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The Cost of Gold: Mining in Peru and its Impacts on the Environment and Communities

  1. 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
  2. ¨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
  3. 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
  4. But, at what cost?
  5. Cross-section of the natural regions of Peru
  6. 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
  7. Map of Mining Concessions in Peru Percentage of National Territory Conceded to Mining Industry in Peru
  8. 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.
  9. 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.
  10. 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
  11. 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
  12. Headwaters Mining Concessions Major Mining Projects Environmental Damage from Mining Activity Poverty Levels above 50% Social Conflicts
  13. • 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
  14. 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).
  15. 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
  16. 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.
  17. 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
  18. 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
  19. 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.
  20. 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.
  21. Thank You! For More Information:

Editor's Notes

  1. This presentation will help to clarify the legal backdrop for the stories you have heard about La Oroya, Peru and other communities hurt by foreign investors. What it really comes down to is international investment law.