Mining News

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Mining concessions have reached a new record: June 2011 totaling over 24 million hectares, equivalent to 18.91% of the country. This means that in 6 months, mining concessions have grown by nearly 3 million hectares, an unprecedented event. Apparently, the current government has sought to ensure access of investors to make concessions before they complete the change of authorities.

TLC: Who wins, who loses. The investment chapter of the Peru-US FTA would reward a company that failed in all its environmental and social obligations in Peru. The company Doe Run Peru and the Reno Group had decided to take the Peruvian state to international arbitration under the FTA between Peru and the United States, seeking a compensation of no less than U.S. $ 800 million. This process has great progress by the company, who have the backing of 8 members of Congress in the U.S., and have a very definite strategy, said José De Chive, Coordinator of the Observatory CMO, and remarks that the state runs the risk of indemnify a company that has been contaminated for years, “the state has reacted very slowly and without any strategy, we find a company that is on the defensive against a weak state.”

And this issue Puno events in recent weeks mark a turning point in the evolution of conflicts related to mining in Peru. There are several factors to consider: never before has a conflict had forced the executive to produce many rules: three decrees and many other supreme resolutions, which repealed the Santa Ana project grants, suspend all grants in Puno ordered the cleaning of the basin Ramos River. Therefore, the regulations issued open a Pandora’s Box of questions from businesses and even possible arbitration proceedings under the investment chapters of FTAs.

With this scenario will not be easy for the new government to reverse this situation and there are no miracle cures. It is gradually regain confidence through a set of corrective policies that attack the causes of the sharp conflict, the stagnation of production and environmental problems in the mining sector. It is expected that the new authorities and various interest groups linked to the industry (companies, social organizations, etc.) can help design a new scenario that can build governance arrangements for extractive industries in the country.

Therefore, inheritance of the APRA government on mining is negative because of where you look. The increased value of exports and higher profits for companies in recent years due to high metal prices and in no way to better production performance or public policies implemented.

Instead, the postponement of the law of prior consultation, the decrees of the “dog in the manger”, to replace the income tax on the “miner’s mite” and lack of environmental enforcement in the sector have been some bad decisions that ended up deepening mistrust and discomfort of entire populations. The lack of political will to address some fundamental issues leave a crossroads for the new government must also address at least two international arbitration proceedings under the FTA.

The Observatory of Mining Conflicts, makes monitoring of five regions, according to the maps of concessions Apurimac is the region that has more land concessions: 56.52%, followed by Cajamarca: 48.47%; Piura: 27.48%; Junín: 24.68% , and Cusco: 18.12%.

The start of the new national government will mark a stage that a clear impact on the management of mining conflicts. The test cases analyzed from the observatory show what is happening in the country, marking the main trends at the regional level and raise the pending social agenda on the development of mining.

Cases by region:

In Piura has a climate conducive to the final decisions to protect important ecosystems such as deserts and water sources. However, the threats do not stop: it has begun a media campaign that seeks to reclaim the mining project and keep coming Tambogrande information that confirms the interest of Chinese companies questioned by the Rio Blanco project. Then there are the threats to the expansion of informal mining in districts like his, toad and Las Lomas.

Apurimac is emerging as a new center for mining investment in Peru. The growth of mining megaprojects formal and artisanal mining has deepened the dispute over access to resources in the catchment areas of projects. Among the topics of conflict also puts the demand for employment and employment expectations of populations.

In Cusco, the conflict over Makes Segues II, still cannot find a definitive solution. The final decision rests with the Constitutional Court and this case marks an important milestone in a kind of conflict will become increasingly recurring disputes over water resources. This region also recorded a number of new mining projects, in addition to the project Antapaccay, the Anglo-Swiss Xstrata.

In Junín, the Peruvian government runs the risk of Doe Run compensation of no less than $ 800 million. TLC: Who wins, who loses, the investment chapter of the Peru-US FTA would reward a company that failed in all its environmental and social obligacxiones.

In Cajamarca, public complaints by mining pollution episodes are common and therefore the population makes strenuous efforts to protect sources of water, this time with the support of regional authorities. The official logic is still imposing projects without social participation in decision-making. A clear example is the company Tantahuatay Coimolache Mining (Group and Southern Copper Buenaventura).

Revenues from mining royalties in the department of Cochabamba in May exceeded the total raised in the 2010 management and to continue the registration of cooperatives and private companies, it is estimated that revenues could reach 8.5 million by year-end Bolivians.

According to the departmental secretary seminarian, Jose Fernandez, last year mining royalty revenue amounted to 4.3 million, and this year in the first five months (January to May) is perceived around 4.5 million.

