SOCIAL DISPUTES IN PERU: "THE MICHIQUILLAY CASE"

• Jurisdiction: Derecho Internacional

International Mining and Oil & Gas Law, Development and Investment
(Apr 2009)
CHAPTER 10C
SOCIAL DISPUTES IN PERU: "THE MICHIQUILLAY CASE"
Xennia Forno
Estudio Rubio, Leguía, Normand & Asociados
Lima

Xennia Forno Castro Pozo is a partner with Estudio Rubio, Leguía, Normand y Asociados, where she specializes in natural resources and environmental law. She graduated in 1979 from the Pontificia Universidad Católica del Perú Law School and has been Registrar of the Public Mining Registry (1979-1991) and Justice of the Mining Council, the administrative court of last resort in mining matters (1991-1999). She is currently the Chairwoman of the Instituto Nacional de Derecho de Minería, Petróleo y Energía (National Institute of Mining, Oil and Energy Law), member of the Legal Committee of the Sociedad Nacional de Minería, Petróleo y Energía (National Society of Mining, Oil and Energy), Professor of Mining and Environmental Law at the Universidad Peruana de Ciencias Aplicadas Law School and at the School of Mines and Geology of the Universidad Nacional de Ingeniería. Ms. Forno has also been a speaker in the Regional Congress of the Rocky Mountain Mineral Law Foundation in Lima in 2005, and in several events organized by public and private entities of the country and has integrated the Consultant Commissions of the Public Registry - Mining Section and of the National Institute of Mining Concessions and Cadastre.

"If the community does not agree, exploitation concessions will not be granted ...let's evaluate whether exploitation is possible in some areas without affecting their environment, their water source, their culture and their way of life. If this can be done, then it will be done. What if I do not believe it and still do not want mining in my forest? Then, be it. Deal! The community will decide. (...)

The concession title does not give the right to whoever holds it to touch not even a stone, because in order to explore and exploit you need -what we will demand first-the consent of the community and the compliance with the environmental laws"

(Statements made by Pedro Sánchez, Peruvian Minister of Energy and Mines, in an interview published on page 8 of La República newspaper on 02.21.09).

I.- INTRODUCTION:

This paper is intended to show the experience in reaching a social agreement that will allow the development of a mining project and that involves 2 peasant communities and the company which acquired the Michiquillay mining project within the framework of the process for the promotion of private investment, organized by the Peruvian State.

Currently, the mining company considers for the development of a mining project besides the economic viability of the exploitation itself, the environmental and social issues as essential requirements before, during and after the execution of its production processes. This approach refers to the concept of Sustainable Development proposed by the Environmental Law, which is intended to address the production activity from a comprehensive point of view and at the same time consistent with the effective protection of natural resources and the promotion of better relationships with all the parties involved in the development of the specific mining activity.

The execution of the Social Agreement between Anglo American Michiquillay S.A. and the Michiquillay and La Encañada Peasant Communities is an example of a proper planning and rapprochement with prior knowledge about the idiosyncrasy of peasant communities in the country, which concluded with the achievement of the consensus necessary for the development of the mining project. This does not mean that there will never be disputes, but what matters is that it is a "good start".

II.- SOCIAL AND MINING DISPUTES

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In Peru, social disputes due to the execution of mining activities go back many years, and they mainly originate in the perception of "exclusion" that the development of said activities may have created on the inhabitants of the social environment of the project. Furthermore, if we take into consideration that mining units are usually established in rural environments where the presence of the State, as authority and provider of basic services, is almost null, we can infer that the relationship between the mining company and the population or peasant or native community begins with overwhelming demands due to necessity and the fact that the mining company is the only "authority" in the zone.

The rejection by peasant communities of the investment in mining projects can become evident on a total or partial basis, generating in some cases disputes of high or low significance; however, the claim of peasant communities revolves around the idea or the fear of the fact that the mining title holder will conduct an inappropriate management of the natural resources which may be scarce. To be more specific, we must say that the dispute is usually related to the disposal of land, the use of water and the impacts on the change of life or customs of the community.

Some of the reasons for peasant communities to oppose to investment in mining are:

1. The mining environmental liabilities pending remediation.

2. The little or no rapprochement of the mining holders to the community, which causes mistrust by the peasants who see in mining only an opportunity for economic benefit from which they feel excluded.

3. The man-land relationship inherent to the members of the peasant communities which is not taken into account by the mining companies, and the background of the land expropriation cases during the validity of this right in which the expropriated areas were not returned to the State when the mining rights extinguished.

4. The State does not play its role as impartial entity, sometimes confusing public interests with particular interests of its officers or politicians.

5. Interference of non-governmental agencies, with own rationale, which channel the tension existing in the relationship between the mining company and the community, and this promotes social disputes.

II.- LEGAL FRAMEWORK: LAND AND CITIZENS' PARTICIPATION

According to the specific legislation, the mining concession title itself does not give rights to explore and/or exploit the granted area. The execution of mining activities implies the prior compliance with the procurement of additional and supplemental permits. Such is the case of the use of surface land and citizens' participation, among others.

With respect to the use of surface land, and specifically the legal regime of the community land, we must state that in accordance with Article 9 of the Single Revised Text of the General Mining Law, the mining concession is a real property different and separate from the property where it is located; in that respect, provided that the title of the

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property and of the mining concession does not lie in the same person, it is necessary to have an agreement for the use of the surface land, before the start of production activities.

In the specific case of the peasant communities in the highlands, the Law on private investment in the development of economic activities in land of the national territory and of peasant and native communities, Law 26505, (also known as "Land Law") as amended, underline that the use of land for the execution of mining activities requires prior agreement with the owner of the surface land. It is specified that Peasant Communities in order to dispose, levy, lease or execute any other act in the community land, they need the resolution of the General Meeting with the vote of approval of at least two thirds of all the peasants.

The high quorum that must be reached by peasant communities in order to make the agreement for the use of surface land valid, has not made easy to reach such agreements; more important, some mining projects have been put off and even suspended based on the impossibility to reach the number of votes required to grant the authorization for the use of land.

As regards citizens' participation, peasant communities must participate in the approval procedures of the Environmental Management Instruments, being the competent authority the Ministry of Energy and Mines.

Currently, the citizens' participation is governed by the Regulations on Citizens' Participation in the Mining Subsector, approved by Supreme Decree 028-2008-EM, which foresees, among other issues, various participation mechanisms (workshops, publications, disposal of information in favor of interested parties, public hearings etc.), the procedure and opportunity of participation of the parties interested in the project, the promotion of dialog and the creation of consensus among all the parties involved within the framework of responsible participation, and finally, although remarks or considerations can be made to the project, the possibility of veto with respect to the execution thereof is not foreseen if the...