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UNCLAS LIMA 003075 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
INTERIOR PASS TO USGS FOR D.MENZIE/A.GURMENDI 
 
E.O. 12958: N/A 
TAGS: PGOV PINR PREL ECON EMIN SOCI PE
SUBJECT: MINING CONFLICT, THE VIEW FROM CAJAMARCA 
 
¶1. (SBU) Conflicts between large mining companies and 
surrounding communities have increased in the last five 
years, with Cajamarca one of the hardest hit regions. 
Cajamarca's Yanacocha gold mine, the largest open-pit gold 
mine in the world, has been the most visible and 
controversial example of the broader challenge to the mining 
sector.  Majority owned and operated by US-based Newmont 
Mining, Yanacocha has been battered by protests that have 
forced it to curb investment and production.  Although 
Newmont and other mining companies have attempted to respond 
to popular demands with social and infrastructure projects, 
conflicts continue.  The ferment, instigated by anti-mining 
NGOs and clergymen, has attracted the attention of 
anti-systemic political actors like ethnocacerist leader 
Antauro Humala, who are taking advantage of the discontent to 
build their political bases. 
 
Scope of the Problem: A Drag on Growth 
-------------------------------------- 

¶2. (U) The Presidents Council of Ministers catalogued 71 
active mining conflicts between November 2006 and May 2007; 
of these, the largest concentration--19 conflicts--took place 
in Cajamarca.  Centered on environmental and employment 
complaints, most conflicts involved protests and roadblocks 
designed to extract concessions from companies or to block 
new investments.  Some conflicts and their leaders received 
international attention through the dissemination of 
anti-globalization propaganda via the internet.  One of the 
most celebrated cases involved clergyman and founder of the 
NGO Grufides, Father Marco Arana, who in 2004 encouraged 
protests that forced Newmont Mining to shelve plans to expand 
the Yanacocha mine.  Newmont's inability to replace its 
reserves has weakened output and in early 2007 led the firm's 
Vice President for Latin America to predict that production 
would drop 30 percent this year.  This decline has 
contributed to a steady decrease in national mining output 
since August 2006; according to the National Statistics and 
Information Institute, Mines and Quarries GDP decreased 2.7 
percent in the first half of 2007 compared to the same period 
in 2006. 
 
Mining Companies Adapt to Conflict 
---------------------------------- 

¶3. (U) Mining companies have worked hard to repair relations 
with local communities and prevent future conflict. 
Yanacocha's security chief admitted to Poloff that the 
company made mistakes in the past but stressed that it has 
improved since 2002.  The company has spent millions to 
expand community outreach, to invest in social and road 
projects, and to build two dams and a reservoir that ensure 
the delivery of clean water to the community.  Other mining 
companies have followed suit: Yanacocha's security chief said 
that the firm Anglo-American, for example, has offered local 
communities $400 million in social investment.  Activists 
have praised Peruvian copper-zinc mining firm Antamina and 
the formerly US-owned Tantaya copper mine as models for 
community relations.  Firms have also contributed revenue to 
local and regional governments through a Mining Canon.  For 
Cajamarca, deposits in the Mining Canon increased from $19 
million in 2003 to $108 million in 2006. 
 
Continued Conflict and Mutual Distrust 
-------------------------------------- 

¶4. (SBU) Despite the companies' efforts, social conflicts 
have continued to erupt, even against the model investors. 
Father Arana told poloff that companies like Newmont have 
made improvements but argued that past mistakes will not be 
easily forgotten.  He also claimed that social pressure has 
been the only effective tool in getting industry to respond 
to the community's needs.  Yanacocha's union leader Guillermo 
Nina complained to poloff about salaries and working 
conditions.  Both Arana and Nina criticized Yanacocha's vast 
profits as unjust in the face of widespread poverty in the 
region.  Yanacocha security analysts, in turn, said that 
Arana is the source of most protests and that both Arana and 
Nina are motivated by politics not economics.  They said 
Arana's ultimate goal is not to spread the wealth of mining 
investment but to lead an international movement to shut down 
the Andean mining industry. 
 
Antauro Humala Seeks to Exploit Conflict 
---------------------------------------- 

¶5. (SBU) Antauro Humala, the jailed brother of former 
presidential candidate Ollanta Humala, and his nationalist 
movement see the mining conflicts as an opportunity to build 
political support.  His Partido Etnocacerista Revolucionario 
Unido (PERU) is actively organizing in Cajamarca--albeit from 
a small base--for local and national elections (2010 and 2011 
respectively) with weekly membership drives.  Jenny 
Cabanillas, PERU's director for Cajamarca, said that the 
renegotiation of mining contracts to guarantee just 
investment is a key plank in the party's agenda.  Another 
PERU organizer defended the approach saying that politicians 
in mining areas have to attack mining companies in order to 
be viable candidates. Isaac Humala, patriarch of the Humala 
clan, predicted to poloff in August that the mining conflicts 
would expand and eventually contribute to the collapse of the 
Garcia government. 
 
¶6. (SBU) Comment: Mining conflicts in Cajamarca highlight a 
broader challenge to spreading the wealth from Peru's 
economic boom to the hinterland.  Where the government 
fails--even with Mining Canon revenue--to deliver services 
and jobs, protestors blame the mines, in turn threatening the 
very investment needed to create wealth and employment.  The 
GOP and mining companies continue to promote the swift 
resolution of social conflicts to enable expanded investment. 
 But the government is in a difficult race with anti-systemic 
actors for the "hearts and minds" of the populace. 
NEALON