Fernandez said that 48 cooperatives operating in Cochabamba and 52 mining companies, of which 60 percent were already registered and paid the royalties, established mining laws that regulate the activity of the area.

DEPARTMENTAL LAW:

According to Fernandez, the Legislative Assembly at the initiative of governor Departmental Edmund Novella and the bed of the Movement toward Socialism (MAS) will soon approve the Department of Mining Law, which will help to strengthen the mining industry and increase income from this.

He said that the law and the agreement with the National Registry of Mineral Marketing (Senarecom) will enable the registration of cooperatives and mining companies that does not exist, economic losses caused by mining royalties.

MINING CENTERS:

The agricultural vocation of natural Cochabamba now joins mining production, as several municipalities are true emporium of mineral resources.

In the Andean region of Cochabamba, which includes Argue, Capitola, Teacart Aye-aye and there are mines of zinc, silver, copper, lead, tin, silver, gold, limestone, marble, tungsten, sodality, gypsum and gemstones.

Deep River Cristal Mayo, under the jurisdiction of the Tropic of Cochabamba, a Brazilian company operates gemstones; the price per kilogram is $ 700. In the southern cone of Cochabamba province Masque, exploit zinc, silver, lead, even gold, the mine is in seats.

Metminco Australian mining company will begin a process of drilling in late 2012 to update the resource estimates in the proposed copper and molybdenum the Galatians, located in Moquegua.

The company expects to complete the update of the estimated resources of the site late next year and only then commissioned a study prefactbilidad project is estimated to require an investment of over $ 2 billion.

Findings

In recent boreholes Metminco said it has made ​​significant BOUT findings, demonstrating that the project has the potential of the Galatians an important reservoir host of red mineral.

The current drill program is designed to provide detailed information and therefore the Australian company expects the project to be world class, similar to mine Escondido in Chile.

So far the project is projected to the Galatians has 926 million tons of ore at 0.39% copper.

Near this site are encuetan three large mines: Cerro Verde, Rennet and Toquepala.

In late June the company was affected by the initial impact was Lolita Humana’s election as president of Peru. So much so that the company reported that its shares fell about 14%, but continue with its program Metminco in the Galatians.

 

The nationalization of copper in 1971 has been one of the most important decisions in the economic and political history of Chile. It occurred in a context of conflict between the interests of foreign mining companies and the country. While Chile sought to use copper mining as its “cornerstone for development”, the domestic industry lost weight on the world market and, worse, the contribution of large-scale mining to the national economy was weak, dominated by perception enclaves that were not able to drive the development of paisley nationalization was a radical response, under a social and political context peculiar to the country’s history, that sought to increase state control in an industry considered strategic. Today it is possible to note that in significant respects, the objectives of nationalization were reasonably achieved. Chilean copper production reversed its downward trend and began a gradual increase from 11% of total world production in 1971 to 17.7% in 1990, which began producing the new era of large-scale private mining.

The other aspect of great importance that the nationalization was allowed the development of national capacities related to mining, mainly through human capital formation, accelerating national technological learning has been sustained not only the production in state hands, but also the great expansion of private mining in Chile since the 90′s. La Corporation del Cobra de Chile (Codec), formed in 1976 to concentrate management sites in a single nationalized company has been a vector of technological development in the country, topping the record of industrial patents. Also through sales management Codec managed to learn and efficiently control the marketing of copper and its byproducts, from a few years to play a leadership role in the global market.

On the other hand, the institutional framework of Codec reported very few changes since its creation, which, along with a diminishing role of the owner, was generating a sub-optimal compromise with their financing needs and insufficient framework for action to address major issues of development, especially in recent years, the world copper market has undergone structural changes which require a faster growth.

That’s why the corporate governance reforms adopted in 2009 are of such historical importance, as they offer a new institutional framework that can help the company overcome its current challenges and push it towards a better future.

Between 1976 and 2010, Codec contributed surplus of over U.S. $ 62 billion, about 12% of the country’s fiscal revenue, which has been a fundamental basis for social action of the state. The big challenge is to empower the company to become the flagship of the internationalization of Chilean mining, maximizing production capacity and efficiency, thus multiplying the contributions he has been able to generate for Chile.

Workers at the giant Codec, the world’s largest producer of copper, on Monday a 24-hour strike to claim against a plan to restructure the mining industry.

The last time Codec operators made a total paralysis was 18 years ago.

Here is a list of major mining strikes in Chile in the last two decades:

- August 1991 – More than 9,500 workers at Codec El Tenanted division remain on strike for nearly a month, halting production of the largest underground copper mine in the world at a cost of $ 450,000 per day.

