Home > Business of Mining Specials > Peru cancels Southern Copper’s Tia Maria Project

Peru cancels Southern Copper’s Tia Maria Project

April 15, 2011

“Peru has canceled the controversial Tia Maria project owned by Southern Copper Corp., a mining ministry spokeswoman said Friday. The spokeswoman said the project was ruled “unacceptable” by the ministry, which is in charge of giving approvals for mining projects.

The cancellation was announced at a brief televised press conference of regional and national government representatives following the deaths this week of three anti-Tia Maria protesters. ‘We want to return to normal,’ said Peruvian Minister for Energy and Mining Pedro Sanchez, who refused to answer further questions. A spokesman for Southern Copper Peru said the company had no immediate comment.

The Tia Maria mine project, which was seen producing 120,000 tons of copper a year, had been dogged by a series of protests from residents fearing it would damage their water and environment.”

Source: Wall Street Journal, April 8 2011

Observations:

  • Southern Copper, part of Grupo Mexico, is one of the world’s largest copper miners, but is largely unknown by many people in the industry. The company has operations in Mexico and Peru and exploration projects in Chile.
  • The 120 thousand ton/year Tia Maria project should have increased expected 630 thousand ton production in 2011 to 700 thousand ton/year in 2012. Approx. 3/4 of the company revenue comes from copper.

Implications:

  • Southern Copper will need to submit a new environmental study to prove the mine will not contaminate groundwater. Public opinion in Southern Peru has turned against the company and led to large protests.
  • The intervention by Peru’s government might have impact on other development projects in the country. Furthermore, a potential increase of mining taxes is one of the key debates in the presidential election. Miners in Peru will have to be more aware of the social and political operating environment in the coming years.

©2011 | Wilfred Visser | thebusinessofmining.com

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  1. November 1, 2011 at 4:02 pm

    Mining projects are a big business and if carefully implemented, it should not damage the water supply. I would think the local residents should welcome the mining companies as long as they agree to offer jobs to the locals, build roads and make sure all the proper security measures are in place to avoid contaminants in the ground water or damage to the environment.

    If all the foreign mining companies left Peru that would be an economic disaster considering one of the largest sources of income for the country comes from foreign mining companies and exports of their products.

    While peruvian companies may be able to take over the large mining projects, they simply do not have the capital required to process and give the final added value to the materials for export. Let alone the multi-million dollars of investment just in machinery to extract the materials.

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