s not just a question of money,” Santos said. “These funds are distributed poorly, and do not benefit the people. There’s also no capacity to implement projects with the funds. The real problem is that in Cajamarca everything revolves around what mining companies do or fail to do. But very soon this is going to stop.”

For Flury, “the problem with the election of Santos is his ideology…He’s a staunch communist,” he alleged.

The movement represented by Santos in the elections is a coalition of the popular and peasant organisations that participated in the mass mobilisations staged against mining companies accused of committing abuses or polluting the environment.

One of the groups is the National Leftist Movement (MNI), whose backbone is the Maoist Peruvian Communist Party – Patria Roja, formed in 1969.

“Patria Roja, the party Santos belongs to, is an ardent opponent of the mining industry, and that negative attitude is more harmful to the population it represents than it is to anyone else,” Flury said.

“If they insist on opposing mining activities, what they’re going to achieve is that the mining companies operating in the area will be pitted against the regional government in a political standoff, while corporations planning to invest here will decide to take their business elsewhere. And that will be detrimental to the population, because it’ll mean no wealth will be generated for development.”

The major foreign mining companies that operate in Cajamarca, besides Newmont, include the South Africa-based Gold Fields and British mining giant Anglo American.

“The mining industry in Cajamarca has a well-known track record of human rights violations and environmental abuse, of keeping local peasant communities in extreme poverty, and of using the state as their repressive arm; in sum, these companies have a long history of getting their way by force and wrongful means,” Santos said.

Santos was referring, among other things, to the government’s 2004 approval of an environmental assessment study for gold mining operations on Quilish mountain, which was carried out without consulting the local community. Another example is the case of a Brazilian company that employed common criminals to stifle protests by local villagers.

“Of course we’re in favour of investment by the mining industry, but the companies can’t ride roughshod over local people, we can’t allow them to pollute the environment, they must respect the peasant communities. If they comply with the law, the corporations have nothing to worry about,” the governor-elect said.

According to the latest report by the ombudsman’s office, as of September the Cajamarca region had the highest level of conflicts over social and environmental issues in Peru.

According to José de Echave, head of CooperAcción, a local social development organisation, Santos’ election is a manifestation of the will of the people, who through their vote have chosen a representative they can trust as a valid intermediary with mining companies.

“I’ve heard mining business representatives complaining about his election. But I think that, contrary to what they believe, Santos will improve relations between the communities he represents and the firms that operate in Cajamarca,” he said.

“Santos won’t make things worse; he’ll act as a guarantee to agreements between the local population and the companies,” he told IPS.

“Besides, the campaign in Cajamarca was not based on ideology, as some members of the business community say. There would still be environmental problems if one of the other candidates had been elected. Even if the candidate backed by the mining industry association had won, it would not have put an end to differences between local communities and mining companies,” de Echave said.