The Cost of Gold
Mining in Peru and its Impacts on the Environment and Communities
Jed Hawkes Koball
PC(USA) Mission Co-Worker
Lima, Peru
28 July 2015

¨Peru is a leading country in mining…and we will
continue being important in this sector.¨
President Ollanta Humala, March 2015
Mining Exports 2001-2011 (US$ million)
Peruvian Exports 2013:
61% Mining; 12% Oil and Gas
Peru in World Rankings of Mining Production:
Gold – 6th
Silver – 2nd
Copper – 2nd
Zinc – 2nd

Peru has become the world’s envy due to its outstanding
economic growth in the last decade.
President Barack Obama of the United
States,
February 2015
Peru´s Annual GDP Growth Rate: 2003-2014 Peru´s Poverty Rate: 2004-2012

But, at what cost?

Cross-section of the natural regions of Peru

Map of Headwaters in Peru
Headwaters in Peru
• More than 12,000 mountain top lagoons
• Headwaters and water retention zones
occupy 34% of the territory

Map of Mining Concessions in Peru
Percentage of National Territory
Conceded to Mining Industry in Peru

Map of Mining Projects in Peru Foreign Companies with Operations in Peru:
Alocoa Gold Fields Sulliden Gold
Barrick Gold Graystone Teck Resources
BHP Billiton Newmont Mining Vale
Candente Copper Chinalco Shougang
Rio Tinto Xstrata Copper
Freeport-McMoRan Copper & Gold Sienna Gold
• The mining sector accounts for over 13% of
foreign direct investment in Peru
• The current value of mining investment in Peru is
over $10 billion.

Map of Environmental Damage
from Mining Activity in Peru
Estimated that mining releases over
13 billion m3 of effluents into Peru´s
water courses every year.

Map of Poverty Levels above 50%
Monetary Poverty in Peru: 2014
• 23% of total population in monetary poverty (Monthly
family income of less than $100/person/month)
• 4.3% of total population lives in extreme poverty (Less than
$2 per day)
• 70% of those in extreme poverty live in the mountains
• Of those living in poverty in the mountains, 45% work in
agriculture and/or mining

Map of Social Conflicts in Peru
As of June of 2015
• 210 Social Conflicts registered in the Country
• 54% are related to the Extractive Industry
• 93 are related specifically to Mining

Headwaters Mining Concessions Major Mining Projects
Environmental Damage
from Mining Activity Poverty Levels above 50% Social Conflicts

• Environmental Contamination
• Impact on Eco-systems
• Buying of Lands/Re-locating Communities
• Lack of credibility with regard to quality and
amplitude of environmental care programs
• Impacts on culture, customs, values and way of life
• Perception that conflict is between mining and
agriculture
Principle Causes of the Conflicts between
Mining and Communities

Government of, for and by the people mining?
“We want more investors to come, to rescue the
concept of corporate social responsibility. We will be a
government that respects foreign investments, that
has a profound respect for private property and
freedom of expression.”
President Ollanta Humala
What does this look like in terms of policy and government
behavior related to mining investment?
• Lack of prior consultation with communities
• Lack of Transparent Concession Process
• Lack of zoning laws for mining with respect to headwaters
• Weakened environmental standards
• Environmental Impact Studies under auspice of Ministry of
Energy and Mines
• Criminalization of Protestors
• Centralized (federal gov) management of conflicts
• Subscription to Investor-State Dispute Settlement
Mechanism found in most Trade Agreements
The governments of Peru have developed
a greater “receptivity” to investment.
(World Economic Forum, WEF).
Peru subscribes to mecanisms for the
protection of investments (World Bank)
Peru exhibits “high grade of investment”
(Standard & Poor’s).

In the abundance of your trade you were filled
with violence, and you sinned
– Ezekiel 28:16 (NRSV)
The Emblematic Case of
La Oroya
• How we are addressing the issue at the
local, national, and international levels
• Concrete actions you can take

The facts about La Oroya:
• Located in the Central Andes, altitude of 13,000 ft.
• 1 of 10 most contaminated cities in the world
• 98.7% of children (6-12) with lead poisoning
• Source of contamination is metallurgical smelter – Doe Run
Peru, purchased by The Renco Group, Inc. (NYC) in 1997
• At height of production, emitted 2 million lbs of lead,
arsenic, cadmium and sulfur-dioxide per day
• 10 years to install new technologies
• Multiple extensions provided by the State
• Following 2008 global financial crisis, declares bankruptcy,
but blames State for excessive environmental enforcement
• In 2011, The Renco Group, Inc. files a lawsuit in a foreign
tribunal against the State of Peru for $800 million, taking
advantage of the Investor-State Dispute Settlement
mechanism found in U.S – Peru Free Trade Agreement,
claiming the State violated its Investor Rights.
• Lawsuit ongoing, for at least another 4-5 years.
• Presently, the State has accepted weakened environmental
emissions standards in La Oroya in order to re-sell the
smelter and begin operations immediately.
• The Renco Group, Inc. is a prospective buyer.

Advocacy at the Local Level:
Implementation of Ordinance 141-
2012
What is it?
A Specialized Human, Public, and
Environmental Health Care
Program to tend to populations
affected by Heavy Metals
Contamination.
No such health care program
exists in the country.
Challenges: Government
Financing, Political Will

Advocacy at the National Level:
Transitions towards a New Mining
What is it?
A package of bills of law to set a
course for a more responsible
mining industry in Peru:
• Prior Consultation with
Communities
• Transparent Concession Process
• Zoning to Protect Headwaters
• Environmental Impact Studies
under the Auspice of Ministry of
Environment
• Stricter Environmental
Standards (emissions, for
example)
• Increased Sharing of Mining
Benefits (to fund health
program, for example)
• De-centralization of conflict
management
Challenges: Hostile Political
Environment towards Mining
Reforms

Advocacy at the International Level:
Elimination of Investor-State Dispute
Settlement (ISDS) Mechanism from Trade
Agreements
What is it?
An unaccountable foreign tribunal in
which foreign investors can sue States
when they believe the State has violated
their right to make a profit by
implementing and/or enforcing public
policies that will cost them money. This
mechanism is being utilized extensively by
the extractive industry to escape
environmental regulations.
The Trans Pacific Partnership (TPP) is a
trade agreement being negotiated among
12 nations (including the U.S. and Peru). It
presently includes ISDS.

Actions You Can Take
• Collection of Signatures – an International
Letter campaign (August/September) to
present concern about weakened emissions
standards in La Oroya
• Direct Advocacy to your U.S. Congressional
Representatives and Senators, to not accept
TPP with ISDS mechanism.

Thank You!
For More Information:
Jed.Koball@pcusa.org
https://www.presbyterianmission.org/ministries/joininghands/