MMG is committed to operating the Las Bambas Copper Mine in a way that benefits all stakeholders, from their own company to the Peruvian government and local communities. From the steps the company has taken so far, it appears they will succeed.
Title: Las Bambas Copper Mine Restores Dignity of Local Communities
Located in the heart of Peru’s Apurimac country 4,000 metres above the sea, Las Bambas open pit copper mine is expected to become the second largest copper mine in the world. Now owned and operated primarily by the Chinese government, it is one of China’s many recent investments in Latin America, mainly in the production of raw materials.
Las Bambas produces a combination of metals: Copper, silver, gold, and molybdenum, all of which will be mined, although the immediate focus is on copper. The mine is expected to produce more than two million tonnes of copper concentrate in its first five years, and 450,000 tons of copper per year for the next twenty years. (Only 10% of the total land holding has been explored so far.)
Glencorp Plc., a Swiss firm, started exploration and construction on the mine in June of 2012. In 2014 Glencorp sold the mine for US$5.85 billion to a consortium of companies owned by the Chinese government: Minerals & Metals Group Ltd (62.5%), GUOXIN International Investment Corporation Ltd. (22.5%) and CITIC Metal Company Ltd. (15.0%). On 15 January 2016, under the new ownership, the first load of 10,000 tonnes of copper left the Port of Matarani on the southern coast of Peru.
Las Bambas Mine Stakeholders
The mine’s new operational managers are Minerals & Metals Group Ltd (MMG), which is the Chinese government’s mining arm in Australia. The company has a full sustainability program already implemented in the other five mines they own in Australia, the Congo, and Laos. MMG is 74% owned by China Minmetals Non-Ferrous Metals Company Ltd.
Investments in Latin America by the Chinese government are growing phenomenally as that government seeks to fuel its own economic growth. Between 2001 and 2013 China invested $85 billion in oil, soybeans, and copper production from six Latin American countries. The Las Bambas mine in Peru is its latest acquisition.
Mining accounts for 12% of Peru’s GDP and 57% of its exports. The Peruvian government, hoping to offset effects of the worldwide 2008 depression, encouraged Chinese investment in Las Bambas. Peruvian officials are doing what they can to support the transition, including providing workshops for the local people to help them understand the Environmental Impact Assessment (EIA) newly amended by MMG.
The indigenous people in the region have inherited political disenfranchisement and distrust of large corporations taking over their traditional territories. MMG’s sustainability commitment has been critically helpful in this regard. In addition to creating a new town for dislocated landholders, the mine hired and trained 3,000 local workers.
Mine Transfer Issues & Successes
Any project take-over from another company requires changes, as the new owner modifies plans to fit their own goals. The mine’s original Environmental Impact Assessment (EIA), created by Golder Associates in 2010, needed new evaluations to support plan modifications. In 2014, SNC-Lavalin prepared addenda to update the project schedule, check potential effects of plant construction near the Challhuahuacho River, and evaluate its respective water management system. In 2015, Geoservice Ingenieria modified the EIA again to include potential effects of above-ground trucking and railroad shipments, as opposed to an underground pipeline.
This January a new $490 million contract with Perurail took effect, covering the last leg (295 km) of ore concentrate shipment to the Port of Matarani 710 km southwest of Las Bambas. The agreement lasts 15 years with the option to renew. It includes shipment of all the ore mined by the company. The copper plant went into production in 2015 and the first shipment of concentrate went to China in February, 2016.
The mine’s copper concentration plant was built with a capacity of 140,000 tones per day (constructed by GyM S.A.). Both the copper and molybdenum factories required outsized foundations, thick concrete walls to house the operations and sturdy steelwork to hold the machinery (built by Doka Perú SAC). They also required powerful crushers, with fasteners strong enough to stay tight during the rock crushing process (provided by Australia’s Technofast). Electrical facilities and lines were set up by ABB Peru.
Sustainable Community & Worker Welfare
During construction, Las Bambas employed more than 18,000 employees, many of them local to the Apurimac region, and contributed more than US$250 million to finance improvements in education, health, production development, capacity building, road networks and mobile communication services. EMSA built camps and field offices to house 7,500 of those people.
Since then, MMG has built a new town called Nueva Fuerabamba to house relocated families, and opened an office there to enable local people to apply for company jobs. The town consists of 441 houses, health care centres, a school, three churches, a community hall, an open market, and green park areas. MMG also provided plant nurseries and cattle to assist locals laid off from construction who can’t work the mines, and psycho-social retraining to help with relocation adjustments.
The Peruvian government, meanwhile, set up workshops to discuss the impacts of the new EIA, including social infrastructure, mining and the environment, agriculture and livestock, and employment-social responsibility. And they prepared an urban development plan to ensure sustained growth of the community.
One of the thing local people were worried about was the health of the environment, especially their water supply. MMG has a good record of environmental care and consideration. When they dig for ore, they remove a minimal amount of topsoil and vegetation, in order to protect the biodiversity of the area and minimise the impact of the mine.
At Las Bambas MMG acquired authorisation to use local water from the local water management authority, and took steps to protect it from contamination by mining activities. Recognising the importance of upper watershed protection, they also committed to identifying “bofedales” (high Andean wetlands) for future conservation purposes.
MMG is committed to operating Las Bambas in a way that benefits all stakeholders, from their own company to the Peruvian government and local communities. From the steps the company has taken so far, it appears that they will succeed. Divisions between locals and the Peruvian government have dissolved into mutual support for the mine and its prospects, and copper production is on its way.
Written by Susette Horspool
Strategic Partners Comments
Doka Peru : Positive outlook for construction progress in the Andes
The site of Las Bambas copper mine is in one of the remotest regions of the Andes. The work on building the ore-extraction infrastructure comprised several crushing plants, tunnels and a dam. Contractors Bechtel have taken up the manifold challenges of this vast new facility located at over 4000 m above sea level, with Doka at their side as their partner for formwork technology as an experienced partner to work with it. As well as Bechtel’s positive experience with Doka on other projects in Latin America, Doka’s ability to quickly provide large quantities of formwork equipment, and the reliability of its safety systems, were key factors behind the award of the contract.
The geographical location of the jobsites presented a great challenge in itself. Transporting formwork equipment from the depot to the mine can take up to a week. What is more, the situation on the ground means that the construction plan is very often changed at short notice: “Thanks to our decades of experience with large-scale projects, and to the flexibility of our formwork systems, we could always react very quickly to these changes”, explains Santiago Hidalgo, General Manager of Doka Peru.
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