Moving for Mining: Peru Must Confront Relocation Demands from Companies

Country: Peru
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Earlier this month, The New York Times reported on the mass relocation of more than 5,000 residents of Morococha, a mining town of located 5,000 meters above sea level in the Peruvian Andes, at the base of Toromocho mountain. The relocation will allow the Chinese government-owned mining company Chinalco to extract the abundance of copper, silver and molybdenum oxide from Toromocho.

Half of the villagers have already moved to Carhuacoto, the brand-new, $50 million town Chinalco built for Morococha's residents. But the other half—approximately 600 families—refuse to move, and have staged protests that have led to the blocking of roads.

This situation has not been resolved yet, and more relocations are coming. Xstrata’s $5.2 billion Las Bambas project, set to begin in 2014, will require the relocation of the community of Fuerabamba. The Chinalco project could generate $7.6 billion in income tax revenues over the life of the project; 50 percent of those revenues will benefit subnational governments and communities in the producing region.

With the potential for such a revenue windfall, it is critical the federal government create national legislation regulating these types of mass resettlements for mining projects. Such legislation should establish clear rules and guidelines on the company’s responsibilities, but also the government’s role in these processes.

Government should also promote and facilitate citizen participation and dialogue between the local population and mining companies at the very beginning, when the relocation plan is being developed. It should also have a strong role in supervising the relocation process and monitor the situation of the population after the relocation has taken place, to ensure that their quality of life has been preserved or improved.

According to Chinalco, the new town Carhuacoto is an improvement compared to Morococha, where houses were steps away from mining waste, lacked indoor water and had only two hours of electricity per day. Chinalco offered families ownership of their new houses, which gave renters an incentive to relocate.

The locals who have refused to move cite as their reasons houses that are too small and a smaller market for local businesses, among others. They also assert Chinalco has not delivered the property ownership paperwork to residents who did relocate, fostering doubt that the company will fulfill its pledge.

The aim of relocation is to maintain or improve living standards, but some cases have not had positive results. The debate on this issue is urgent, for the people of Morococha as well as the populations affected by future mining projects.

Claudia Viale is RWI Latin American Research Assistant.

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