Quellaveco’s quandry

Anglo American and Mitsubishi to face scrutiny of environmental and labour standards at Quellaveco mine.

Peru’s Prime Minister, Anibal Torres, has confirmed that licenses for the Quellaveco copper mine, owned by Anglo American and Mitsubishi, will remain in force as long as the mine “meets its contractual obligations and respects the country’s environmental and labour standards”.

Torres’ comments followed a period of indigenous protest and uncertainty around the future of the mine when the Ministry of Agriculture said it would re-evaluate the use of waters near the mine after receiving complaints from local agricultural producers. This prompted Anglo American to express concern that the government may revoke the company’s license to use water at Quellaveco.

A non-executive director at a Peruvian mining company commented, “The situation is absurd and embarrassing for the government. The right hand doesn’t know what the left hand is doing. The indigenous communities were encouraged to protest by various advisors, manipulators and some parts of the government to try and extract some additional benefit at the last minute. Fortunately, the Minister of Mines has calmed things down and the Prime Minister has clarified the situation but it should never have got that far.”

“The situation is absurd and embarrassing for the government. The right hand doesn’t know what the left hand is doing.”

Non-executive director, mining company, Peru

Quellaveco is the largest copper mine in Peru and has received an estimated USD 5.5 billion investment. The mine is expected to produce 300,000 tonnes of copper per year in its first decade.

Quellaveco began pilot production of copper last July after securing regulatory confirmation that it could use water for mining purposes. The company received the green light from the Peruvian water authority (“ANA”), granting that it would not discharge wastewater into the Asana River. The regulator’s decision was reviewed by a court in Peru’s tribunal for water resolutions which agreed that mining operations did not pose an environmental impact on the Moquegua water reserve.

Anglo American insists that operations in Quellaveco will not affect water availability in the region but local communities disagree and insist that the mine will use 18 million cubic litres from the Titire River and 4 million cubic litres from the Vizcachas River, both located in the Tambo basin. The company also emphasised that the environmental licences were obtained in a transparent manner and that water resources used contained soil of volcanic origins, considered unfit for human and agricultural use. A partner at an environmental law firm confirmed, “The communities claim that Quellaveco has taken away their water but it is clear to everyone that this is not the case.”

“It is simple, the communities are causing problems to try and extract more money or local investment from Anglo American and Mitsubishi.”

Chief Investment Officer, asset manager, Peru

The Chief Investment Officer of a Peruvian asset manager had a more cynical view, “It is simple, the communities are causing problems to try and extract more money or local investment from Anglo American and Mitsubishi. The radical environmentalists have told them that they can ask for anything and the company will give it to them. It’s blackmail and they will keep trying.”

Despite such concerns, the project looks set to continue, for now, but the recent tensions have heightened the level of scrutiny around environmental and labour issues and the indigenous communities are unlikely to give up.

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