|Protestors in Juliaca last week stormed the airport. (Photo: Los Andes/Reuters)|
After 45 days of protests that turned deadly last week, the Peruvian government cancelled the mining concession granted in 2007 to Bear Creek Mining for the Santa Ana project in the southern Peruvian department of Puno.
The group of mostly Aymara Indians demanded the concession be revoked and that indigenous groups be consulted before mining and oil concessions are given in the future. Friday the government granted both requests, and the region has begun to normalize with the lift of road blockades and the opening of stores.
Bear Creek Mining insists a "political solution" to its problems in Peru is achievable, but investors do not agree.
Bear Creek shares dropped 27 percent to $3.75 on the TSX Venture Exchange – the lowest level in almost a year (symbol: BCM). That’s after having already lost about 50 percent this spring when the protests began. Bear Creek shares were at an all-time high of $12 in March, reports the Globe and Mail.
The company said it is launching legal action against Peru, arguing that nothing has changed with the project since it passed all the requirements necessary to operate in the country.
According to a company press released issued June 25, the 2007 decree was required in order for a foreign company to obtain title to mineral rights located within the 50 kilometer border regions of Peru. It also states there are as many as 15 other foreign companies investing in mineral exploration projects located within the Peruvian border regions under similar decrees.
Andrew Swarthout, Bear Creek CEO, stated in the release, "The company intends to immediately and vigorously defend its rights at Santa Ana through all available avenues, including provisions under the Canada-Peru Free Trade Agreement and Peruvian appeal processes."
He says every effort was made on the part of the company to assist the national and local authorities in reaching a solution to the politically motivated protests. He goes on to say that the community showed strong support for the project, after over 200 public meetings and workshops.
Swarthout says, "We firmly believe this was not the right decision for Peru, its vibrant mining sector, local inhabitants or foreign investors."
The project would provide 1,000 direct jobs, 1,500 indirect jobs, and provide over $330 million in royalties and taxes.
Reuters reports that president-elect Ollanta Humala said remote towns bear the costs of mines, which can cause pollution and sap scarce water supplies, but do not see direct economic benefits from them.
“The issue of mining concessions generates 70 per cent of the conflicts in the provinces and we think mining needs to contribute more to development,” Humala told local reporters.
According to Reuters, conflicts over natural resources have killed nearly 100 people over the past three and a half years as poor towns demand a bigger slice of Peru’s lucrative mining boom or try to halt projects they said would cause pollution.
Mining is the traditional economic engine of Peru, one of the world’s fastest-growing economies, and the country has lined up more than $40-billion in foreign investment for mining projects for the next decade.