When President Ollanta Humala assumed office in Peru in July, he immediately went to work on one of his key campaign promises: to renegotiate taxation agreements with foreign mining companies. By mid-August, the Peruvian government had announced a new royalty regime that would see mining companies taxed on their operating profits, which Reuters reported follows the Chilean model.1
There's no doubt that Peru is of utmost importance to the mining sector generally, and to Barrick Gold in particular. In 2008, 60 per cent of Peru’s exports came from the mining sector. “Peru, in particular, has been a motor of development for the corporation,” said Aaron Regent, Barrick’s CEO, in 2010.2
The Pierina mine, near the highland city of Huaraz, in the department of Ancash, emerged as a flashpoint for conflict in Peru. In 2006, two miners were killed by police during demonstrations by workers and local community members demanding higher wages.3 Production at Pierina started in 1998, and the company has extended the mine life to 2014 because of high gold prices.4
According to researcher Dr. Matthew Himley, Barrick's“social development agenda for Pierina essentially takes as a given the fact that the firm’s exploitation of the Pierina gold deposit will not offer significant and long-lasting opportunities for nearby communities to benefit from mining through direct involvement in the mining economy.” 5
Himley quotes a person living near the Pierina mine, who stated in 2010 that “[Barrick’s subsidiary at Pierina] hasn’t made good on anything. They offered a lot. They were just making us believe things. After that, nothing. Now, to get any little thing for the village, we go to them begging, imploring. And how much wealth are they availing themselves of?”6
Nearby, close to the village of Huamachuco, Barrick Gold holds a sprawling 19,000 hectare claim where it operates an open pit heap leach gold and silver mine known as Lagunas Norte. The low grade mine produces just over one gram of gold per ton of ore, but is being mined at a rate of 80,000 tons per day – enough to make the company a handsome profit.
Such a large mining operation comes with a high environmental cost. According to a study carried out by the catholic group Marianist Association for Social Action (AMAS), the pH of the Perejil river, which is downstream from Lagunas Norte, dropped from 8.5 to 4.8, and heavy metals including cadmium, iron and nickel were discovered in the water.7 AMAS has collaborated with industry in the past.
Compared to other mine sites in Peru, the Lagunas Norte mine, which is built on the traditional territory of Indigenous Quechua people, has not become the site of protest and upheaval.
The Canadian International Development Agency has come under fire for collaborating with Barrick Gold on reforestation projects in communities located nearby the Lagunas Norte mine. CIDA put nearly $500,000 towards the project, Barrick contributed $150,000.8 “It is clear that at least some tax payer dollars at CIDA are going to subsidize the corporate social responsibility projects of the world’s most profitable mining companies,” said Catherine Coumans of MiningWatch Canada.9
The Lagunas Norte receives its power from the city of Trujillo via a 95 kilometer long powerline, one of many mining projects to put a heavy burden on the local power grid. In August, the Peruvian government announced that electricity rationing in the department of Trujillo.10
Barrick is currently looking in to expanding the Lagunas Norte mine so as to extend mine life by another six years.11
5. http://www.mdpi.com/2071-1050/2/10/3270/pdf p. 3820.
6. http://www.mdpi.com/2071-1050/2/10/3270/pdf p. 3284.