Social Unrest Puts Future of Peruvian Copper in Danger

Rising inflation and skyrocketing metal prices fuel another wave of resource nationalism and social unrest in Peru, one of the top producers of copper, zinc and silver.

Two more copper mines will be offline from Wednesday as MMG Ltd’s Las Bambas mine and Southern Copper Corp.’s Cuajone succumb to community protests. A fifth of Peru’s copper production will be shut down as a result. Moreover, unions at the mining region of Cusco have been staging strikes against rising prices and residents near Glencore’s copper mines set to resume protests.

Some of the current protests is about protecting water supplies rather than having a bigger share from the mining revenue.

However, the mining protests have started to join more generalized unrest in the country over living costs.

While the lawmakers are trying to appease the people’s pain from the biggest inflation rise in 24 years, politicians aim to pass some of the bill to the mining industry by raising taxes.

Some officials believe more than $1 billion could be added to state coffers with a modest increase in mining taxes. Others think more drastic measures, including nationalization of resources, is necessary.

President Castillo, who has dodged two impeachment attempts since taking office in July, is being criticized by both the mining industry and some community groups.

Southern Copper executives claim that dialogue at Cuajone hasn’t advanced because the government is being passive in resolving conflicts.

The industry thinks some of the unrest is caused by the government’s prioritizing the right to protest over other concerns such as free transportation. In some isolated areas with less government presence, mines can be de facto local governments and become targets of grievances.

While Castillo has softened his stance on resource nationalism to attract more moderate factions, he is having a hard time maintaining support from his party’s more hardline factions and rural voters who put him in power.

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