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PP RUEHWEB

DE RUEHPE #3217/01 2641737
ZNR UUUUU ZZH
P 211737Z SEP 07
FM AMEMBASSY LIMA
TO RUEHC/SECSTATE WASHDC PRIORITY 6920
INFO RUEHAC/AMEMBASSY ASUNCION PRIORITY 1805
RUEHBO/AMEMBASSY BOGOTA PRIORITY 5106
RUEHBR/AMEMBASSY BRASILIA PRIORITY 7592
RUEHBU/AMEMBASSY BUENOS AIRES PRIORITY 3097
RUEHCV/AMEMBASSY CARACAS PRIORITY 0797
RUEHLP/AMEMBASSY LA PAZ SEP 4527
RUEHMN/AMEMBASSY MONTEVIDEO PRIORITY 9310
RUEHQT/AMEMBASSY QUITO PRIORITY 1467
RUEHSG/AMEMBASSY SANTIAGO PRIORITY 1496
RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC PRIORITY
RUMIAAA/USCINCSO MIAMI FL PRIORITY
RUEHC/DEPT OF INTERIOR WASHINGTON DC PRIORITY

UNCLAS LIMA 003217 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
INTERIOR PASS TO USGS/RESTON FOR 
D.MENZIE/A.GURMENDI/D.ELELSTEIN 
 
E.O. 12958: N/A 
TAGS: PGOV PREL ECON EINV EMIN PE PINR
SUBJECT: THE MAJAZ REFERENDUM: A VOTE AGAINST MINING 
 
REF: LIMA 03075 
 
¶1. (SBU) Summary: Residents of three districts in the 
northern region of Piura voted September 16 to reject 
development of the Majaz copper deposit owned by the Chinese 
Zijin Consortium.  The referendum is the latest event in two 
years of conflict between civil society and community groups 
that argue mining degrades the environment and hurts the 
poor, and the government and mine owners who promise clean 
practices and funds for development on the other.  After 
criticizing as interlopers the NGOs and clergy that backed 
the referendum, the GOP has since invited the parties to the 
negotiating table.  Despite the government's efforts, the 
non-binding referendum has spooked the mining industry -- 
Peru's largest taxpayer and foreign exchange earner -- and 
underscores widespread skepticism about the benefits 
investment brings to local communities.  End Summary. 
 
The Referendum 
-------------- 

¶2. (U) In a symbolic, non-binding vote, residents of the 
remote districts of Ayabaca, Pacaipampa, and Carmen de la 
Frontera in the northern region of Piura voted overwhelmingly 
September 16 to reject investment in the nearby Majaz copper 
mine via the Rio Blanco project.  Although only half of 
eligible voters participated, about 94.5% voted against 
"mining activity" in the area.  Organizers and backers of the 
referendum included local and foreign NGOS such as the Red 
Muqui, CONACAMI, and Oxfam, church representatives, and local 
government officials.  A similar (non-binding) referendum 
held at the Tambogrande copper deposit in Piura in 2002 -- 
along with constant community harrasment and attacks on 
company facilities -- led investors to back out of that area. 
 
Accusations Against Majaz 
------------------------- 

¶3. (U) Organizers and backers of the referendum allege that 
investment at Majaz will destroy the delicate local ecosystem 
and disrupt peasant agriculture.  According to one Oxfam 
document, the mining concession is covered with "cloud 
forests that act as a sponge that captures the water from 
rain and feeds the rivers that support the agricultural 
zones" in the region.  Critics also cite a recent University 
of Texas environmental study stating that "the exploration 
phase of the Rio Blanco mining project in Peru's northwestern 
Andes mountains caused damages to the area's biological 
diversity."  The report further argues that mining at Majaz 
"could lead to an interruption of the links between 
ecosystems" and threaten wildlife.  Anti-mining groups argue 
that the Majaz owners have not presented their plans to 
mitigate environmental impact and have been unwilling to 
dialogue.  Claiming the support of the government's human 
rights Ombudsman, they also accuse the company of beginning 
exploration without the legally required permission of local 
communities (Law 26505).  One Nationalist Party Congressman 
told poloff that the fundamental issues are jobs and poverty, 
and the perception that large mining operations hurt rather 
than help the poor. 
 
The Government and Industry Response 
------------------------------------ 

¶4. (U) President Garcia initially responded to the vote by 
blasting the interventionism of NGOs and church groups that 
supported the referendum.  "Just like I do not like the 
governments of Venezuela or Argentina to intervene in policy, 
I also do not like the Vatican to intervene in policy," he 
said according to press.  "Foreign priests should go fight 
for revolution in their own lands and not here."  Prime 
Minister Jorge del Castillo criticized NGOs for misinforming 
the local populace and said that if a town does not want 
private investment, it does not deserve public services.  The 
National Election Committee (JNE) declared the vote an 
illegal usurpation of its powers and contrary to the legal 
order. 
 
¶5. (U) The GOP and Majaz owners have since called for 
dialogue.  The President's Council of Ministers convoked a 
September 27 meeting in Piura with local officials to resolve 
the conflict, and Garcia publicly stressed the importance of 
investment for job creation and the way responsible mining 
companies can protect the environment.  Majaz officials 
echoed the call for dialogue, stating that Peru's 
environmental regulations require all new mining projects to 
use the most modern, environmentally-friendly mining methods. 
 Majaz's manager said that their priority is to inform local 
communities about the Rio Blanco project, the technology to 
be employed, and the planned social investments. 
 
Anti-systemic Groups Spreading Social Conflict? 
--------------------------------------------- -- 

¶6. (SBU) The referendum results spooked other mining 
interests who fear that its success could encourage similar 
referenda elsewhere, and ignited speculation that 
antisystemic groups are behind the Majaz confict.  A security 
analyst at the majority U.S.-owned Yanacocha gold mine in 
Cajamarca (REF) worried that social sectors were moving 
faster than the government and that the GOP did nothing to 
prevent the referendum.  He told poloff that the Cajamarca 
head of the Communist New Left Movement (aka Patria Roja) -- 
Gregorio Santos Guerrero -- actively backed the Piura 
referendum and might now return home to promote a similar 
vote.  Former Prime Minister Pedro Pablo Kuszynsky told 
Poloff that opium traffickers, fearing the increased security 
presence of a large mine in a key narco-export corridor, 
helped back the referendum.  A September 10 press report, 
citing intelligence sources, claimed that a group of radical 
NGOs backed by Venezuelan President Hugo Chavez were 
conspiring against mining companies to destabilize the 
Peruvian government.  Even Ollanta Humala got involved by 
disseminating a flyer promoting a no vote in the referendum. 
 
¶7. (SBU) Comment: Mining is Peru's most significant industry, 
its largest tax payer and foreign exchange earner, critical 
for the nation's macro development.  At the same time, the 
communities closest to mine fields often reject the industry 
because of a combination of misinformation, past company 
mistakes, and their own experience of continuing poverty in 
the face of wealth.  Although many firms have made great 
strides in improving community outreach and local development 
programs, problems continue.  The ongoing challenge for the 
GOP is to proactively mediate conflicts while showing that 
investment can bring development.  End Comment. 
MCKINLEY