The same month, workers at Chuquicamata, then the world’s largest copper mine open pit paralyzed chores for two weeks.

- May 1993 – Workers at Codec strike that lasted less than an hour. Had no effect on production.

- February 1995 – Some 1,200 workers at state refiner Venetians copper stop their work for a wage dispute that forced the government to buy copper cathode in the spot market to secure their supplies.

- May 1996 – Chuquicamata miners made an eight-day strike ended May 12.

- April 2003 – Workers in the Candelabra copper mine agreed to end a strike that lasted 16 days after accepting an offer from the company on wages and benefits.

December 2003 – Copper prices up due to a strike of 11 days in Codec’s Adina division by wage demands and bonus payments linked to production.

- August / September 2006 – Escondido, currently the largest copper mine in the world is affected by a 25-day strike by 2052 union workers forced to declare force majeure. The paralysis damaged production and pushed up copper prices in the international market.

- June / July 2007 – Codec signed an agreement to give bonuses and benefits to 14,000 workers in contracting firms serving the state mining company, after a sometimes violent strike that affected the production of the El Tenanted, El Salvador and Adina. Contract workers threatened to extend their protest to the private mining companies, but this did not materialize.

- July 2007 – A four-day strike at Collahuasi causes a rise in international copper prices.

- May 2009 – Workers at the Lomas Bays copper mine, owned by global miner Xstrata, reach a wage agreement with the company and end a stoppage of tasks that lasted nine days.

- November 2009 – Workers at the Spence copper mine, BHP Billiton group, end a strike that lasted 42 days and left a total loss of about 20,500 tons.

- December 2009 – Workers at Xstrata’s Altamonte go on strike after not reach an agreement with the company during its collective bargaining process.

- January 2010 – Union workers at the huge Chuquicamata copper mine started a strike that pushed up copper prices.

- May 2010 – Contract workers blocked the access road to Collahuasi, hitting operations and forcing the company to declare force majeure briefly.

- November 2010 – Workers at Collahuasi plant, a unit controlled by Xstrata and Anglo American, began a strike for higher wages that lasted over a month. This strike is enshrined among the most difficult he has faced a foreign mining in Chile.

- May / June 2011 – Production at Codec’s second largest mine, El Tenanted, is substantially reduced due to a protest by contractors, demanding better wages.

- July 2011 – Thousands of workers in all divisions of Codec made a one-day stoppage in protest at a plan of modernization. The strike will cost the firm to stop producing 4900 tons of copper.

 

A delegation of 12 residents of the district of Texaco Tacna to Lima travel after July 28 to talk directly with the elected president of Peru, Lolita Humana Tasso, who will ask the repeal of Supreme Decree 040-2007, through which granted a mining concession to Newmont.

That was the agreement that was made today during a meeting called in the local Commission on Irrigation Texaco, where virtually the entire population conglomerate ticaqueña. Villagers were happy that the company only has withdrawn its “local information” definitely looking out for Newmont.

“Regional President Tito Chicano is committed to us, to meet with President Humana. We agreed that we will go with him. We will be 12 who will travel to the capital to tell Lolita not want anything of mine, only our agriculture. They did everything they wanted (in reference to Newmont) as if they were our gods, from the beginning did not respect our position, “said the president of the Rural Community Texaco, Marcia Walter Liquate Chianti.

The leader reported that another of the agreements was performing in the district rural patrols so as not to allow the mining company comes again. “We do not want to see their trucks his entire splendor. We were a people living quiet, this issue has united us more, “said Liquate.

FACT. The company has a bad history Newmont that alarmed over the ticaqueños. The company is majority shareholder in the Yanacocha mine, and in 2002 accidentally spilled about 150 kilos of mercury in the town of Cajamarca Choropampa. The damage was “repaired” with a compensation of 3 million dollars to the municipality of Cajamarca, after a long dispute came to the United States.

 

Three examinations being conducted by the Group Mexico mining, one of the largest copper reserves in the world, in Chile. The company, which holds deposits in the U.S., Mexico and Peru, and bills U.S. $ 7,500 million a year, found 20 million tons of ore (not copper) in Ojos Del Salado, one of his explorations.

However the volume is still insufficient to make large investments as required by this business. He explains the CEO of Group Mexico, Xavier Garcia de Queued, who adds that in a year and a half have conclusive studies on the subject, which could trigger its final landing in Chile.

Meanwhile they are attentive to the present market opportunities for new developments.

Growing up in Chile and other Latin American countries is in their fundamental objectives. This mineral has 70 million tons of copper in reserves, aims at three or four years, exceed 1.2 million tons of copper a year.

