MINING COMPANIES WORRIED ABOUT SECURITY

UNCLAS SECTION 01 OF 03 LIMA 003609

SIPDIS

SENSITIVE

DEPT FOR WHA/AND, EB/TPP BMANOGUE
COMMERCE FOR 4331/MAC/WH/MCAMERON
USTR FOR BHARMAN

E.O. 12958: N/A
TAGS: EMIN ETRD SNAR PTER ECON EINV PGOV PE
SUBJECT: MINING COMPANIES WORRIED ABOUT SECURITY

REF: A) LIMA 3571, B) 04 LIMA 5874, C) LIMA 3105


1. (SBU) Summary: The U.S. and Canadian Ambassadors hosted a
meeting on August 11 for representatives of international
mining companies to review their operating difficulties in
Peru and to coordinate efforts to improve the investment
climate. Consensus among the companies is that radical
forces (Communist Party-Patria Roja, drug traffickers and
rural defense committees--ronderos) are increasingly active
in rural communities, seeking to target mining operations
throughout the country. Because of the electoral campaign,
the companies do not expect the government to take a
proactive role enhancing security in mining areas over the
next 18 months. Ambassador Struble requested that each
company develop a comprehensive list of their community
projects (e.g., roads, schools, clinics, wells) to better
publicize the positive impact of mining projects in Peru.
End Summary.


2. (U) The U.S. and Canadian Ambassadors jointly hosted a
meeting on August 11 to coordinate efforts with
representatives from several international mining companies
in Peru: Antamina, Newmont (Minera Yanacocha),Minera
Quellaveco, Barrick, BHP Billiton (Tintaya mine). The Swiss
Charge, the new Australian Consul General, and the British
Embassy Trade and Investment official also participated. A
representative from the South African Embassy, which forms
part of this diplomatic mining group, was unable to attend.
The Ambassadors sought the companies' views on initiatives
each side could undertake to help improve the investment
climate and security conditions in mining communities. The
meeting took place shortly after the violence against
British firm Majaz's exploration in Northern Peru (Ref A).

Bolder Opposition to Mining Operations
--------------


3. (SBU) Carlos Santa Cruz, Director of Minera Yanacocha
(South America's largest gold mine) noted that conditions
have changed since the last meeting hosted by the Canadian
Ambassador (Ref B). Santa Cruz observed that NGOs have
taken a backseat in the campaign against multinational
mining companies since the outbreak of violence against the
Anglo-Australian owned, BHP-Tintaya copper mine (Ref C),a
model mining project near Cusco. He opined that radical
groups, i.e., local politicians and fringe political groups
such as Patria Roja, have now taken on this role. Santa
Cruz believes that the objective of these groups is to
create serious problems by attacking the industry and
economic system. Most of the company General Managers
lamented they are focused on improving security rather than
enhancing production.


4. (SBU) Felipe Cantuarias, Vice President of Commercial and
Corporate Affairs for Minera Antamina (copper and zinc
producer),remarked that the companies are dealing with a
new phenomenon: local politicians that promote violence and
have ties to ronderos and coca growers. He stated that
there is no solution in the short term; the GOP does not
have the tools or desire to confront these radical
politicians. To minimize future disruptions, Cantuarias
indicated that the companies would have to take on more
social responsibilities in the communities, providing jobs
or visible infrastructure projects.


5. (SBU) Cantuarias contends that the recent disruptions are
well-organized efforts to stop responsible mining companies
from operating in Peru and Ecuador, much like the national
anti-hydrocarbons movement that succeeded in Bolivia. While
recent anti-mining efforts have focused on companies in the
north (Quillish and Majaz),the Antamina executive noted
there are indications that Dodge Phelps' Cerro Verde project
(copper mine) near Arequipa in the south or the isolated Las
Bambas (copper deposit near Cusco) could become future
targets.

Watching the NGOs
--------------


6. (SBU) Eduardo Rubio, Director of Minera Quellaveco, laid
much of the blame on Oxfam America and Friends of the Earth,
stating the two international NGOs are fomenting anti-mining
attitudes, exploiting low levels of education and weak
institutions in rural areas of Peru. (Note: Oxfam America
played a key role in mediating the conflict during the
Tintaya crisis, Ref C. End Note.) The Ambassador stated
that NGOs are entitled to express their views; nevertheless,
he encouraged the companies to bring to his and the other
Ambassadors' attention NGO-funded groups or individuals that
advocate violence. He requested, for example, public
statements, newspaper reports or radio spots that encourage
violence. Armed with this information, Ambassadors would be
able to confront any NGOs from their respective countries
about such dangerous activities.


7. (SBU) The Canadian Ambassador recounted her recent visit
to one of the country's top polling institutions and left
impressed that NGOs, such as Oxfam UK, regularly consult the
public opinion surveyors to obtain a feel for what issues
and concerns motivate communities. She noted that the NGOs
appeared to be well ahead of the companies in determining
how and what messages to convey in rural mining regions.

Next Steps
--------------


8. (SBU) Ambassador Struble noted that security problems in
mining communities affect the interests of several
countries. He recommended that the Embassies as a group
(U.S., Canada, U.K., Australia, Switzerland, and South
Africa) highlight the billions of dollars invested in Peru
by international mining companies. The Ambassador stated
that diplomats often have opportunities to remind Peruvian
officials and the public of the benefits of modern mining
and the higher salaries paid by mining-related jobs in Peru,
but they need details. The Ambassador requested that the
companies compile a list of all civic actions implemented by
the international companies (roads, wells, schools, clinics)
in mining communities to better publicize the benefits of
mining projects throughout the country.


9. (U) The Antamina Executive recommended that the diplomats
meet as a group with the Education Ministry to encourage a
rotation of teachers -- often members of the radical SUTEP
teachers union and Patria Roja -- in conflictive mining
communities. He also suggested that the Embassies urge the
Catholic Church to rotate bishops operating in these
regions. The Ambassadors agreed to consider this, but
needed specific examples of anti-mining teachers and
priests, who engage in inappropriate activities.


10. (SBU) The executives expressed concern that none of the
political party leaders had spoken against the anti-mining
violence. Santa Cruz emphasized that it is crucial to stop
the impunity for those who damage private property and block
roads. There is a law pending approval in Congress that
would give the GOP the legal framework to enhance security
in mining communities. All too often, the police will
arrest instigators of anti-mining violence, but the local
prosecutors release them under pressure from the community.
The pending law would permit the police to move a detainee
to a different jurisdiction, thereby reducing the likelihood
of prosecutors bowing to local demands. The Ambassadors
agreed to evaluate when a meeting with the chiefs of the
political parties would be most effective.

Comment: PPK Will be Instrumental
--------------


11. (SBU) Pending key information from the mining companies,
a core group of country representatives (U.S., Canada, U.K.,
Australia, Switzerland, South Africa) are ready to meet as a
group with the GOP, Catholic Church and political party
leaders. With the appointment of new Prime Minister Pedro
Pablo Kuczynski, we have an influential government ally in a
position that is willing to tackle the lawlessness issue in
mining communities. His recent statements about putting the
GOP's house in order, establishing control of the roadways
where commerce transits, are encouraging.

STRUBLE