1. 1
THE PERUVIAN MINING SECTOR: EXPLORING ISSUES
RELATED TO SOCIAL LICENSE, CORRUPTION AND THE
TRANS-PACIFIC PARTNERSHIP TREATY
SIPA Capstone Report 2016
Prof. Jenik Radon
Jonathan Avila
Yohan John Balan
Ana De La Cruz
Muhammad Affan Javed
Suzhe Jia
Mubarik Khan
Jenny Lee
Joseph Maberry
Abhinaya Natarajan
Vatsala Sahay
Naoko Takahashi
2. The Peruvian Mining Sector Spring 2016
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OTHER REPORTS
Mining in Peru: Benefiting from Natural Resources and Preventing the Resource Curse is
published by the School of International and Public Affairs (SIPA) at Columbia University as
part of a series on natural resource management and development in Africa, Asia, and Latin
America. Other publications include:
Oil: Uganda’s Opportunity for Prosperity (2012)
Politics and Economics of Rare Earths (2012)
China, Natural Resources and the World: What Needs to be Disclosed (2013)
Mozambique: Mobilizing Extractive Resources for Development (2013)
Colombia: Extractives for Prosperity (2014)
Tanzania: Harnessing Resource Wealth for Sustainable Development (2014)
Mining in Peru (2015)
3. The Peruvian Mining Sector Spring 2016
3
ACKNOWLEDGEMENTS AND THANKS
The Peru Capstone team acknowledges the individuals and organizations that provided
invaluable assistance in the preparation of this Report.
In Peru, the team thanks Mario Huapaya Nava, Fatima Retamoso, and Mayu Velasquez at the
Ministry of Culture, Government of Peru, for their support and guidance. The team would also
like to thank the professors and students affiliated with the Communications and Corporate
Image program at the Peruvian University of Applied Sciences (Universidad Peruana de Ciencias
Aplicadas)—Claudia Guillen Arruda, Paloma Valqui Andrade, Manuel Rumiche, Alexandra
Vassallo Bedoya, Pia Fernandez Roig, and Sergio Hoyos—for their time and great contributions
to a successful and insightful research experience.
The team also expresses deep gratitude to all the community leaders, company officials, private
sector experts, academics, scholars, NGO staff, international organization representatives,
government officials, and civil servants in Lima, Cajamarca, and Arequipa who made the time to
share their invaluable experiences and insights with the group. The team would also like to
mention the scholars, experts, and journalists in the United States that provided the team with
their insights and comments. The team hopes that your views are reflected in this Report to
further the objective of an inclusive development strategy for the extractive industry in Peru.
In New York, the team thanks Professor Jenik Radon, Esq, the Capstone advisor, for his
mentorship and guidance. He has advised governments across the world on the sustainable
development of resources, including Georgia, Afghanistan, Tanzania, Cambodia, and Colombia,
Professor Jenik’s leadership and wisdom has contributed to the depth of analysis, pragmatism of
recommendations and otherwise informed every aspect of this Report. The team also thanks
Stefan Brown, Jill Marden Casal, Suzanne Hollman, Sylvia Polo, Josephine Vu, and all the
people at SIPA and Columbia Law School who made field travel to Peru possible, Affan Javed
and Naoko Takahashi for the photographs and Affan Javed for design. The contents of the
Report are formatted by Mubarik Khan and Yohan John Balan. The members of the Peru
Capstone team are:
Jonathan Avila, MPA ‘16
Yohan John Balan, LLM ‘16
Jenny Lee, MIA ‘16
Joseph (J.T.) Maberry, MIA ‘16
Ana De La Cruz, MIA ‘16 Abhinaya Natarajan, MPA ‘16
Muhammad Affan Javed, MPA ‘16 Vatsala Sahay, LLM ‘16
Suzhe Jia, LLM ‘16 Naoko Takahashi, MIA ‘16
Mubarik Khan, LLM ‘16
The recommendations and content of this Report are the sole responsibility of the 12 authors and
do not represent the views of Columbia University or its affiliates, nor the Ministry of Culture,
Government of Peru or other stakeholders.
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EXECUTIVE SUMMARY
INTRODUCTION
A report published by Ernst and Young in 2014 (“EY”) rated ‘social license to operate’ as the
third most important risk to the mining industry.1
The EY report details salient factors, such as
social and economic impacts; normative shifts; and direct and indirect costs, relating to the
mining industry. An analysis of dynamics of communities and dialogue with a broad range of
stakeholders is necessary to address impacts on local societies and broader economies. Due to
globalization and interconnectedness, communities are cognizant of their rights with regards to
mining activities on their territories. Normative shifts resulted in new frameworks, such as UN
and ILO conventions, and have altered the relationship between States and the indigenous
communities. As stakeholders better understand their rights, the reactions to negative
environmental or health impacts have escalated from complaints to civil unrest and protests. This
has led to the characterization of the ‘social license to operate’ as a risk. Mining companies
directly face increased costs from ‘the inability to pursue future projects and/or opportunities for
expansion or for sale.’ Further research shows long-term costs related to project delays, tensions
with stakeholders, and inadequate grievance mechanisms.
I. SOCIAL LICENSE TO OPERATE
Central to any analysis on the impact of the mining industry and its impact on local societies is
an understanding of what a Social License to operate is and how it affects the mining sector in
Peru. Research indicates that mining companies acknowledge that successful mining projects
require the consent of indigenous communities, and communities expect mining companies to
secure a Social License to mine their traditional territories. Social License refers to acceptance
by local communities that host mining operations, and other stakeholders, such as provincial and
regional governments, of the mining projects. Effective social licenses encompass the following
three components:
1. Inclusive and consultative process with relevant and affected stakeholders;
2. Good governance mechanisms to facilitate and monitor the engagement process;
3. Grievance mechanisms through which local communities can voice concerns, which are then
adequately addressed.
– Features –
The concept of social acceptance depends on the beliefs, perceptions, and opinions of the
stakeholders with regards to the mining company and its activities. The features of social license
include legitimacy, credibility, and trust.
- Legitimacy: This is based on formal and informal norms of the community, and requires
continual community engagement and consultation to promote understanding and
transparent information sharing between the mining companies and local communities.
- Credibility: There are two parts necessary to sustain social acceptance throughout the
lifecycle of the project, and allow future projects to take place:
a) Consistent provision of transparent and comprehensible information;
b) Compliance with mutually established and agreed upon commitments
1
EY Report - Business Risks Facing Mining and Metals 2014-2015, pp.16-18 (2014) available at
http://www.ey.com/Publication/vwLUAssets/EY-Business-risks-facing-mining-and-metals-2014%E2%80%932015/$FILE/EY-
Business-risks-facing-mining-and-metals-2014%E2%80%932015.pdf.
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- Trust: Legitimacy and credibility are prerequisites for creating trust between the mining
company, local community, and other relevant stakeholders. Together the three
components facilitate a cooperative atmosphere that generates a mutually beneficial
environment.
– Characteristics –
The following listed characteristics of social licenses affect how companies pursue community
acceptance. Generally, Social Licenses are:
- Intangible: As it is rooted in perception and opinion, the nature of social licenses are
intangible. It is necessary to have clear and transparent dialogue between the company
and community to maintain an effective relationship.
- Informal: Social licenses are dynamic and change over time as perceptions change and
scope of the project change. The company should periodically take stock of social
approval to ensure that social acceptance is maintained in presence of internal and
external influences.
- Dynamic: The perceptions and opinions that local communities hold fluctuate over time
and throughout the lifecycle of a mining project. Companies and governments must take
steps beyond initial engagement, and extend a continued presence in the local community
to sustain viable company-community relations.
- Spatially diverse: Social license obtained in one community is not necessarily
transferrable to another community with similar mining activities. In addition,
distribution of benefits to communities closest to mining sites can result in inter-
community conflicts, despite the apparent fairness of this system. Companies and
governments must know the impacts on the affected communities regardless of their
distance from mining sites, and address their needs appropriately.
The term ‘community’ is a misnomer and suggests ‘a singleness of purpose that does not always
exist.’ Rather, there are numerous communities with varied interests. Referring to them as
“networks” more accurately describes communities that “might not be part of a geographic
community” but are nevertheless impacted by mining activities.
– Free, Prior and Informed Consent (FPIC) –
The United Nations General Assembly resolution 61/295 adopted in 2007, titled “United Nations
Declaration on the Rights of Indigenous Peoples” in Article 102
sets out the principle of Free,
Prior and Informed Consent (FPIC) in the following terms:
- Free refers to the voluntary nature of the process, wherein the communities are free and
empowered to direct the entire process.
- Prior refers to the state gaining consent from the indigenous communities well in advance
of the project. In order for communities to make a voluntary decision, they must be
provided with information in advance as well.
- Informed refers to the extent to which the community is knowledgeable regarding a
proposed project. This requires accurate and transparent information that is crucial to
their decision-making process, such as financial, political, social and environmental
impacts.
2
UN General Assembly - United Nations Declaration on the Rights of Indigenous Peoples, UN Doc 61/295 (2007) available at
http://www.un.org/esa/socdev/unpfii/documents/DRIPS_en.pdf.
6. The Peruvian Mining Sector Spring 2016
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- Consent refers to the collective decision made by indigenous communities based on the
information the State provides. This allows communities “the right to say no” to any
proposed activity/project.
Furthermore, the FPIC process includes an annual review/renewal component that is integral
towards ensuring credibility throughout the lifecycle of the project.
