'It isn't a state problem': the Minas Conga Mine controversy and the need for binding international obligations on corporate actors.

Author:Woods, Cindy S.
Position:V. Case Study: Minas Conga through VI. Conclusion, with footnotes, p. 654-683
 
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  1. CASE STUDY: MINAS CONGA

    The controversy surrounding Newmont Mining Corporation's Minas Conga mine is an illustrative case of the business and human rights problem. Ruggie himself recognized the emblematic nature of the situation, arranging a site visit in 2006 at the start of his special mandate in order to "gain a more granular understanding" of the business and human rights issues in the mining sector. (133) At the outset of this Section, it must be acknowledged that the Minas Conga case study is not an attempt to represent any overarching, general trend in the response of host governments to MNC power, but instead is used as an example of a situation where binding international human rights obligations for corporations are needed to protect individuals and defend against impunity--a situation where the Global Compact and the Guiding Principles fail to do enough to protect against human rights abuses. (134) This Section provides: (1) a history of the rise of neoliberalism and international mining operations in Peru; (2) an overview of the Minas Conga controversy; (3) a discussion of antimining protests in the region and the state and corporate responses; (4) an overview of the human rights implications of Minas Conga; and (5) an analysis of how the current business and human rights frame works fail to adequately protect those affected by the project.

    1. Neoliberalism and the Proliferation of Mining in Peru

      As discussed in Section II, for many developing countries, foreign direct investment has become a main, if not the primary, source of national capital. Peru, as one of the world's leading producers of a number of minerals, including copper, silver, gold, tin, zinc, and mercury, has increasingly become reliant on the foreign direct investment of multinational mining companies. (135) Since the 1990s, the Peruvian government has aggressively pursued foreign investment through economic liberalization.

      The election of Alberto Fujimori (1990-2001) brought about a dramatic implementation of neoliberal economic reforms. Aptly termed "Fujishock," Fujimori's "Draconian program" of neoliberal reforms included foreign exchange rate unification and liberalization, state employment cuts, tax and banking reform, flexibilization of labor relations, the elimination of wage indexation and employment security laws, the dismantling of agrarian codes, and aggressive privatization. (136) By the end of the Fujimori regime, Peru was one of the most open and liberal economies, not only in Latin America, but the world over. (137)

      With the implementation of neoliberal reforms, the mining industry has gained increasing importance in the country's export-led economy. In 1995, the Ley de Tierras privatized land markets by revoking the inviolability of communal lands and eliminating landholding limitations. (138) This, coupled with the 1996 Ley del Catastro Minero Nacional, which guaranteed foreign mining firms' control of the land resources necessary for operations, including transport and beneficiation concessions, opened Peru to an onslaught of mining investment and operations. (139)

      The facts are in the figures: between 1992 and 2001, mining products composed an average of 45.4% of national exports--the country's biggest export--and mining investment rose from US$387 million in 1996 to more than US$1.5 billion in 2000. (140) Subsequent administrations have adhered to and advanced the neoliberal trajectory of Peru. Alan Garcia (2006-2011), perhaps in an attempt to rectify the disastrous economic policies of his first term (1985-1990), surpassed the neoliberal footsteps of his predecessors, placing multinational mining companies at the center of his new economic development plan and signing numerous free trade agreements, including with the United States, Canada, and China. (141) However, Garcia went even further, pushing numerous extractive industry related decrees through Congress during his presidency, some of which unconstitutionally opened up exploratory land and suspended environmental regulations in order to promote investment. (142)

      Not surprisingly, Peru's lax environmental and economic regulations have resulted in an inundation of investment and revenues from multinational mining ventures. By the end of the Garcia administration, the Peruvian economy was outperforming the majority of its Latin American neighbors. (143) In 2011, mineral exports composed 59% of national exports and mining investment surpassed US$7 billion. (144) Current president Ollanta Humala has continued in his predecessors' footsteps. Although running on a liberal ticket, Humala quickly changed his stance toward the mining industry once in office. (145) As of April 2013, minerals composed over 62% of national exports, and Peru expects a record US$14 billion in mining investments in 2014. (146)

      With the need for increased exploratory and extractive investment to fuel the economy, Peru has promoted industry at the expense of the environment and the rural populations who depend upon it. The country is a prime example of a national government willing to shirk its duty to protect individuals in order to promote the economic prosperity of the country as a whole; as long as mineral rents continue to support and uplift the Peruvian economy, the state appears ready to continue to support mining MNCs in the face of social unrest and environmental and human degradation.

