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Competition from illegal miners in Peru impacts large mining firms
Wednesday, June 19, 2024 - 08:23
foto de Reuters minería ilegal Perú

Attracted by near-record copper prices, increased traffic by informal mines' trucks along the so-called "mining corridor" in the Andes is affecting the flow of vehicles operated by formal mining companies such as Las Bambas (owned by the China state-run MMG), Constancia (Hudbay), and Antapaccay (Glencore). "There are as many or more than ours," they acknowledge.

Large copper producers in Peru are facing the challenge of an increasing number of trucks from small artisanal and illegal miners congesting a key highway for the sector, industry sources said.

Attracted by near-record copper prices, increased traffic by informal mines' trucks along the so-called "mining corridor" in the Andes is affecting the flow of vehicles operated by formal mining companies such as Las Bambas (owned by the China state-run MMG), Constancia (Hudbay), and Antapaccay (Glencore). 

"Yes, they are as many or more than ours," said a source close to Las Bambas, which operates in the Apurimac region and has suffered frequent interruptions due to protests from nearby communities demanding more benefits from the mine.

"This complicates life for all the miners that use the corridor," added the Las Bambas source, which produced 302,039 tons of copper last year, less than its capacity of 400,000, placing it fifth in the local producers ranking.

Artisanal and illegal mining has grown dramatically in recent years in Peru, protected by temporary permits from the government while they manage their formalization. The informal miners have also been driven by high gold and copper prices. The latter has even caused confrontation and deadly attacks amongst small producers.

The global demand for copper is on the rise because it is necessary for construction and the changing energy matrix.

A source from the Hudbay stated that about 120 trucks of artisanal and illegal mines mobilize daily.

"Although we had already observed this problem for some years, the increase in the number of these units since 2024 is noticeable," said the source, adding that the company had formally requested government intervention to reinforce road controls.

This congestion of vehicles "has been generating delays and stoppages in the normal vehicular flow" of the highway, stated the Hudbay source, who shared with Reuters a document that indicated that in May there were at least 11 accidents involving informal mining trucks in one part of the route.

The information included images that also showed damage to the road, which is mostly unpaved.

The so-called "mining corridor" in Peru has an extension of about 482 kilometers, passing through the Andean regions of Apurímac, Cusco and Arequipa. It is used by large mines to receive supplies and transport copper concentrates to coastal ports for export.

Peru has registered some 86,800 permits for artisanal miners, of which 28,200 are in Apurimac, Cusco and Arequipa, according to data from the Ministry of Energy and Mines.

ENVIRONMENTAL IMPACTS

The increase in trucks coming from informal mines is not only congesting the mining corridor, but is also deteriorating the road and generating environmental impacts because these vehicles do not travel in an "encapsulated" manner as formal mines do, according to the sources consulted.

And artisanal or illegal mining trucks often travel at night, to avoid detection, they added.

"They transport loads of minerals at times that are not usual for known mining companies," said a source linked to the Antapaccay mine, adding that this has generated "concern" among the large mines.

There are also copper and iron projects under development for around US$ 12 billion along the corridor, according to official data, including Southern Cooper's Los Chancas and First Quantum's Haquira.

Representatives from the Ministry of Energy and Mines did not respond for comment on the report.

Robertson Pacheco, leader of the defense front of the Velille district, in the Cusco region, said that the recent increase in informal trucks has meant more uncontrolled activity on the roads of the Andean region.

"The flow (of trucks) is strong, sometimes too much, the same amount as Las Bambas, an average of more than 100 trucks a day," he said in a telephone conversation. "The trucks carry their material outdoors along the mining road. There are schools and institutes here and they only cross," he added.

The congestion of the mining route highlights the dramatic increase in informal mining in Peru, which has at times affected local production vital to the Andean country's economy.

"There is definitely a problem of increased traffic in the mining corridor," said Lima-based mining conflict analyst Iván Arenas, adding that the illegal extraction, transportation and processing of metals will not stop due to demand. "This supply chain will continue to grow."

Illegal mining, mainly of gold, has become the activity that moves more money than drug trafficking, between US$ 3 billion to US$ 4 billion dollars each year, according to the government.

Peru, whose income from mineral exports accounts for 60% of all foreign sales, seeks to boost its copper extraction after losing in 2023 the status as the world's second largest producer of the red metal to the Democratic Republic of Congo.

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