– The Context in Peru –
Social conflict has increased in the last decade with regard to mining activities in the Andean
region. There are three explanations:
1. Issue of ownership of the resource-rich land: The State owns the minerals underground,
while the communities own land titles. As such, the State provides mining concessions,
which the companies interpret as rights to the minerals. There is no communication or
consultation with the communities, which leads to social conflict.
2. Inconsistent expectations and priorities: The various expectations and interests among the
participating entities results in incongruous activities among the company, government, and
local communities. The lack of consensus between the primary actors results in clashes.
3. Failure of mining companies to comply with terms: In cases where the company acquired the
social license to operate, the lack of compliance changes the perception of local
communities, diminishing trust in and credibility of the company.
FPIC, or Consulta Previa was passed in Peru as the Law of the Right to Prior Consultation for
Indigenous and Native People. It is a formal process involving seven stages, including the State’s
responsibility to identify indigenous or native peoples; State responsibility to disclose
information, such as motives and impacts of proposed project to indigenous or native peoples;
and State responsibility for internal evaluations of institutions impacted by proposed measures.
– Salient Challenges –
In-depth research indicates the following challenges in obtaining and maintaining the social
license to operate:
- Absence of the State: There is limited to no presence of government in the mineral-rich
regions. The companies are expected to take on the role of the State in providing basic
facilities to gain community consent for the project. Consequently, managing
expectations of the communities and mining companies is a major challenge.
- Burden on community liaison workers: The low number of liaisons allotted per
community, resulting in one worker representing more than a dozen different
communities. They must negotiate with the company and government on behalf of the
communities but lack leverage.
- Consensus and intergovernmental coordination: The decentralized nature of decision-
making and the lack of capacity in the local, regional and national governments result in
delayed communication and/or miscommunication that can undermine consensus on
benefit distribution, impacting social acceptance.
– Recommendations –
1. Engagement with indigenous or native peoples should be carried out well in advance and not
left for after project finalization so as to timely address any concerns of the indigenous
people.
2. Identifying indigenous communities should include language and permanence of indigenous
peoples within the traditional territory.
7. The Peruvian Mining Sector Spring 2016
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3. To address the lack of power parities among the local, state, and corporate actors, the
government and companies should appoint independent counsel for the indigenous or native
peoples.
4. To address potential sources of conflict related to social and environmental impact,
companies and governments should utilize NGOs, anthropologists, community liaisons, and
other field experts to accurately map stakeholders and their needs.
5. Development of a triangular relationship in which the central and regional governments
should work to ensure their roles are constructive throughout the lifecycle of the project, the
company should coordinate with the central government to ensure continuity of provision of
services when regional presence is lacking, and the community should be an equal participant
in decision-making processes regarding services.
6. Development of a hub network for distribution of benefits based on (a) stakeholder maps not
only of the immediate mining site but also zones that are impacted indirectly; (b) including
community input on mapping zones.
7. Execution of a legally valid and binding consent agreement with the company,
acknowledging indigenous community rights in relation to mining activities in traditional
territories. This effectively recognizes the community as a partner in the endeavor, engaged
in decision-making processes related to benefit distribution.
8. Document community consent and develop an institutionalized process, to increase
transparency and accountability measures.
9. Granting licenses for mining ecosystems as opposed to sole mining operations. Governments
should have a long-term vision for developing mining regions into self-sustaining economic
clusters.
II. ANTI-CORRUPTION EFFORTS AND THE MINING SECTOR
The trial and conviction of former President Alberto Fujimori indicates that the political
establishment and the general public have become highly sensitized to the issue of corruption.
The international community has recognized Peru as a compliant country by the Extractive
Industries Transparency Initiative (EITI)4
Mechanism for the Implementation of the Inter-
American Convention against Corruption (MESICIC) of the Organization of American States
(OAS).5
This report analyzes efforts that have been made and recommends further actions to
address corruption in the mining sector in Peru.
– International Obligations –
Peru was the first South American country to ratify the UN Convention against Corruption
(UNCAC). It also signed the US-Peru Trade Promotion Agreement (PTPA) and is a member of
the OECD Convention on Combating Bribery of Foreign Public Officials.
– National Legislative Framework –
Peruvian Criminal Code criminalizes the following acts as corruption if performed by public
officials:
- Bribery (cohecho): This covers both “active” and “passive” forms of bribery.
4
EITI compliance requires that countries disclose information on benefits and payments made by companies operating in the
Extractive Industries and these are reconciled against the revenues actually received by the State. For an understanding of on the
more recent standards to be adhered to by EITI Compliant Countries, please refer to The EITI Standard 2016 (2016) available at
https://eiti.org/files/english_eiti_standard_0.pdf
5
OAS recognizes Peru’s progress in fight against Corruption, published March 21, 2016 available at
http://www.andina.com.pe/ingles/noticia-oas-recognizes-peru’s-progress-in-fight-against-corruption-604318.aspx
8. The Peruvian Mining Sector Spring 2016
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- Influence peddling (tráfico de influencias): This is the act of receiving or giving a gift or
promise of any advantage to influence a public official in the performance of duty.
- Illicit Enrichment (enriquecimiento ilícito): This refers to public officials illegally
enriched by virtue of his or her office.
- Embezzlement (malversacíon): It is a punishable offense for a public official to
appropriate or use in any form assets whose custody was committed to the official by
reason of the office.
– Enforcement –
Existing Peruvian legislation is adequate, but enforcement is insufficient. The following are
salient issues in enforcement:
- Conflict of interest: Inadequate screening for conflict of interest and nepotism result in
the ‘revolving door’ phenomena, or ‘la puerta giratoria.’
- Lobbying: Domestic or foreign individuals and companies, engaging in the activity of
‘interest management’6
must be registered with the government. Lobbying activities
require monitoring.
- Right to information: Based on the Law of Transparency and Access to Public
Information of 2003, any government information is deemed public unless specifically
excluded by the law.
- Whistleblower protection: Since 2010, Peruvian law protects individuals who report
arbitrary and illegal acts by public officials. Individuals that may be held liable must fall
within categories of the administration, private employee, journalists, and private
citizens.
– Subnational Government –
Half of corporate taxes earned by the government were distributed to the regional level, referred
to as the ‘canon minero.’ In addition, revenue from royalties is distributed to regional
governments where minerals are extracted. Mining regions lack institutional capacity to handle
these sums. Decentralization has led to political fragmentation, and the lack of communication
between central and regional governments and the lack of technical and institutional capacity
have created circumstances that allow for corruption. For example, nine out of the twenty-five
regional presidents in Peru have been accused of Corruption in Peruvian Courts, with the most
common charge being misappropriation of public funds.7
– Recommendations –
1. Collaboration between the government and company for the Public Works Through Taxes
(Obras Por Impuestos) program.
2. Strengthen fiscal oversight and control systems in the regional branches of the Comptroller
General
6
The euphemism for lobbying, which includes oral or written communications to public officials regarding a public decision. See
Luiz Alberto dos Santos and Paula Mauricio Teixeira da Costa, The Contribution of Lobby Regulation Initiatives in addressing
Political Corruption in Latin America, Journal of Public Affairs, 438 (2012) available at
http://www.politicalcauseadvocacy.com/wp-content/uploads/2012/12/Lobby-Regulation-in-Latin-America.pdf
7
Jane Korinek, Managing the Minerals Sector: Implications for Trade from Peru and Colombia, OECD Trade Policy Papers,
No. 186, OECD Publishing, Paris, 32 (2015) available at http://www.oecd-ilibrary.org/trade/managing-the-minerals-
sector_5jrp6wrc2r7l-en.
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III. LEGAL FRAMEWORK OF MINING LICENSES, LOOPHOLES, AND RISKS
The licensing process for mining operations requires good governance and institutional control,
as it presents the greatest risk for corruption to occur.
- Mining concession: Applicants must follow the administrative procedures set out in the
Regulations for Mining Procedures as implemented by INGEMMET (the Geological
Mining and Metallurgical Institute). The application is a seven-step process.
- Loopholes: Major gaps in the legal framework exist in the administrative process, as
concessions are primarily a function of government official discretion.
- Risks: Companies must deal with multiple agencies and applications, which is often an
arduous process. Subsequently, in order to shorten the process and initiate mining
activities, opportunities for bribery and lobbying increase.
– Environmental Protection –
Additional requirements include water and environmental certifications based on the General
Environmental Law.8
Since mining activities can have a serious impact on the quality and
quantity of water, soil, species, and air, Environmental Impact Assessments (EIA) should
necessarily be done prior to commencement of operations. There are three categories of the EIA
process:
1. Environmental Impact Declaration for activities, projects or works with low negative
environment impacts;
2. Semi-detailed EIA for projects, activities or works with moderate environmental impacts;
3. Detailed EIA for works with significant negative environmental impacts.
- Risks in licensing: The EIA presents opportunities for corruption due to time constraints,
and lack of regulatory authority for EIAs. The lack of inter-governmental communication
coupled with the incentive to collect revenues from the mining company results in
mismanagement and oversight during the licensing and approval processes.
- Risks related to communities: The lack of know-how in community management,
especially with regard to drafting of agreements, results in the isolation of the
community.
IV. THE TRANS-PACIFIC PARTNERSHIP TREATY: BOON OR BANE FOR
PERU’S INDIGENOUS?
– Signatory to Investment Treaties –
The Peruvian government seeks to cultivate economic and political relationships with other
countries, to hone the image of an investor-friendly Peru.9
As such, the government reassures
international investors in various ways, such as:
- Article 63 of the 1993 Constitution stipulates that foreign investors have the same rights
as national investors;
- Companies can enjoy tax and administrative stability conditions for a 10-year term;
- The Constitution states that all expropriations must be compensated at fair market value.
