In Eco-political analysis, Mining

Miners in Latin America must pay as much attention to local communities as they have historically done with national governments. Although examples of stakeholder distrust are plentiful, often stemming from the historic misconduct of past miners in a region or the malfeasance of political leaders whose promises were never kept, there are also examples of companies the have successfully navigated local community opposition.

To gain an environmental license and local consent to develop the $5.5bn Quellaveco copper mine, Anglo American conducted an 18-month consultation beginning in 2011 where Peruvian stakeholders from 31 local authorities and institutions, alongside representatives of the Moquegua community, gathered to define how Quellaveco could best contribute to long-term sustainable development. The result was a detailed overview with 26 specific commitments relating to water management, environmental care and social investment.

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Targeted benefits for the community

Anglo American agreed to create a $1bn development fund, to be spent over the 30-year life of the mine, to fund small community projects that improve the livelihoods of 26,500 people in the Moquegua region. These include the Moquegua Emerge enterprise program, intended to assist over a thousand local entrepreneurs to scale their own businesses by improving market access for labor and goods/services.

As part of this work, more than 20 entrepreneurial networks have been set up to market agricultural products, such as avocado and oregano. This has already produced some positive results:

  • Olive producers from Ilo Valley have increased their incomes by 65%
  • Water optimization techniques introduced in Omate have helped grow grape vine yields by three tons per hectare, a 60% increase
  • The company’s partnership with the José Carlos Mariátegui Technical-Educational Institute launched 20 skill-building programs for over 9,000 participants to increase employability and technical growth opportunities.

Managing environmental concerns

The key to success in managing community opposition based on environmental concerns and indigenous claims is to ask: what are the priorities and fears of project opponents? Based upon historic abuses and water contamination by former (often government-owned) mining operations, local communities are acutely sensitive to environmental issues. As a result, ensuring steady and honest communication and surveying public perception regularly is essential. By polling local communities using an independent research consultancy like AMI and using said intelligence to communicate directly with residents, miners can help deflect efforts by corrupt local politicians to extort monies in return for peaceful community relations.

One important agreement in Quellaveco was that Anglo American would need to channel the river past the mine, so that it emerges untouched downstream. To meet its needs, Quellaveco uses water from the Titire river, which is unsuitable for human consumption or agricultural use because of its volcanic origins. The company also constructed a reservoir on the headwaters of another river with a capacity of 60 cubic meters of water.The mine uses 4 meters and the rest goes to farmers, providing them with a reliable water supply they previously lacked.

Sustainable downscaling: can it be achieved?

Quellaveco now faces the tricky transition from construction, which at its peak involved 15,000 direct workers and 29,000 indirect jobs, to a much smaller operational staff. Perhaps the most important commitment made with local communities was to hire local people—many of whom Anglo American trained—and to give opportunities to local suppliers. Of the mine’s permanent workforce of 2,500, 71% are from Moquegua and 28% are women (compared with an average of 10% at mines in Peru).

Partnering with appropriate local and regional authorities has allowed the company to promote employment by strengthening and developing value chains with high potential in the region, such as agriculture and aquaculture, and encourage the use of sustainable renewable resources. Anglo American conducts these initiatives under the ‘Moquegua Crece’ Collaborative Regional Development (CRD) program alongside the Regional Government of Moquegua, Mitsubishi Corporation, M.C. Inversiones Perú (MCIP), and the International Finance Corporation IFC, a member of the World Bank Group. Moquegua Crece also supports initiatives to improve natural infrastructure in the region, aiming at enhancing water quality and availability.

Applying a Similar Approach

While Anglo American’s work with Quellaveco is inspiring, it’s quite challenging to achieve. Market intelligence is a crucial puzzle piece for miners who wish to build similar strong relationships with local communities.

With hundreds of team members on the ground in mining jurisdictions across Latin America, here at Americas Market Intelligence we’re uniquely positioned help miners with relationship building with local communities. We can help by:

  • Identifying key community leaders who are crucial to reach out to
  • Surveying local communities to understand the issues that are most important
  • Researching the local history of mining in the area to understand past conflicts, problems or resentments
  • Proposing effective strategies to engage local communities and create programs with lasting value
  • Monitoring communities closely to ensure that programs are producing the intended results and that relationships keep flourishing

Contact us to find out how our mining risk experience can help you build strong, lasting relationships with local communities that become time-tested partnerships.

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