On December 18th MMG, a Chinese mining company, and local communities in Peru will halt copper production at its Las Bambas mine in Peru after failing to negotiate a 27-day road blockade.
Residents of Chumbivilcas province have been blocking the road used by Las Bambas since November 20 because they are demanding jobs and economic contributions from the company, which they say has failed to benefit residents along the way despite its wealth.
MMG, a unit of China's Minmetals Group, said earlier this month that it would stop operations at Las Bambas after local residents blocked roads, hampering the company's basic operations.
Las Bambas, which accounts for 2% of the world's copper supply, will produce about 290,000 tonnes of copper concentrate this year through December 18. The company had announced in July that it expected the mine to produce a low of 310,000 to 330,000 tonnes.
MMG said in a statement that there were about 60,770 tonnes of copper concentrate in storage at the site.
At issue are the dirt roads that Las Bambas uses to transport copper from its mines to the seaport. Communities along the road are demanding more logistics contracts, financial compensation for land used to build mining roads, and action to reduce alleged damage to their crops caused by the large number of trucks on the road each day.
They also want to set up a fund that would use 8 percent of the mine's annual profits to finance production and social development projects, while the company would finance individual social projects.
MMG believes that laying the route is the government's responsibility, but a long-term solution would be to build a separate freight train link. The railway will take more than five years to build and cost $9.2 billion, according to Peru's Ministry of Transport and Communications.
The company's decision is a blow to Pedro Castillo, the left-wing president. Mr Castillo wants to raise taxes on mining to fund social programmes. Las Bambas is the second company to halt production this week, after Nexa Resources suspended its Cerro Lindo zinc mine because of a similar road blockade.
Protesters demanding compensation for using their land to transport ore forced Cerro Lindo, the country's biggest producer of zinc and copper, to halt production in November.
Protest against the 400 days
Las Bambas is the fourth-largest copper mine in Peru and the ninth-largest in the world. The mine has been dealing with intermittent protests and road blockades since it began operations in 2015-2016.
Operations at the mine were halted for more than 100 days in 2019, and 70 communities along the 450km (280-mile) road to Matarani port demanded that MMG and the national government take action on truck emissions and reducing farmland.
A three-week roadblock protest in late 2020 prevented MMG from exporting 189,000 tonnes of copper concentrate worth $530 million from the mine.
More disruptions in September forced the company to suspend operations for several days. The company agreed in early October to integrate these communities into its value chain, even though they are outside the assets' scope of influence.
Overall, Las Bambas' operations have been disrupted for nearly 400 days since 2016, according to company estimates.
The mine has an annual production capacity of 400,000 tonnes of copper (as well as significant amounts of gold and silver), accounting for about 2 per cent of the world's total primary products, and about 69 per cent of MMG's revenues in 2020.
Its closure will result in the loss of more than 6,000 direct and indirect employees, 25 percent of whom are residents of the Aprilmac area.