8
Peru Law 2861, available at http://www.fonamperu.org/general/documentos/leyambiente.pdf.
9
Report by E&Y and Ministry of Foreign Affairs, Peru - Peru’s Mining & Metals Investment Guide 2015-2016, p. 18 (2015)
available at http://www.ey.com/Publication/vwLUAssets/Gu%C3%ADa_Minera_2015-2016/$FILE/EY-Peru-mining-and-
metals-investment-guide-2015-2016.pdf.
10. The Peruvian Mining Sector Spring 2016
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– Negotiation Mechanics –
Article 29.8 of the TPP states that the government would be obligated to pay the full market
value of the property seized from indigenous communities. Arbitration between local
communities and the government are a potential risk, which can be mitigated by early
consultations and negotiations. The Agreement elevates foreign investor rights to the same level
of national investors through non-discriminatory and expropriation clauses, but this is not
extended to indigenous communities.
– Investor-State Dispute Settlement System (ISDS) –
In the event of an investment dispute the investor can sue the host country. The host country (i.e.
Peru) is obligated to treat foreign investors no different from national investors; foreign investors
cannot be treated differently from one another; and Peru cannot expropriate or nationalize a
covered investment without exceptional reason.
– Recommendations –
1. Require consultations with indigenous community representatives, NGOs, civil society
organizations, and other relevant stakeholder representatives, during the drafting stages of
investment treaties.
2. Make the ‘protection of the indigenous and preservation of cultural heritage’ a ‘public
purpose’ exception to expropriation.
3. Provide for appeals such that the host government has means beyond annulment on limited
grounds.
4. Mandate corporate social responsibility standards, guidelines, and principles.
5. Strengthen the Peruvian central government to effectively manage the risk of potential
disputes.
6. Determine how Consulta Previa can generate a conflict with bilateral and international
investment treaties and create better practices for interaction between communities and the
State.
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METHODOLOGY
The contents of this Report were developed through extensive literature review and desktop
research, interviews in Peru, and collective group discussion, all under the guidance of Professor
Jenik Radon, Esq. From late December 2015 to May 2015, the six graduate students from the
School of International and Public Affairs (SIPA) at Columbia University, New York, studied
large scale mineral and metal mining in Peru using economic, social and environmental
frameworks, while the four LL.M. students from Columbia Law School (CLS) at Columbia
University, New York, examined the governance and legal framework of mining and foreign
investments in Peru. The Capstone Team benefited greatly from the help of students and
professors affiliated with the Communications and Corporate Image program at the Peruvian
University of Applied Sciences (Universidad Peruana de Ciencias Aplicadas).
The Capstone project client is the Ministry of Culture, Government of Peru (Ministry of
Culture or Client), which oversees the implementation of the Consulta Previa, in all activities
that impact indigenous populations, including mining activities. Professor Radon liaised with
officials at the Ministry of Culture to refine the scope of the Report.
In March 2015, the Capstone team traveled to Peru for 10 days, where the students conducted
interviews with stakeholders in Lima and fieldwork in Arequipa and Cajamarca, all Peruvian
cities with a strong mining presence. These sites were chosen based on research conducted by the
students, and agreed to by the Client. Fieldwork consisted of interviews, interactions with and
travel to directly impacted communities.
Data collected firsthand during the trip to Peru were analyzed within the existing canon of
research, and new insights were developed by the authors to create a report that would be useful
to the Ministry of Culture in developing a strategic plan for its mining sector and recommending
legal and policy amendments. The strengths of the research methodology include the diversity of
perspectives that inform this Report, the refined focus of the Report, and the engagement of
primary and secondary sources. The authors hail from professional and academic training in
human rights, development, security, investment and trade, civil rights law, and many other
fields, which confers rich nuance to this Report.
While the research benefited from meetings with multinational companies engaged in mining
activities, findings and research would have been further strengthened if the team had been able
to work in mining sites with more organized indigenous community presence. The Capstone
team intentionally chose not to use surveys or polls or similar instruments, in the interest of full
commitment to rigorous qualitative data collection. In future research, outcomes from this kind
of analysis will be reflective of the perceptions surrounding the various issues in the mining
sector in Peru. The Capstone team also faced some logistical challenges due to the brevity of
time spent in Peru, and the varying degrees of Spanish language ability of its members. Many
primary sources are only available in Spanish, and the team worked internally to translate these
documents. The recommendations relating to provisions in legal instruments, statutes etc.
contained in this Report have been drafted in English. The Government of Peru (or the relevant
ministry) may adapt such recommendations to Spanish language, as required.
Artisanal, informal, and small-scale mining comprise a large part of mining activity in Peru, but
are fraught with political complexity and lack of documentation. Peru also has oil and gas mining
12. The Peruvian Mining Sector Spring 2016
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operations, and state owned enterprises and government actors remain highly involved in these
activities. This Report focuses its analysis on large-scale mineral and ore mining exclusively, and
the outcomes contained herein are for application in large investments and multinational mining
concession contexts only.
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LIST OF ABBREVIATIONS
AAA : River Basin Authorities
AG : Attorney General
ALA : Local Water Authorities
ANA : National Water Authority
BIT : Bilateral Investment Treaty
CETA : EU-Canada Comprehensive Economic and Trade Agreement
CG : Comptroller General
CIRA : Certificate of Non-existence of Archeological Ruin
DGAAM : Directorate General of Mining Environmental Affairs
DGAAM : General Directorate of Mining Environmental Affairs
E&Y : Ernst and Young
EIA : Environmental Impact Assessments
EITI : Extractive Industry Transparency Initiative
EU : European Union
FDI : Foreign Direct Investment
FPIC : Free Prior and Informed Consent
FTA : Free Trade Agreements
GDP : Gross Domestic Product
GORE : Arequipa Regional Government
HKS : Harvard Kennedy School
IACAC : Inter-American Convention against Corruption
ICC : International Chamber of Commerce
ICS : Investment Court System
ICSID : International Centre for Settlement of Investment Disputes
IGCP : Inter-organizational Committee on Guidelines and Principles for Social Impact
IIA : International Investment Agreements
ILO : International Labor Organization
INGEMMET : Geological Mining and Metallurgical Institute
ISDS : Investor-State Dispute Settlement System
MESICIC : Mechanism for the Implementation of the Inter-American Convention against
Corruption
MINEM : Ministry of Energy and Mines
NGO : Nongovernmental Organizations
NPV : Net Present Value
OAS : Organization of American States
OECD : Organization for Economic Co-Operation and Development
OEFA : Environmental Evaluation and Oversight Agency
ONDS : National Office of Dialogue and Sustainability
PTPA : US-Peru Trade Promotion Agreement
SCC : Stockholm Chamber of Commerce
SEIA Law : Law on the National System of Environmental Impact Assessments
SENACE : National Environmental Certification Service
SIA : Social Impact Assessment
14. The Peruvian Mining Sector Spring 2016
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SICRECI : Sistema de Coordinacion y Respuesta del Estado en Controversias
Internacionales
TeleSUR : Latin American Television Network
TPP : Trans-Pacific Partnership Treaty
TTIP : Transatlantic Trade and Investment Partnership
UN : United Nations
UNCAC : UN Convention against Corruption
UNCITRAL : United Nations Commission on International Trade Law
UNCTAD : United Nations Conference on Trade and Development
15. The Peruvian Mining Sector Spring 2016
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TABLE OF CONTENTS
OTHER REPORTS......................................................................................................................... 2
ACKNOWLEDGEMENTS............................................................................................................ 3
EXECUTIVE SUMMARY ............................................................................................................ 4
INTRODUCTION ...................................................................................................................... 4
I. SOCIAL LICENSE TO OPERATE........................................................................................ 4
II. ANTI-CORRUPTION EFFORTS AND THE MINING SECTOR....................................... 7
III. LEGAL FRAMEWORK OF MINING LICENSES, LOOPHOLES, AND RISKS ............ 9
IV. THE TRANS-PACIFIC PARTNERSHIP TREATY: BOON OR BANE FOR PERU’S
INDIGENOUS?.......................................................................................................................... 9
METHODOLOGY ....................................................................................................................... 11
LIST OF ABBREVIATIONS....................................................................................................... 13
TABLE OF CONTENTS.............................................................................................................. 15
INTRODUCTION ........................................................................................................................ 17
THE ECONOMICS OF THE MINING SECTOR: A BRIEF PROFILE ................................ 18
SOCIAL LICENSE TO OPERATE ............................................................................................. 21
I. DEFINING ‘SOCIAL LICENSE TO OPERATE’ .............................................................. 21
II. COMPONENTS OF SOCIAL LICENSE............................................................................ 22
III.CHARACTERISTICS OF A SOCIAL LICENSE .............................................................. 23
IV.FREE, PRIOR AND INFORMED CONSENT................................................................... 26
V. WHY IS IT IMPORTANT? (THE CASE FOR SOCIAL LICENSING)............................ 31
VI. SOCIAL CONFLICT IN PERU......................................................................................... 34
VII. CHALLENGES IN OBTAINING SOCIAL LICENSE IN PERU................................... 46
ANTI-CORRUPTION EFFORTS IN PERU AND THE MINING SECTOR............................. 57
I. ANTI-CORRUPTION LAW AND EFFORTS..................................................................... 57
II. LEGAL FRAMEWORK FOR ANTI-CORRUPTION LAWS OF PERU.......................... 60
III. THERE IS THE LAW - WHERE IS THE ENFORCEMENT?......................................... 63
IV. CONFLICTS OF INTEREST: ........................................................................................... 64
V. ENFORCEMENT AGENCIES IN PERU........................................................................... 69
CURRENT LEGAL FRAMEWORK AND POLICIES IN RELATION TO MINING.............. 74
CRITIQUE: CORRUPTION RISK IN THE MINING SECTOR................................................ 85
FACTORS THAT FACILITATE CORRUPTION ...................................................................... 90
SOCIAL IMPACTS OF CORRUPTION..................................................................................... 91
THE TRANS-PACIFIC PARTNERSHIP TREATY: BOON OR BANE FOR PERU’S
INDIGENOUS?............................................................................................................................ 97
GENERAL INTRODUCTION................................................................................................. 97
ARBITRATION DISPUTES AND FOREIGN INVESTMENT ........................................... 100
PERU AND THE SICRECI ................................................................................................... 103
THE PITFALLS OF INTERNATIONAL INVESTMENT AGREEMENTS (IIA) .............. 104
A CLOSER LOOK AT THE ISDS PROVISIONS IN THE TPP.......................................... 106
16. The Peruvian Mining Sector Spring 2016
16
CONCLUSION........................................................................................................................... 119
ANNEXES.................................................................................................................................. 121
EXHIBIT 1.............................................................................................................................. 121
EXHIBIT 2.............................................................................................................................. 150
SOCIAL IMPACT ASSESSMENT ....................................................................................... 150
WHAT IS SOCIAL IMPACT ASSESSMENT?.................................................................... 150
SOCIAL IMPACT ASSESSEMENT IN THE CONTEXT OF PERU.................................. 153
TEAM BIOGRAPHY................................................................................................................. 155
17. The Peruvian Mining Sector Spring 2016
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INTRODUCTION
Peru is a resource rich nation with abundant supplies of copper, gold, silver, lead, zinc, natural
gas, and petroleum deposits. For this reason the Peruvian economy continues to be dependent on
the mining industry driven by the investment from overseas.10
As one of the largest mineral
resources producers in the world, sustainable management of natural resources is imperative for
Peru’s economic and social development.11
The country continues to exhibit improvement in the
World Bank Doing Business indicators, and attract investors due to its strong financial services
sector, the transparent regulatory environment, and the investment-friendly tax regimes.12
There
is concern, however, that there is weak enforcement of environmental protection laws, and that
local authorities may not be capable of containing social conflict that arises from discontent over
the direct and indirect impact of mining industry.13
Peru has been unable to improve its low ‘political stability’ and ‘absence of violence and
terrorism’ score in the World Bank’s Worldwide Governance Indicators over the past decade.14
In a country as ethnically diverse as Peru, national security could be a concern. This is especially
because of the history of conflict in the country among peoples including indigenous
populations, the unresolved social discontent, the systemic inequality, and the large illicit
revenue coming from the informal mining industry.
