This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 04 LIMA 002115 
 
SIPDIS 
 
SENSITIVE 
 
DRL FOR CNEWLING, DWALTERS, KCUMBERLAND 
LABOR FOR PWESNER, LBUFFO 
 
E.O. 12958: N/A 
TAGS: EINV EMIN SOCI ETRD ECON EAID ENRG PGOV PHUM PE
SUBJECT: TINTAYA MINE: FROM CONFLICT TO COOPERATION 
 
REF: A. LIMA 1432 
 
     ¶B. 04 LIMA 5441 
     ¶C. 04 LIMA 4471 
 
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Summary: 
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¶1.  (SBU) Conflicts between communities and mining companies 
are among the most serious problems that confront Peru.  One 
company, however, stands out as an exception: BHP Billiton, 
an Australian firm with a copper mine in Tintaya, has 
succeeded in ameliorating once highly conflictive relations 
with the local community through a permanent &dialogue 
table8 established with the help of Oxfam America.  The 
&Tintaya Model8 shows that, at least in some cases, 
negotiation can lead to accommodation of mining and community 
interests.  Post notes that Oxfam,s role in Tintaya 
contrasts starkly with its involvement in protests that 
turned violent in Cajamarca last September.  End Summary. 
 
---------------------------- 
From Conflict to Cooperation 
---------------------------- 
 
¶2.  (SBU) Over the last three years, BHP Billiton, an 
Australian company that owns the Tintaya copper mine in the 
province of Espinar in southeastern Peru, has succeeded in 
transforming once conflictive relations with the local 
community into cooperative ones through a &dialogue table8 
set up with the help of Oxfam Australia. 
 
¶3.  (SBU) Espinar Province is located 260 km from Cusco in 
southeastern Peru.  It is one of Peru,s poorest provinces, 
with 84 percent of the population living beneath the poverty 
line.  Almost 80 percent of Espinar,s inhabitants speak 
Quechua as their first language.  In 1980, the Peruvian 
Government expropriated 2368 hectares of land from local 
communities to establish the Tintaya copper mine.  The mine 
began operations as a government-run enterprise in 1985.  In 
1994, under Fujimori-era privatizations, an American firm, 
the Magma Copper Company, purchased Tintaya.  Two years 
later, an Australian mining firm, BHP Billiton (BHP), bought 
the mine from Magma.  At the same time, Tintaya also 
purchased additional lands from local communities, 
approximately doubling the land to be mined.  In 1999, the 
mine produced 76,795 metric tons of refined copper. 
 
¶4.  (SBU) Starting in 2000, BHP faced a number of challenges 
from local communities over latent grievances, some of them 
dating from before BHP,s acquisition of Tintaya.  These 
included: 
 
-Protests that land for the mine had been purchased under 
unfair conditions. 
 
-Community women complained of being forcefully evicted from 
land they considered theirs. 
 
-Locals alleged contamination of air and water by mine wastes 
that had led to ailments among both people and cattle. 
 
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Enter Oxfam 
----------- 
 
¶5.  (SBU) In 2001, Oxfam, in collaboration with local NGOs 
concerned about mining, analyzed the communities, 
complaints.  Oxfam found that the GOP had paid USD three per 
hectare in compensation for the land for the Tintaya mine. 
The GOP had also promised mine employment to those who lost 
land.  Most of the promised employment disappeared when 
copper prices fell in subsequent years.  Further, Oxfam also 
found that some people had been forcibly ejected from the 
land.  Oxfam reps attribute this to weak documentation of 
land ownership in the countryside, where country dwellers may 
have farmed land for generations without title to the same. 
Thus, when a sale takes place, they may not be aware of it 
until asked to leave.  Finally, locals had been injured and 
killed falling into holes dug to mine the copper at Tintaya. 
¶6.  (SBU) Initially, local BHP reps refused to respond to the 
community's complaints.  Oxfam America in Peru contacted 
Oxfam,s Mining Ombudsman in Australia, who discussed the 
case with BHP upper management in 2001.  In February 2002, 
Oxfam, Tintaya-area NGOs, and local community leaders agreed 
to establish a Dialogue Table, a permanent forum, for 
negotiating solutions to problems caused by the mine.  Four 
joint commissions, made up of company and community reps as 
well as NGOs were also established to work on issues 
involving land, human rights, sustainable development, and 
the environment. 
 
¶7.  (SBU) These commissions proposed solutions to various 
problems that had plagued BHP,s relations with the local 
community.  Peasants who had lost their land were relocated 
onto new territories purchased by BHP.  The Human Rights 
Commission worked with the Institute of Legal Defense (ILD), 
a Lima-based human rights NGO, and the local Vicaria of 
Solidarity of the Catholic Church to investigate alleged 
human rights abuses.  BHP acknowledged that human rights 
abuses had occurred during forcible relocations of 
inhabitants.  The company paid compensation to victims, 
usually several thousand dollars.  In one case, that of a boy 
whose father had fallen into the mining pit and died, the 
company provided him and his mother with a house (worth about 
USD 3000) and a commitment to finance his education until age 
¶18. 
 