 

Unlike the oil sector where the fee shall be applied as a share of the value of production minus the costs of transportation and distribution until the point where control values ​​the oil, the oil charge in practice is funded by various taxes generated in the value chain, from royalties, income taxes, and tariffs and other. Where thanks to the Law No. 29693, canon oil has increased from 10% of the value of oil production to 15%, and sobrecanon from 2.5% to 3.75%, putting the departments of Piura, Loreto, Ucayali, Tumbes.

In contrast, the mining canon depends on the income tax paid by mining companies, therefore is subject to a number of deductions own items that make up the cost of sales, selling expenses, administrative and financial expenses.

Thus, by law the State has determined that 50% of income tax paid by mining companies mining canon becomes distributed in a 10% producer in the district where the unit operates mining, 25% between district municipalities the province where mineral resources are extracted, 25% for the regional government that includes 5% for public universities and the rest 40% from local government department where exploiting mineral resources.

Therefore we affirm that the mining canon is not a real canon as its source is the income tax, an income that is derived, which is subject to a number of deductions and benefits that mining companies because of the attractive framework to attract private investment, especially crime, in a model that is being challenged by reality, through the many social conflicts, especially the negative externalities, i.e. the environmental mistakes that have no counterpart in the effective remediation (liabilities environmental) and poor penalties for violators, sleeping “the sleep of the just” in the judiciary.

Thus, various tax benefits that range from the reinvestment of profits allowed deducting up to 80% of income tax for purposes of reinvestment (Mar. Antamina, Mra. Cerro Verde), accelerated depreciation, the ability to deduct expenses exploration of the income tax as business profits distributed. The exemption of selective consumption on diesel or residual fuel used in electricity generation in the service of mining companies.

A report by the agency revealed that this activity proceeds under the influence of illegal groups.

The extraction of coal, gold and other materials is done without permits, a work which in turn inevitably pollutes water sources and air, and is at 44 percent of Colombian municipalities.

And, as it has spread like a cancer, not overlooked. Mining the ‘fact’, informal, improvised, and that does not respect the ecology of the places where it is practiced, is representing 30 percent of total national mining.

Thus he could draw up a report on the subject recently made by the Ombudsman in 1,010 municipalities and that time could know exclusively.

Cordoba, Boyacá, Risaralda, Quindío, Valle, Caldas and Antioquia departments are the largest percentage of municipalities that are not approved overrun with extractions or deed, which employs about 15 thousand families.

“Today, illegal mining is the human activity is causing the greatest impact on the country’s natural resources,” said Colmar Perez, Ombudsman.

There are three major problems caused by this activity: environmental affectations, damage to the health of communities and accidents that left dead and wounded. Everything, says the report, look through the inoperative state.

“The government has proposed three legalization programs, which have efficiency less than 1 percent,” the study says. In 2006 alone, the Comptroller General’s Office stated that the legalization program cost 8270 million dollars and only ran into four operating contracts.

Another difficulty is that the responsibility for controlling mining has been delivered to the mayors, a situation that is beyond their ability to budget and management, says the Ombudsman.

The gold mining, coal and construction materials, the most taken out of the basement, have permeated public six protected areas assigned to National Parks (see chart). But undoubtedly the hardest hit was areas of wilderness.

In this research coincides Guillermo Roads, consultant to the National Planning Council, and recently released by the University, according to which in 2010 had registered mineral titles in 122 hectares of wasteland, of which supply hundreds of regional water supply. Therefore, 22 of the 34 major areas of this type in the country are in danger of extinction. So is the forest reserves, as of 51.5 million hectares of Colombia, there are about 1.3 million mines.5

Done with the presentations made by the Special Project Pasto Grande Regional (PERPG), the National Water Authority (ANA) and the mining company Anglo American Quellaveco on the issue of water availability in Moquegua, full of the Roundtable, approved the formation of a Technical Committee on Water Resources to analyze and evaluate such information.

The Technical Committee shall be composed of 07 organizations designated as coordinator PERPG, with the other members: Front Regional Agricultural Frontier Expansion of Moquegua, College of Engineering – Departmental Council Moquegua, Ilk Provincial Municipality, District Municipality the Algarroba Anglo American and ANA Quellaveco as technical advisor.

This working group will present the first steps for the next session of the Roundtable, scheduled for Wednesday, August 3, from 15:00 in the auditorium of the Regional Government Moquegua, where they also invite the General Mining Environmental Affairs, Ministry of Energy and Mines, Ministry of Environment and Anglo American, to address environmental issues.