The World Bank’s Worldwide Governance Indicators give Peru low scores in ‘government
effectiveness.’15
The government’s lack of capacity to monitor all regulations imposed on private
sectors has discouraged the public trust toward the government and makes the mining companies
question the benefit for them to follow regulations that do not have a sufficient monitoring
scheme. Low transparency and efficiency in the license approval process and weak monitoring
system fertilize the corruption risk and thus discourage foreign investment.
While much effort should be expended on improving enforcement and monitoring of existing
regulations, such regulations itself might be nullified as a result of globalization. The signing of
the Trans-Pacific Partnership Treaty (TPP) might impose more obligations on the Peruvian
government to protect foreign investors and may limit the state’s sovereign right to protect the
environment and the rights of the indigenous persons.
By drawing on primary government sources, private and public research, and interviews with
relevant actors, this Report addresses social implications of mining industry in Peru. While the
10
EY Report - Business Risks Facing Mining and Metals 2014-2015, p. 12 (2014) available at
http://www.ey.com/Publication/vwLUAssets/EY-Business-risks-facing-mining-and-metals-2014%E2%80%932015/$FILE/EY-
Business-risks-facing-mining-and-metals-2014%E2%80%932015.pdf.
11
Bertelsmann Stiftung, BTI 2014 - Peru Country Report, Gutersloh: Bertelsmann Stiftung, note 6, at p. 8 (2014).
12
KPMG Report, Peru - Country Mining Guide, p. 3 available at
https://www.kpmg.com/Ca/en/industry/Mining/Documents/Peru.pdf.
13
International Monetary Fund, Peru – Selected Issues paper, IMF Country Report No. 14/22, p. 11 (2014) available at
https://www.imf.org/external/pubs/ft/scr/2014/cr1422.pdf.
14
“The World Bank, Worldwide Governance Indicators 2015 available at
http://info.worldbank.org/governance/wgi/index.aspx#countryReports.
15
Ibid.
18. The Peruvian Mining Sector Spring 2016
18
previous report of Columbia University16
comprehensively approached economic, social, and
environmental impact of mining industry, this report purports to discusses three aspects of the
mining industry in Peru; social license, with a focus on indigenous people’s rights, anti-
corruption, and Trans Pacific Partnerships (TPP). Sound policy has guided Peru out of crises in
the past, and will fortify recent gains through empowering the Peruvian civil society including
the resident communities and private sectors. This Report provides legal and policy guidance in
establishing more inclusive and sustainable development strategies for the mining sector in Peru
so that benefits can be maximized, and negative impacts minimized.
THE ECONOMICS OF THE MINING SECTOR: A BRIEF PROFILE
As commodities prices rose in the early 2000’s, investment in the mining sector significantly
grew from US$ 305 million to US$ 8,568 million (2003-2012).17
In 2013, mining activity
accounted for almost 15 percent of total GDP.18
Periods of rampant investment are exciting
because they bring significant amounts of immediate cash, and underdeveloped countries then
see natural resource extraction as the path towards development. At the same time, foreign
companies remain aware of the risk involved in operating in developing or emerging resource-
rich nations. Admittedly, the risks vary by country—political risk, price volatility, and corruption
can quickly derail projects. In response, oil companies, for example, use their significant
negotiating advantages to structure revenue payout to recover their initial investment as soon as
possible,19
with the consequence that these companies only have future prospects, or potential
profits, to lose. Any natural resource contract can hold to a similar cost-recovery structure,
including mining contracts.
In addition to signing lopsided contracts, the promise of huge royalties in the short-term can
distract governments from the long-term economic benefits of natural resource extraction. This
short-term thinking occurs because revenues from mining activity increase the country’s current
income without the usual domestic investment. When rising commodities prices cause a flood of
investment into a developing economy, fundamental economic metrics like GDP per capita tend
to improve, but the foreign investment usually does not result in sustainable economic growth.
Sustainable economic growth is a result of fixed investment in infrastructure, education, and
technology. Such investment is primarily the domain of the national government and thus
depends on tax revenue. When gold and copper prices are high, mining companies deliver
significant tax revenue—as much as 16 percent.20
But as we have seen over the last few years,
prices are volatile. They can drop suddenly and stay low for unpredictable lengths of time. Such
volatility makes national investment planning difficult when the mining industry contributes
such a large share of the revenue. Beyond national planning difficulties, funding for programs in
place can disappear as well. Corruption and non-transparent contracts can make things worse by
diverting revenue away from the state. For example, corrupt officials can divert royalties meant
16
See generally Columbia School of International and Public Affairs Report, Mining in Peru: Benefitting from Natural Resources
and Preventing the Resource Curse Capstone Workshop – Spring 2015, (2015) available at
https://sipa.columbia.edu/sites/default/files/Capstone%20-%20Peru%20(25%20June%202015)_FOR_PUBLICATION.pdf.
17
PricewaterhouseCoopers International Report, 2013 – Mining Industry Doing Business in Peru, p. 24 (2013) available at
https://www.pwc.de/de/internationale-maerkte/assets/doing-business-in-mining-peru.pdf.
18
Ibid.
19
Jenik Radon, How to Negotiate an Oil Agreement, Initiative for Policy Dialogue Working Paper Series, p. 89 (2006) available
at http://policydialogue.org/files/publications/Ch04.pdf.
20
PricewaterhouseCoopers International Report, 2013 – Mining Industry Doing Business in Peru, p. 8 (2013) available at
https://www.pwc.de/de/internationale-maerkte/assets/doing-business-in-mining-peru.pdf.
19. The Peruvian Mining Sector Spring 2016
19
for the state into their personal accounts directly, or indirectly by funneling contract work to
companies that pay them.
Fortunately, there are ways to solve, or lessen, these problems: increased transparency in
contracts, auction-based concessions/licenses, infrastructure and local employment requirements,
and stabilization funds ensure that the people benefit from increased revenue. Above all, mining
companies must recognize that they are in partnership with the host country.21
The country
should recognize that it is the owner of the resource, and thus has the right to determine the terms
of its extraction. Further, the resources do not disappear if left in the ground. Previous contracts
may have been poorly negotiated, but governments can learn from their mistakes. Some
companies might be willing to renegotiate current deals for the sake of future extraction
contracts. The government of Peru should view the current downturn in prices as an opportunity
to be cautious and deliberate in the mining sector. Now is the time to consider policy, regulation
and laws while the pressure to develop is less.
21
Jenik Radon, How to Negotiate an Oil Agreement, Initiative for Policy Dialogue Working Paper Series, p. 96 (2006) available
at http://policydialogue.org/files/publications/Ch04.pdf http://policydialogue.org/files/publications/Ch04.pdf.