----------------- 
Problems with Dam 
----------------- 
 
¶8.  (SBU) During 2003, a new problem surfaced. BHP had 
received permission to build an additional dam to contain 
mine wastes.  The new dam would extend the life of the mine 
by ten years.  In planning, BHP complied with all the 
regulations required by the Peruvian State.  Nonetheless, 
when locals found out about the dam,s construction, they 
protested that it would have a negative impact on downstream 
farmers.  BHP used the Dialogue Table to meet with concerned 
residents and made significant design modifications to the 
dam to ensure that it would have no negative environmental 
impact. 
 
¶9.  (SBU) In 2003, BHP negotiated a Framework Agreement with 
the local community in which the company guaranteed that it 
would provide USD 1.5 million annually for local projects 
designed to produce sustainable development.  An 
administrative committee of company and community reps 
manages the projects.  Currently there are 22 projects 
ongoing. 
 
--------------------------------------- 
Oxfam: Teaching Locals How to Negotiate 
--------------------------------------- 
 
¶10.  (SBU) Oxfam mining expert Javier Aroca and Oxfam rep 
Katherine Ross explained that Oxfam faced significant 
difficulties in training the affected communities in how to 
negotiate with BHP.  Aroca said that Peruvian political 
culture orients local leaders to take maximalist, high 
visibility positions that often fire up their supporters, but 
are not helpful in reaching an agreement.  Oxfam worked for 
several months to teach the concept of bargaining and genuine 
negotiations to key members of the communities around Tintaya 
so that they could deal effectively with the company. 
 
¶11.  (SBU) Oxfam reps praised BHP for acknowledging that 
human rights violations had occurred.  Ultimately, the costs 
of compensation in cases were not high, but the company's 
willingness to acknowledge that wrongs had taken place went a 
along way toward building trust. 
 
¶12.  (SBU) BHP rep Paul Warner told Poloff that BHP has 
benefited also from its investment of time and money into 
good relation at Tintaya.  In his words, BHP has established 
itself as &the mining company of choice8 for NGOs and 
activists interested in mining issues.  BHP,s image as the 
kinder, gentler mining company could pay dividends in the 
future as other mining concessions open up and face NGO and 
community scrutiny. 
 
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A Contagious Example? 
--------------------- 
 
¶13.  (SBU) Oxfam and Buenaventura Mining Company jointly 
sponsored a workshop on 4/18 to discuss the International 
Labor Organization (ILO) Agreement 169, which protects the 
rights of indigenous peoples.  ILO 169 says that that 
governments must consult with indigenous peoples regarding 
projects that might impact their communities. Though Peru's 
Congress ratified ILO 169 in 1993, the agreement has not been 
implemented in Peru. Representatives of various mining 
companies attended the joint Oxfam-Buenaventura event, where 
they discussed how to interpret and implement ILO 169. 
 
------------------------------------ 
Marked Contrast to Cajamarca Debacle 
------------------------------------ 
 
¶14.  (SBU) Oxfam's success in working with BHP is a departure 
from its experience in Cajamarca six months ago.  Last 
September, protests against Newmont Mining/Yanacocha Mine's 
exploration of Cerro Quilish turned violent.  Protesters 
argued that Yanacocha,s exploration would harm the water 
supply for the surrounding communities, which are highly 
dependent upon agricultural production (Ref B).  Some of 
Oxfam's Cajamarca partners made inflammatory statements that 
may have contributed to an atmosphere of violence  We 
understand that Oxfam has stopped its financial support to 
one more such groups. 
 
¶15. (SBU)  Although part of the blame for the September 
protests against Yanacocha, which led to the postponement of 
the exploration of Quilish, lies with Newmont, Oxfam, as well 
as other participating NGOs, should not have let the protests 
get out of hand.  Yanacocha is improving its public relations 
as well as its cooperation with the local government (ref A). 
 Oxfam continues to deny its involvement with any of the 
violent protestors and has now adopted a specific policy of 
non-violence and dialogue in the Cajamarca region.  Oxfam is 
also participating in the Cajamaraca Mining Dialogue group, 
which brings together representatives from the government, 
mining companies, NGOs, and the community to attempt to 
resolve some of the real concerns about mining in Cajamarca. 
 
-------- 
Comment: 
-------- 
 
¶14.  (SBU) BHP management in Australia moved intelligently to 
incorporate Oxfam and other local NGOs into the negotiations 
process to head off brewing problems in Tintaya that local 
management had ignored.  In this way, BHP emerged with a 
much-enhanced reputation and a working mine.  Too often, 
mining companies in Peru assume that if they get central and 
municipal government approval and pay taxes, they should not 
experience problems.  Weak linkages between governments and 
communities and endemic corruption can render agreements with 
elected governments useless.  Companies need to communicate 
their needs to communities and make sure that message reaches 
the grassroots. 
 
¶15.  (SBU) Oxfam America proved to be an effective moderating 
force in training local community leaders in how to negotiate 
realistically with a foreign mining company.  This contrasts 
with the more confrontational stance the NGO took on the 
question of Newmont,s Mine in Quilish (Ref C).  For its 
part, Oxfam America appears to be trying to market itself as 
an intermediary between the community and the mining 
companies.  Although it did have some success in Tintaya, it 
remains to be seen whether Oxfam, in the future, will act as 
an honest broker or will position itself firmly on the side 
of radical, anti-mining NGOs. 
STRUBLE