    2. The Minas Conga Controversy

      The department of Cajamarca, located among the Andean highlands of northern Peru, is a center of mining exploration and exploitation. It historically receives the most mining investment of any department--with 2012 investments totaling approximately US$1.3 billion, or around 15% of national mining investment. (147) These high investment levels are due, in large part, to the mega-mining complex Minera Yanacocha, South America (MYSA), which includes Mina Yanacocha, the largest gold mine in South America. The Minas Conga mining project is an outgrowth of Newmont's operations in the region. Minas Conga, similar to the Mina Yanacocha, is owned and operated by Newmont (51.4%), Minas Buenaventura (43.6%), and the International Finance Corporation (5%). (148) Minera Yanacocha operates the project, which is also majority owned by Newmont Mining. (149) The mine is estimated to hold approximately 6.1 million attributable ounces of gold reserves and 1.7 billion attributable pounds of copper reserves. (150) With an initial planned investment of US$4.8 billion, this large-scale gold and copper mine is expected to generate upwards of 8,000 jobs and more than US$2 billion in taxes for the Peruvian government over its nineteen-year lifespan and to introduce more than US$1.3 billion into the regional economy. (151)

      Cajamarca's regional economy relies heavily on cattle and dairy production. (152) As such, the rural economy is dependent on natural capital--usually land and water resources--which either directly or indirectly constitutes the majority of household livelihood activities in pastoral Cajamarca. (153) However, since the proliferation of mining, most specifically the founding of the Yanacocha mine in the region, rural access to natural capital has been greatly affected, both in terms of access to and price of land and access to unpolluted natural resources. Between 1992 and 2000, MYSA purchased over 11,000 hectares of land in the region, consequently raising the price of private land in the surrounding regions and "shuffling ... the sociospatial distribution of rights to use land." (154) Households participating in traditional vertical production techniques, which involve utilizing differing regional ecological zones for agriculture or grazing, have been relegated to lower, less fertile ecological zones, as mining operations function most often at the highest elevations of the region. (155) In addition, the techniques utilized in the Yanacocha venture, which will also be employed in the Minas Conga project--open-pit mining and cyanide heap leaching--are highly environmentally straining, requiring the removal of entire mountain tops, extensive water use, and the introduction of dangerous chemicals into the environment. (156)

      In order to access the large amounts of gold and mineral deposits in the area, Newmont planned to completely drain four lakes, constituting the region's main water supply, within the operational region. (157) While the loss of these four lakes was to be offset by the construction of four reservoirs, local communities, dependent on these bodies of water for their livelihood, were concerned by the consequences of such ecologically disruptive operations in their local environments. (158) Newmont's Environmental Impact Assessment of the project, approved by the Peruvian government in October 2010, was a main source of controversy surrounding the Minas Conga. The EIA expressly states that the project "has the potential to generate impacts on the environment," not only with regard to water, but also in relation to air and soil quality and plant and wildlife degradation and destruction; however, the EIA relies on mitigation techniques to control these negative consequences and ensure "adequate environmental protection." (159) Having witnessed for decades the destructive nature of open-pit gold mining from the neighboring Yanacocha mine complex, local community members were wary of promises of "adequate mitigation"--a term of broad interpretation. (160)

      In 2011, a report by then Minister of the Environment Ricardo Giesecke outlining the irrevocable damage that could result from the Conga project as planned was leaked to the public. According to Giesecke, the Conga project would transform:

      de manera significativa e irreversible la cabecera de cuenca, desapareciendo varios ecosistemas y fragmentando los restantes, de tal manera que los procesos, funciones, interacciones y servicios ambientales semn afectados de manera irreversible. [the basin head in a...

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