21. The Peruvian Mining Sector Spring 2016
21
SOCIAL LICENSE TO OPERATE
I. DEFINING ‘SOCIAL LICENSE TO OPERATE’
In the recent years, securing a social license to operate from the local community has become a
critical factor in the success of mining operations. Recurring social conflicts hindering project
development in resource rich regions has led mining companies to realize the importance of
securing a social license to operate (“Social License”). There is now widespread
acknowledgment by mining companies that the consent of indigenous communities is essential
for successful mining projects. Over time, indigenous communities have also become
increasingly aware of their rights, including the importance of granting a Social License22
accompanied with an expectation that mining companies should seek and secure the Social
License for extractive activities in their local territories.
In context of the mining industry, the concept of a Social License refers to the social acceptance
of proposed mining activities to be carried out by the mining company in the indigenous
territories. Although the concept of social acceptance centers mainly on acquiescence by the
local communities to mining operations in their territories, it is also necessary to gain social
acceptance of other relevant stakeholders such as the local and provincial government. An
important aspect of this license relates to engagement and consultation with the indigenous
community on the social and environmental risks of the proposed mining operations prior to
commencement of project development. This entails discussions on any environmental or social
impacts of the mining activities and how the mining company proposes to mitigate said impacts
to prevent any adverse consequences.
Therefore, to secure and maintain a Social License the following three elements should be
ensured:
1. A well-defined stakeholder engagement and consultation process that promotes project
awareness and ensures inclusion of the affected indigenous community and other relevant
stakeholders;
2. An efficient monitoring and evaluation mechanism that enables governmental authorities
to effectively monitor compliance with agreements reached between the indigenous
community and the mining company during the engagement process;
3. A grievance mechanism through which indigenous communities can appeal, submit
comments or raise concerns against grant of concessions or project activities. The
grievance mechanism should have built-in safeguards to ensure that any comments,
concerns or grievances raised are adequately addressed. This attribute is essential to
ensuring and promoting the transparency of the entire process.
22
The scope of the report has been limited to obtaining a social license to operate from the Indigenous communities in Peru. The
limitation has been imposed given the requirements of the ILO conventions. However, the concept of obtaining a social license to
operate can be extended to all communities that might be impacted by any mining activity.
23. The Peruvian Mining Sector Spring 2016
23
Formal legal agreements may be executed to ensure compliance with agreed commitments and to
empower the local communities to enforce such commitments against the mining company.
Following negotiations between the company and the indigenous communities, such formal
agreements can record the agreed understanding and expectations relating to project
development as well as clearly define the roles, responsibilities, and the consequences of a
breach or failure to comply with agreed terms. In the case of Social Licensing, the emphasis is on
managing expectations27
and maintaining a relationship to mitigate against the loss of credibility
that may jeopardize the legitimacy of an entity or project wishing to operate in the local territory.
– Trust –
Social legitimacy and credibility are pre-requites for developing trust among the mining
company, the local community, and other relevant stakeholders. When coupled with trust, social
legitimacy and credibility form the basis of the continued social acceptance of the mining
project.
The aforesaid components collectively facilitate a cooperative atmosphere that generates
opportunities for collaboration to both ensure community consent and benefit the mining
company and the local communities.
III. CHARACTERISTICS OF A SOCIAL LICENSE
As discussed, a Social License—symbolizing a local community’s social acceptance of mining
activities—is obtained by a mining company’s continued engagement and consultation with
communities residing in areas that may be impacted by proposed mining.28
A Social License
generally has the following characteristics:
– Intangible –
Social License is an intangible concept that is rooted in the local communities and relevant
stakeholder’s perceptions, beliefs, and opinions about the mining project. In the absence of clear
and transparent communications, the intangible nature of the license makes measuring the level
of acceptance, discontent or rejection of a project a difficult task to undertake. If the mining
company does not maintain and monitor the company-community engagement, it runs the risk of
equating the community’s silence with approval and cooperation with trust.29
– Informal –
The product of an amalgamation of perceptions, a Social License is a dynamic concept and is a
reflection of the local communities’ changing perceptions of the mining company and its project.
The non-permanent nature of a Social License adds to the intangibility of the license by
complicating attempts at accurately measuring the status of the social approval. Periodic
27
Managing expectations, particularly at the start of an extractive project, is a crucial component of mitigating the social conflict
that stems from grievances related to unfulfilled company obligations or increasing community demands regarding benefits
beyond the scope of those agreed to by the company. The authors of this report address the issue of managing expectations in
more detail later on in this report.
28
The challenges surrounding how to define or delineate impacted communities is explored further in Section J, Challenge #4.
29
Mari Hayman, Summary – Mining and Community Rights: Does Consulta Previa Promise Peace or Conflict?, Americas
Society / Council of the Americas (2013) available at http://www.as-coa.org/articles/summary-mining-and-community-rights-
does-consulta-previa-promise-peace-or-conflict.
24. The Peruvian Mining Sector Spring 2016
24
measurements of local sentiments are therefore key to ensuring that a social license is maintained
in the presence of internal and external influences.
An informal Social License is in respects difficult to understand when compared to the formal
licensing process that entails the granting of a license or concessions by official authorities. In
contrast, the granting of a Social License, in the context of the extractive industry, is contingent
upon a dynamic relationship between the mining company and local communities. Given its
intangible nature, the concept of a Social License is faced with challenges when companies or
regulators confine their understanding of social license requirements to only formal state
permissions. The aforesaid reasoning is misguided. Instead given the dire consequences of social
conflict on mining sector investment, an informal social license plays an important role in
securing a community’s acceptance of the project within the web of state permissions that can
guarantee little in the face of local resistance.
– Dynamic –
The dynamic nature of a Social
License is particularly important
in the case of frozen projects.
The Conga project is a $5 billion
dollar project of Yanacocha—a
company owned by Newmont
Mining Corporation and
Buenaventura—that was
suspended in 2011 following
rising financial costs and social
unrest. Although it is possible to
halt extractive preparations,
activities, and operations, social
relationships are much harder, if
not impossible, to freeze given
the non-static nature of
perceptions influenced by a host
of changing variables. Companies and governments should ensure that the initial engagement
process is followed by steps to maintain the social relationships.30
The sufficiency and adequacy
of the steps can only be understood in a subjective context and may vary depending on the
geographical scope of the mining activities, local customs, impacted communities, and spheres
of influence. Thus maintaining a Social License requires on-the-ground presence of mining
company representatives, equipped with both an understanding of local communities and the
relevant resources to perform required tasks.
30
According to community members and certain mining officials, Yanacocha has not been maintaining its community
engagement with sufficient number of resources. In order to make the social licensing concept work, a company needs to elevate
the position of the official tasked with formal or informally managing this responsibility. If relationship building is delegated
solely to community liaison workers, rather than including top management, operational and business development departments,
the effort will be viewed as an insincere attempt at bettering a company’s image. By elevating the position of the person in
charge, the company can both make a symbolic gesture of its dedication as well as ensure that the individual has the resources
and political ground to carry out his or her mission.
Figure 2 - The Slogan "No A Conga" or "No to Conga" carved into a hill
in Cajamarca, Peru. Image Credit: Ana H. De La Cruz.
25. The Peruvian Mining Sector Spring 2016
25
Crucially, coping with the dynamic nature of social perceptions requires managing community
expectations. Over the course of a project’s lifecycle, mining companies should take necessary
steps to monitor social perceptions and thereafter endeavor to meet community expectations.
– Spatially diverse –
A Social license
encapsulates the “demands
on and expectations for a
business enterprise that
emerge from
neighborhoods,
environmental groups,
community members, and
other elements of the
surrounding civil
society.”31
Given the
spatial nature of said
consent, the social license
obtained for one type of
activity in one particular
community, is not
necessarily transferable to a
similar or different activity in a nearby locale with other indigenous communities.32
In mining projects whose territory or spheres of influence expand across vast amounts of terrain,
the questions of how to generate, sustain, and prioritize the social license across various
communities is particularly complex. Operating with a limited number of resources and within
the context of spatial limits determined by access and distance, the distribution of benefits is
often centered upon the zones immediately surrounding the site of operations.33
In such cases,
the inequitable distribution of benefits runs the risk of creating inter-community conflicts, as one
community comes to reap the benefits more so than others.
In the case of Yanacocha operations in Cajamarca, the mining company operates near 120
communities of influence while the Conga Project itself spans across 32 “caserios” or
departments. Getting to know and manage the diverse sets of interests and concerns across these
communities is a task that requires significant involvement of third parties, such as community
groups, research institutes, development agencies, multilaterals, and local as well as international
NGOs. Despite attempts at defining the spatial boundaries of a Social License, said boundaries
may become permeable in the presence of social conflict. As recent as 2012, representatives of
the 32 caserios of Cajamarca have signed a petition calling for the resumption of the Conga
31
Neil Gunningham, Robert A. Kagan and Dorothy Thornton, Social License and Environmental Protection: Why Businesses Go
beyond Compliance, Law & Social Inquiry Vol. 29, No. 2 (Spring, 2004), at p. 307, available at
http://eprints.lse.ac.uk/35990/1/Disspaper8.pdf.
32
Presentation by Bernice Garcia, Sistema De Transporte Seguro Compañía Minera Antamina S.A.,. (2011) available at
http://slideplayer.es/slide/100813/.
33
In the case of the departments within Cajamarca and in the immediate vicinity of Yanacocha’s Conga Project, the distance
between communities that receive tangible benefits and those who do not can be marked by a short five minute drive.
Figure 3: The geographical scope of the Antamina company's Mineroducto.
