To access copper, a little town is being moved. Residents feel bullied by the needs of commerce
TO CATCH a glimpse of the impact China’s voracious demand for South America’s mineral wealth is having across the continent you could do worse than visit Morococha.
There are few other reasons to come here. It is a desolate place – a grim town on an exposed valley 4,600m above sea level in the thin air of Peru’s Central Andes. A couple of llamas graze on clumps of rough grass, but otherwise little grows in the brown dirt. Much of the local water is polluted from a century of mining, an activity which is the town’s lifeblood.
But just down the valley a Chinese company is building a brand spanking new Morococha in what is Peru’s biggest civic engineering project. Hundreds of workers are bused in each day to put up new houses and schools in a planned new city that even half-built looks futuristic compared to the ramshackle settlement 10km away.
The reason for the frenetic activity is that Morococha happens to sit on one of the world’s largest deposits of copper, the metal crucial to wiring China’s rapidly industrialising society.
The right to extract the copper was acquired by the Aluminum Corporation of China in 2007 and it plans to invest $2.2 billion (€1.5 billion) to get at the estimated 5.7 million tonnes of metal under Morococha. But before it can do so, the state-owned miner known as Chinalco needs to move the town’s 5,800 residents 10km down the valley.
The problem is that they do not want to move, at least not under the terms being offered by Chinalco.
They originally voted to do so in 2006 but left the decision about where to move to until further studies were completed. Now residents say they have been betrayed by Chinalco and that they are facing pressure to relocate against their will.
“Chinalco is unilaterally building this new town but it is not where we want to move to,” says Morococha’s straight-speaking mayor Marcial Salomé Ponce. “It is not environmentally safe, the new houses are too small and owners are not being offered proper compensation for losing their old ones. Also promises that locals would be employed in its construction have been broken. Chinalco are liars.”
The company disputes the mayor’s allegations. “We only want to build where people want to move to,” says Pedro Salazar, Chinalco’s spokesman in Morococha. “We consulted the population before we started building. We adjusted the original sizes of the houses after complaints they were too small. The new town will have everything the old one has, only it will be far better and more modern.” But Mr Salazar admits that though the original vote to relocate was a secret ballot of the town’s residents, its selection of the site under construction followed “consultations” with locals in 19 “workshops”.
The mayor, who cites surveys showing over 90 per cent of the population favouring an alternative site to Chinalco’s, says this is a clear failure of democracy: “All we are asking for is a secret, democratic vote of the whole town – no workshops or small groups – to see what people want: their site or the one surveys show most residents prefer.” Instead, he says he has received anonymous death threats and intimidation. Last year, Mr Ponce says Chinalco bushed in outsiders for the presentation of its environmental impact report on the project which ended in scuffles when he led local objections.
The company says the mayor is grandstanding for more money. Chinalco points out that as well as €35 million on building the new town, it will invest a further €43 million in ameliorating the social and environmental impact of the moving to their new site. “Before, mining companies showed no social or environmental responsibility,” notes Mr Salazar. “We are going to be here for decades so we want to be a model of responsibility.” But the mayor retorts that such spending is a pittance considering that copper now sells for over €6,600 a tonne. At those prices, Chinalco will need just 0.2 per cent of the mine’s projected output to pay for the new town and its social and environmental programme.
“We are not going to let them take out the wealth from here and abandon us somewhere we do not want to go,” warns Mr Ponce.
He knows he is going to have a fight on his hands. His municipal office does not even have e-mail while the Beijing-based company has the backing of Peru’s national government. The state hails projections that Chinalco will spend €175 million locally each year on goods and services as well as €1 billion in payments to regional and national government over the mine’s working life.
The mayor’s efforts to bring the town’s dispute direct to Chinalco’s Chinese executives have proved frustrating: “We had one meeting with the bosses from China but we do not speak the same language so it is difficult to know if the local executives are twisting what they say. Our problem is with the local bosses. They are all liars.”
The conflict in Morococha mirrors similar ones across a Peru experiencing an economic boom driven by Chinese-led demand for its commodities. But many local communities feel they are excluded from decisions that affect their lives and a fair share in the fruits of the boom.
“The current model of economic development is centred on extractive industries and, as it is designed, ignores the wishes of those communities where the resources are concentrated,” says Giofianni Peirano, of the school of government and public policy at Lima’s Catholic University.
Conflicts between local communities and those looking to exploit their natural resources have the potential to quickly escalate out of control.
Last month, protests against a silver mine in Puno in the far south of the country turned violent. Five people were killed in clashes with the police as opponents of the mine blockaded the city on the shore of Lake Titicaca. The government caved in and revoked the Canadian miner’s licence and promised to consult with indigenous Aymara communities before granting new mining permits.
Ollanta Humala, Peru’s new president, promises to listen more to the concerns of local communities unhappy about mining operations.
Mr Ponce, the mayor of Morococha, says he is hopeful that the change in regime will help tilt the dispute with Chinalco in his favour.
But the new president has a delicate balancing act to strike between the demands of residents in towns such as Morococha and those of the mining sector, the economy’s main motor.
Income from commodity exports is key to Mr Humala having the cash to fulfil his election pledges on health, education and pensions. In the first five months of this year, China surpassed the US to become the main market for Peruvian exports.
On the day after Mr Humala’s election victory last month, mining lobbyists mingled with his supporters and journalists in the five-star Lima hotel where he had set up headquarters. “There will be a certain amount of rhetoric and almost certainly a rise in royalty payments,” said one lobbyist who asked not to be named. “But otherwise? I think it will be business as usual.”