Image Credit: Compañía Minera Antamina
26. The Peruvian Mining Sector Spring 2016
26
project, arguing that the delays following the social protests of 2012 were caused by individuals
from far off departments.34
In circumstances where a Social License is obtained in consultations
with specific sections of a broader community, assessing a community’s overall social
acceptance of a project becomes more difficult. Therefore, to augment the likelihood of a
project’s success it is important to consult all impacted communities within the project area.
Non-monolithic: “Community” vs. “Network of Stakeholders”
Generally, the term ‘community’ denotes a meaning that “suggests a singleness and purpose that
does not always exist.”35
Instead of uniform communities, there are aggregations of communities
or interest groups that function as a network of varied interests. The question of whether to refer
to the individuals within a sphere of extractive activities as a ‘community’ or ‘network of
stakeholders’ is at the heart of issues surrounding the definitional boundaries of ‘impacted’
communities. Referring to a community as a ‘network’ “makes salient the participation of groups
or organizations that might not be part of a geographic community” but may nevertheless be
impacted by the mining activities.36
In contrast referring to local actors as ‘stakeholders’ implies
a network comprised of groups that can affect or be affected by the extractive operations.
IV. FREE, PRIOR AND INFORMED CONSENT
– Framework for FPIC –
Whereas a Social License refers to the social acceptance of any community impacted by a
mining project, Free Prior and Informed Consent (“FPIC”) specifically refers to the consent of
the indigenous community in the region where the mining concession is being granted. Generally
the obligation is on states to, prior to granting the aforesaid concession, engage with the
indigenous communities that may be impacted by mining activities and obtain their consent
before approving any project that may affect their land or territories.
FPIC is an internationally recognized principle that is founded on numerous international
instruments, including the UN Declaration on the Rights of the Indigenous People.37
Other
international instruments relevant to the context of the FPIC are the ILO Convention 169, the UN
Declaration on the Rights to Development, the Human Rights Covenant, Article 27 of the
International Covenant on Civil and Political Rights and Article 15 of the International Covenant
on Economic, Social and Cultural Rights. Furthermore, since 2012, the International Finance
Corporation has included the requirement of obtaining the consent of indigenous communities as
a performance standard for responsible mining operations, as well as a condition to continued
financing for mining projects.
34
News Report, Caseríos De Cajamarca Exigen Continuidad Del Proyecto Conga, Peru21.pe (2012) available at
http://peru21.pe/politica/caserios-cajamarca-exigen-continuidad-proyecto-conga-2047297.
35
On Common Ground Consultants Inc and Robert Boutilier and Associates, What Is the Social License? The Social License To
Operate, (2016), available at http://socialicense.com/definition.html.
36
Ibid.
37
Article 32(2) of the UN Declaration on the Rights of Indigenous Peoples (accessible at
http://www.un.org/esa/socdev/unpfii/documents/DRIPS_en.pdf) provides the following:
“States shall consent and cooperate in good faith with the Indigenous Peoples concerned through their own representative
institutions in order to obtain Free, Prior and Informed Consent prior to the approval of any project affecting their land or
territories”.
27. The Peruvian Mining Sector Spring 2016
27
– A Legal, Valid, and Binding FPIC –
In order to be legal, valid, and binding, the consent of the community should be free, prior, and
informed. The aforesaid statement is comprised of the following elements all of which are
interrelated and must be present for consent to be valid:
Free
Free refers to the voluntary nature of the process and implies that the consent should be procured
without coercion, manipulation or intimidation of the indigenous community. While the
indigenous community may lack the sophistication, organization, and resources of the mining
company, they have inherent rights that should be respected.
The requirement of no coercion is intended to preempt and prohibit all forms of coercion that
may detract from the process of freely giving consent. This includes coercion resulting from the
imposition of deadlines or timelines within which decisions are required to be made. Thus it is
essential that there be compliance with and respect for customs, traditions, and practices that may
be relevant to the decision-making processes of the indigenous communities. Thus, the FPIC
process should be open-ended giving the communities adequate time to make decisions in
accordance with their customs and practices.
Prior
Prior refers to the in advanced procurement of an indigenous community’s consent that is before
the granting of a concession or commencement of project development. Thereafter, prior is
inclusive of the understanding that the consent is of a continuing nature and will thereafter be
sought prior to each major stage of project development. Crucial to prior consent is the timely
and well in advance provision of project information that will allow communities to reach an
informed decision.
Informed
To satisfy informed consent, the indigenous community should be provided all information
related to the mining project and activities in a comprehensible manner that allows the
communities to make an informed decision on whether or not to grant consent. This component
is centered on the level of communication with the impacted indigenous communities and
involves the provision of complete and accurate information about the extractive project
including matters such as the ownership of rights, the anticipated financial, political, social and
environmental impact assessment results and other information that is necessary for an
indigenous community to arrive at an informed decision. All information should be provided in
the local language and in a non-technical form that is easily comprehensible to the indigenous
communities.
A critical aspect of informed consent merges with the continuing nature of FPIC and mandates
an ongoing communication channel whereby the indigenous community is constantly updated
and kept informed of all project activities including those that may impact the validity of the
continuing consent. This may be relevant if the circumstances on which consent was based and
previously granted are no longer reflective of actual circumstances, therefore requiring that the
consent be revisited in light of changing events.
28. The Peruvian Mining Sector Spring 2016
28
Consent
Consent refers to the collective decision made by the indigenous communities on whether or not
the consent to the proposed project on the basis of the information that has been provided to
them. Given the impact mining may have on the land and culture of indigenous communities, it
is imperative that their consent be procured for such activities. In the event the indigenous
community does not grant its consent, the project should not be allowed to proceed unless
community concerns are addressed. Thus the component of consent is reflective of the “right to
say no” to any proposed activity/project.
Procuring consent should be a participatory process that not only involves constant dialogue with
the leaders of the community, but also the rest of the community including those marginalized
members. Consent must be forthcoming from the indigenous community as a whole and must be
reached through a participatory process that ensures inclusion of minorities such as youth and
women.
The FPIC should be a legally binding requirement for any mining project developed in areas
inhabited by indigenous communities. To this end, enacting national legislation that both
incorporates principles relating to FPIC set out in ILO Convention 169 and that recognizes the
inherent right of indigenous communities to give consent can strengthen the mandatory nature of
FPIC.
In recognition of the continuing nature of the FPIC process, the consent must be reviewed and
renewed on an ongoing basis throughout the project lifecycle. According to the World Bank, the
FPIC review and renewal process should be carried out every year, as the project develops to
account for new demands. This would account for changes in expectations of the indigenous
communities or in project development that deviates from the understanding that formed the
basis of the previous community consent.
In many respects, the indigenous community is not at par with the mining company therefore
placing it at a disadvantage in determining how the mining activities are executed. In some
instances, NGO’s or government departments may represent such communities, but even they
may lack the resources and the professional sophistication amassed by the mining companies. In
recognition of and to protect the inherent rights of the indigenous community, the onus is on the
company to procure the consent on the aforesaid basis.
One proposed means to achieve this is the execution of formal legal agreements between the
company and the indigenous community. The relevant government departments may also be
parties to this agreement in order to facilitate the negotiation, implementation, and enforcement
of the agreement, including any cross default provisions with government issued permits,
licenses or concessions.
– A Formal Legal Agreement –
In some instances, mining companies and local community representatives have executed simple
handwritten agreements recording the understanding reached following informal negotiations.38
38
Information provided by the personnel at Sumitomo Metal Mining in interview conducted on March 10, 2016.
29. The Peruvian Mining Sector Spring 2016
29
These are simple handwritten documents, usually short one page agreements, that set out the oral
agreement and promises made by the company in return for the community permitting the
execution of certain mining activities on the territory.39
While the simplicity of such agreements,
in that they are readily understandable by the indigenous communities, may appear beneficial in
the short-term, they leave much to be desired.
As an alternative, the proposed formal legal agreement carries with it a degree of permanence as
it is embedded with legal rights. This lends stability to project development by engaging the
indigenous community as partners and involving them in the decision-making process thereby
reducing the possibility of social conflicts. The proposed form of the legal agreement titled
‘Community Consent and Partnership Agreement’ (attached as Exhibit 1) attempts to offset
concerns raised in relation to the treatment of indigenous communities in the Peruvian extractive
industry.
The numerous instances of social conflict in Peru have highlighted the importance of a legal,
valid, and binding agreement. Of the many factors that fuel social conflicts deals with the loss of
credibility that emerges when indigenous communities encounter mining companies reneging on
their promises. In other instances, the company engages in mining activities without regard for
the culture or the environment of the indigenous territories. In the absence of government
intervention to penalize the company’s actions or ensure the enforcement of promises, the
indigenous communities resort to strikes, block outs etc. resulting in social conflict. In several
cases, the mining projects are carried out in areas lacking state presence and basic public
facilities. When mining activities represent an opportunity to bring development to these areas,
indigenous people are by way of right, entitled to all the resulting benefits.
A legal, valid, and binding formal agreement seeks to bring it all together. The agreement sets
out various steps for engagement of the indigenous community in all stages of the project
development including provisions allowing for information sharing and monitoring of the
project. The company’s various commitments, including the provision of jobs, education,
training or the creation of development funds are all to be included in the agreement with
imposition of penalties and cross defaults in the event of a breach. The agreement also requires a
company to obtain and maintain the indigenous community’s free, prior and informed consent
throughout the project lifecycle.
Furthermore, the agreement includes the basic protective provisions absent in the existing one-
page agreements. Such formal legal provisions are the bedrock of the legal, valid, and binding
nature of agreements as they outline the consequences and remedies for breach, enforcement and
means of dispute resolution. Without these provisions, the indigenous community has no
recourse, except social conflict, to both seek enforcement of promises made and hold the
company accountable for any environmental violations.
The formalization process does not derogate from the importance of community inclusion. The
execution of a formal legal agreement does not detract from the need for regular on the ground
engagement and community consultation by the company. The company will still be required to
30. The Peruvian Mining Sector Spring 2016
30
consult and engage the indigenous community to keep them engaged at all stages while ensuring
that their expectations are met. To ensure that the community benefits from the formalization
process, it is imperative that they be able to understand and thereafter rely and enforce the
protections provided for in the legal agreement. Therefore, the agreement has been structured
and authored in a simple, but clear language and manner so as to be comprehensible for the
community members all while retaining its legal provisions.
In other countries, projects set up in indigenous territories have executed formal legal agreements
with indigenous communities. Such agreements commonly referred to as ‘Community
Development Agreement’ or ‘Impact Benefit Agreements’ have been met with varying degree of
success. The proposed draft of the ‘Community Consent and Partnership Agreement’ has been
prepared as a discussion draft keeping in view the issues faced by the indigenous persons in Peru
where this legal framework remains untested and its legal ramifications unknown.
31. The Peruvian Mining Sector Spring 2016
31
V. WHY IS IT IMPORTANT? (THE CASE FOR SOCIAL LICENSING)
In 2014, Ernst and Young named a social license to operate as the 3rd
most important business
risk to the mining and metals industry.40
Indicative of recent normative shifts surrounding social
corporate responsibility, over time,
companies have come to recognize the
importance of “bring[ing] host communities
along with them on their road to prosperity,”
as a prerequisite to successfully operating in
the area of the community.41
Identifying and, to the extent possible,
quantifying the social and economic impacts
of extractive activities is a process that
requires analysis of the dynamics of
individual communities as well as dialogue
with a broad array of stakeholders. Impact
assessments and the consultative process
require substantial time investments that can
add to the time needed for a project to
materialize, thus, according to former Shell International VP for External Affairs Donal A.
O’Neill interfering with the “investment decisions made on discounted cash-flow economics.”42
However, the abandonment and postponement of projects due to the inability to obtain or sustain
a social license to operate means that early, ongoing,43
and in-depth community engagement are
of great importance in reducing the likelihood of the social conflict that threatens investment.
– Shift in Norms –
Today’s globalized and interconnected world has provided communities with the space to
understand their rights. Although lacking formal political representation of their interests,44
indigenous communities are more conscious of their rights in relation to the mining activities
conducted in their territories. In Peru, the paternalistic business approach of the 1990s that
carried on into the early 2000s caused tensions between the Yanacocha mining corporation and
the communities of Cajamarca whereby the latter was left resenting their marginalization from
the developmental process.45
Normative shifts have also introduced frameworks within which
governments may work to protect the rights of indigenous communities. In some instances these
international frameworks, such as the principle of obtaining a free, prior, and informed consent
40
E&Y Report - Business Risks Facing Mining and Metals 2014-2015, pp.16-18 (2014) available at
http://www.ey.com/Publication/vwLUAssets/EY-Business-risks-facing-mining-and-metals-2014%E2%80%932015/$FILE/EY-
Business-risks-facing-mining-and-metals-2014%E2%80%932015.pdf.
41
Ibid, p. 20.
42
Donal A. O'Neill, Chapter 8: Impact Assessment, Transparency, and Accountability: Three Keys to Building Sustainable
Partnerships between Business and Its Stakeholders, Peace through Commerce: Responsible Corporate Citizenship and the
Ideals of the United Nations Global Compact. Ed. Oliver F. Williams. Notre Dame, IN: U of Notre Dame, p. 14 (2008).
43
Should be a constant process, not just one that is initiated prior to the project or that stops when activities begin – Information
as provided by confidential source b in interview conducted on March 15, 2016.
44
Interview with Cesar Chavez Arevalo, Regional Commissioner for Arequipa – ONDS on March 16, 2016.
45
Information as gathered from interviews at Yanacocha on March 16, 2016 and with source b on March 15, 2016.
Figure 4: Top 10 Business Risks to Mining and Metals.
Image Credit: Ernst and Young, Business Risks Facing
Mining and Metals 2014-2015.
32. The Peruvian Mining Sector Spring 2016
32
of indigenous communities, have also been incorporated in domestic laws of countries so as to be
directly applicable.
– Costs –
Following the normative shifts in the standards of socially responsible corporate behavior and
the emergence of communities that are more aware of their rights, stakeholder risks in the
extractive industry have increased over the past two decades. The reactions of local communities
to negative environmental or health impacts of extractive projects have the potential to escalate
from minor complaints to outright social conflict involving protests, strikes, death, and injury.
Such occurrence in turn threatens the development and operations of mining activities. Thus, it is
imperative that mining companies and governments in mining areas understand the economic
and social costs of social conflict in the context of mining activities.46
As part of the Harvard Kennedy School (HKS) Corporate Social Responsibility Initiative, Rachel
Davis and Daniel M. Franks sought to better identify and account for the costs of social conflicts.
Project delays are regarded as the most frequent cost associated with company-community
conflicts. According to the results of the study, these costs arise from “the inability to pursue
future projects and/or opportunities for expansion or for sale.”47
With respect to the loss in
productivity during times of conflict, a world-class mining project with a capital expenditure of
between US$ 3-5 billion would lose approximately US$ 20 million per week of delayed
production in Net Present Value (NPV) terms.48 49
While the greatest costs of conflict include the opportunity cost
in terms of the lost value tied to future projects, companies also
tend to overlook costs associated with periods of company-
community conflicts. According to the HKS report, the most
overlooked expense is staff time dedicated to managing conflict.
Management time spent dealing with community conflicts can
range from 5% to 35- 50% of the manager’s time.50
While costs associated with social conflicts have a direct impact
on the companies and, consequently, government revenues, it is
important to note that project delays, stakeholder tensions, and
inadequate grievance mechanisms could lead to further negative
consequences for the communities themselves. As a result of
social conflict, such communities stand to be deprived of any
46
Rachel Davis and Daniel Franks. Costs of Company-Community Conflict in the Extractive Sector, Corporate Social
Responsibility Initiative Report No. 66. Cambridge, MA: Harvard Kennedy School, p. 8 (2014) available at
https://www.hks.harvard.edu/m-rcbg/CSRI/research/Costs%20of%20Conflict_Davis%20%20Franks.pdf.
47
Ibid, p. 20
48
Ibid, p. 8
49
E&Y Report - Business Risks Facing Mining and Metals 2014-2015, p. 18 (2014) available at
http://www.ey.com/Publication/vwLUAssets/EY-Business-risks-facing-mining-and-metals-2014%E2%80%932015/$FILE/EY-
Business-risks-facing-mining-and-metals-2014%E2%80%932015.pdf
50
Rachel Davis and Daniel Franks. Costs of Company-Community Conflict in the Extractive Sector, Corporate Social
Responsibility Initiative Report No. 66. Cambridge, MA: Harvard Kennedy School, p. 20 (2014) available at
https://www.hks.harvard.edu/m-rcbg/CSRI/research/Costs%20of%20Conflict_Davis%20%20Franks.pdf.
Figure 5: Costs of Social
Conflict. Image Credit: Ernst
and Young, Business Risks
Facing Mining and Metals
2014-2015.
33. The Peruvian Mining Sector Spring 2016
33
“Many companies still see social investment as the number one
risk mitigation strategy...[So if] you ask [Company A] how much
they spend on [Country X] every year, which is probably about
USD$60 or 70 million a year, they will do that for no other
reason than…social risk mitigation. The fact of the matter is, it
doesn’t work. You know there’s no [Company A] employee that
has the nerve to go outside the gate with a [corporate] emblem
on his or her shirt. They don’t do it...If anything, it creates more
conflict rather than reduces [it]...[I]t is a widely held assumption
that as long as you build schools and clinics, that people will be
happy and won’t attack you. And the evidence is overwhelmingly
that that’s not the case.”
- Rachel Davis and Daniel Franks. Costs of Company-Community Conflict in the
Extractive Sector, p. 24 (2014)
economic, employment or social benefits generated by local mining activities. For instance
following the shutdown of Yanacocha’s Conga mine, the company reported the estimated loss of
USD 2 million a day as well as the termination of employment of 6,000 workers.51
Figure 6: Cases of Company-Community Conflict: Proximate Issues/Issues in Dispute. Image Credit: Rachel
Davis and Daniel Franks, Costs of Company-Community Conflict in the Extractive Sector
52
Creating a framework for a Social License is an important first step to crafting the stability that
would attract foreign investment in a country’s mining sector. In its existing legal provisions for
community engagement and prior consultation of indigenous peoples, Peru has made strides in a
positive direction. With social
licensing concepts remaining to be
identified and expanded upon in
Peru—an understandable reality
given their spearheading role—
ensuring the enforcement of such a
framework will continue to be a
work in progress.
While the pressure of environmental
and social impact assessments may
be perceived as an expensive
process undertaken to satisfy
criticism, the tools serve as means
with which to add and sustain a project’s long-term value and thus should be viewed as a
positive form of engagement that should be extended beyond the borders of indigenous
51
Naomi Mapstone, Workers kidnapped in protest at Peru mine, Financial Times, March 16, 2012, available at
http://www.ft.com/cms/s/0/f764b140-6f9b-11e1-b368-00144feab49a.html#axzz4GOk0Sfq4.
52
Rachel Davis and Daniel Franks. Costs of Company-Community Conflict in the Extractive Sector, Corporate Social
Responsibility Initiative Report No. 66. Cambridge, MA: Harvard Kennedy School, p. 17 (2014) available at
https://www.hks.harvard.edu/m-rcbg/CSRI/research/Costs%20of%20Conflict_Davis%20%20Franks.pdf.
34. The Peruvian Mining Sector Spring 2016
34
communities.54
In essence, a Social License should not represent an obstacle to energy-related
politics and the mining activities that are important for development. Attempts at introducing and
strengthening the principle of a Social License is about trying to articulate and harmonize
extractive activities with the rights of communities and the standards of environmental
protection.
In order to build strong community relations essential to the sustainable operation of a project,
governments and companies need to distinguish the costs of investing in community
development from the amount allocated towards social risk mitigation. Community development
represents the preemptive measures aimed at obtaining community acceptance of the project;
this type of community development stands in contrast to arbitrary mitigation measures aimed at
managing specific instances of social conflict and protest as and when they arise on a case by
case basis. Failing to differentiate between the costs of community development and the costs of
preventative or mitigation measures could undermine the relationship building process with the
community as a whole.55
Focusing on mitigation measures in the absence of a complete community development agenda
and conflating social investment with social risk mitigation can result in rewarding those
individuals who are most vocal. Directing efforts to appease vocal protestors risks ignoring other
community members who want to reap the benefits of project development without resorting to
protests and violence.56
For instance in Cajamarca—the location of the Conga Project—some
community members used protest tactics as leverage against the Yanacocha mining company to
gain employment. In these communities, non-protesting community members were left frustrated
as their attempts to cooperate and not resort to violent protests went unrewarded, unlike the
community members who initiated social conflict. Therefore, the company emphasis should be
on community development that preempts and offsets the need to resort to protest and social
conflict by engaging with and ensuring the equal provision of developmental benefits amongst
all community members.
VI. SOCIAL CONFLICT IN PERU
As identified by Inter-American Development Bank, Peru has emerged as one of the most
promising developing economies in Latin America. Peru’s GDP has risen from US$ 50 billion in
year 2000 to more than US$ 200 billion in 2016 with a projected growth rate of 3.6%.57
Despite
the aforementioned positive economic growth indicators, there are continuing concerns about the
54
See Donal A. O'Neill, Chapter 8: Impact Assessment, Transparency, and Accountability: Three Keys to Building Sustainable
Partnerships between Business and Its Stakeholders, Peace through Commerce: Responsible Corporate Citizenship and the Ideals
of the United Nations Global Compact. Ed. Oliver F. Williams. Notre Dame, IN: U of Notre Dame (2008).
55
Rachel Davis and Daniel Franks. Costs of Company-Community Conflict in the Extractive Sector, Corporate Social
Responsibility Initiative Report No. 66. Cambridge, MA: Harvard Kennedy School, p. 9 (2014) available at
https://www.hks.harvard.edu/m-rcbg/CSRI/research/Costs%20of%20Conflict_Davis%20%20Franks.pdf
56
Interviews conducted with communities of Cajamarca, which are affected by the Conga Project, revealed that some community
members used protest tactics as leverage against the mining company to gain employment opportunities. Certain community
members expressed their frustration with what they saw as their cooperation (i.e. failure to protest) and the subsequent lack of
employment reward vis-à-vis those neighbors who did stir social conflict.
57
Carlos Basombrio, Peru 2015: Inept Leadership Threatens to undermine growth in spite of strong fundamentals, Geopolitical
Intelligence Services (2015) available at https://www.gisreportsonline.com/peru-2015-inept-leadership-threatens-to-undermine-
growth-in-spite-of-strong-fundamentals,economy,246,report.html.
35. The Peruvian Mining Sector Spring 2016
35
sustainability of Peru’s growth trajectory, one reason being the proliferation of social conflict in
the extractive industry.
Mining sector development drives the economic growth of a resource rich country like Peru. The
sustainable development of Peru’s mining sector has been affected by social conflicts that have
in some instances caused project development to be suspended or cancelled, therefore deterring
potential possibilities for continued investments. Prominent examples include investments of
US$ 1.6 billion in Tia Maria, Arequipa and US$ 5 billion in Conga, Cajamarca. Both projects
were suspended as a result of social conflict and continued local community opposition over the
fear of contamination and reduced local water supply due to mining activities.58
These instances of social conflict have had widespread ramifications in Peru. The suspension of
the Conga Project—a gold and copper mining project in northern Cajamarca, Peru—was
followed by two months of bloodshed that resulted in the declaration of a state of emergency. In
the ensuing conflict, five protestors were killed and the violent arrest of Marco Arana—an
internationally acclaimed environmentalist—was caught on camera for all to see.59
The political
repercussions of the events led to changes in the cabinet, as well as the dismissal of then Prime
Minister Oscar Valdes on July 23, 2011.60
The dismissal of the Prime Minister Oscar Valdes by
President Ollanta Humala over the former’s handling of the Conga mining project61 62
illustrates
the importance of the extractive industry in Peru. Recently, in September 2015 the current
President Ollanta Humala once again declared a state of emergency for thirty days in the regions
of Cusco and Apurimac due to protests against the construction of the Las Bambas mining
project.63
The local community’s demands included the creation of jobs and channeling of
mineral concentrates from the mining process from the region.
In an attempt to increase the social acceptance of mining activities in regions, there have been
attempts to share a mining project’s benefits with local communities. One such measure includes
the decentralization reforms passed in 2003 that transferred resources and revenues generated
from mining activities by the national government to the local and regional governments.
Unfortunately, as noted in Capstone Report of 2015,65
due to a lack of adequate planning,
funding, training, and expertise to properly deal with the mining-related responsibilities allocated
to local and regional governments, decentralization has fueled rather than resolved conflict.
58
In Conga, the suspension followed two months of bloodshed and high tension, as local opposition and police intervention
under a state of emergency resulted in the deaths of five demonstrators in Bambamarca and Celendín as well as the arrest in plain
view and captured on video of Marco Arana, an internationally well-known environmentalist leader. The fallout led to two
cabinet shuffles and a change of prime minister. See Joan Martinez-Alier, Conga Project: The End of the Line, available at
http://www.ejolt.org/2012/08/conga-project-the-end-of-the-line/.
59
Ibid.
60
See http://rulers.org/rulp1.html#peru.
61
Joan Martinez-Alier, Conga Project: The End of the Line, available at http://www.ejolt.org/2012/08/conga-project-the-end-of-
the-line/.
62
The protests left five people dead and President Humala's popularity rating the lowest it has been since he took office a year
ago. See Profile: Peruvian Prime Minister Juan Jimenez Mayor. BBC (2012) available at http://www.bbc.com/news/world-latin-
america-18970126.
63
Peru: Region in State of Emergency After Deadly Protests at a Mine, New York Times (2015) available at
http://www.nytimes.com/2015/09/30/world/americas/peru-region-in-state-of-emergency-after-deadly-protests-at-a-mine.html.
65
Columbia School of International and Public Affairs Report, Mining in Peru: Benefitting from Natural Resources and
Preventing the Resource Curse Capstone Workshop – Spring 2015, (2015) available at
https://sipa.columbia.edu/sites/default/files/Capstone%20-%20Peru%20(25%20June%202015)_FOR_PUBLICATION.pdf
36. The Peruvian Mining Sector Spring 2016
36
Three primary causes of social conflict in Peru can be identified from the aforesaid instances and
events:
First is the undermining of the indigenous communities’ rights to their land during the
government’s granting of mining concessions. In Peru, the government has the right to minerals
found in the land regardless of whether the land is owned or inhabited by local communities. As
a result, the government’s decision to grant a mining company an extractive concession often
excludes the local communities from the process. This exclusion can result in a failure to consult
and inform local communities of the impacts, including environmental effects such as the
contamination of scare water sources, resulting from the mining activity. A mining company’s
singular purpose of mineral extraction can also lead to a lack of consideration of the adverse
impacts of pollutants, the diversion of water resources or displacement of persons from their
traditional territories. Such exclusion of local communities from the developmental process
results in a resentment that manifests itself in protests and social conflict.
Second, the competing interests of participating entities (national government, provincial
government, local government, mining companies and communities) result in the
mismanagement of community expectations leading to social conflict. For instance, the company
and government’s profit and revenue driven concerns may run contrary to the community’s
expectation of social development funded by mining activity. Furthermore, in this context
mismanagement results in social conflict when the mining companies do not fulfill commitments
made to the local communities.
Lastly, this mismanagement of resources and processes, lack of aligned interests and the inability
of the affected to seek legal recourse result in continued social conflict. At the core of this social
conflict are people who are unjustly excluded from the decision-making process, and are
disproportionately affected by the outcomes.
To understand how to address social conflict within mining sector in Peru, the next section
delves deeper into the intricacies of obtaining social license to avoid social conflict.
– Identifying Indigenous Communities in Peru for Obtaining Social License –
In recognition of the debilitating effect of social conflict on investments, Peru has developed a
legal framework as part of its commitment to sustainable development of natural resources. This
is reflected in the ratification of ILO convention 169 and the enactment of Consulta Previa and
Participacion Ciudadana.66
These laws guarantee indigenous people the right to consent in the
case of relocation, transportation, and storage of toxic wastes, as well as in situations where their
lives or their means of subsistence are threatened.67
Although this is a step in a direction that
prioritizes the rights of the affected communities, the law’s current form has limitations in its
implementation.
Peru has diverse indigenous communities that fail to classify under the single objective criterion
that fails to account for varying differences amongst indigenous groups. Thus, the complex
66
Ibid, p. 102
67
Ibid.
